Trading "America First" for American Leadership in Trade Policy

President Trump put trade policy on center stage during the 2016 election cycle, shifting the debate from "free trade versus fair trade" to "America-first trade." While stakeholders in the trade space may hold out hope that the 2020 election will rebalance the trade debate, most of the frontrunners in the Democratic presidential primary share some of President Trump's views when it comes to trade policy. In this first in a series, we compare the trade positions of leading Democratic presidential candidates with President Trump's trade policies to forecast what trade policy changes are likely should a Democratic presidential candidate win in the November 2020 election.

Joe Biden

Of the top five Democratic presidential candidates, Joe Biden holds the most pro free trade positions. Compared to the record of other Democratic presidential candidates, Joe Biden's career, as former Chairman of the Senate Foreign Relations Committee and then as Vice President, gives us a deeper insight into what a Biden Administration's trade policies may look like. Even as the most pro-free trade candidate, a Biden Administration is likely to keep or rely on some of the policies and tools implemented by the Trump Administration.

Free Trade Agreements

As a senator, vice president and then presidential candidate, Joe Biden's position on free trade agreements shifted from supporting free trade to fair trade. Early in his career, Biden supported several free trade agreements, including the North American Free Trade Agreement (NAFTA),¹ and voted to extend permanent normal trade relations to China.² Later in his Senate career, his support for free trade agreements was mixed—Biden supported free trade agreements with Australia and Morocco,³ but voted against free trade agreements with Singapore, Chile, Oman, and Central America for failing to have strong labor and environmental enforcement provisions.⁴ During the 2008 election cycle, as then-presidential candidate Barack Obama's running mate, Biden supported renegotiating NAFTA.⁵ However, as a current Democratic presidential candidate, Biden said in 2019 "there's no going back to business as usual on trade with me."⁶

We would expect a Biden Administration's approach to trade policy to emphasize addressing domestic concerns over trade before entering into new trade agreements. As part of his "Foreign Policy for the Middle Class,"⁷ according to Biden's campaign website, the following domestic concerns would need to be addressed as preconditions to entering into new trade agreements: (1) increasing investment in education, healthcare, and infrastructure; (2) raising the minimum wage to $15; and (3) "lead[ing] the clean-economy revolution to create 10 million new jobs in the United States."⁸ His trade plan does not explain how much investment is needed before his Administration would start trade negotiations. Biden also has pledged to include input from labor and environmental leaders on all future trade negotiations.⁹ At the same time, Biden has maintained his anti-protectionist stance, arguing it would be the "wrong thing to do" to "put our heads in the sand and say no more trade deals."¹⁰

US-Mexico-Canada Agreement (USMCA)

Biden voiced support for the US-Mexico-Canada Agreement (USMCA), praising the accord's labor and environmental enforcement mechanisms, which in most respects tracked terms the Obama Administration bargained for in TPP.¹¹ Biden also voiced support for changes made by House Democrats to the USMCA's biologic and pharmaceutical patent protections.¹²

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)(formerly, the Trans-Pacific Partnership (TPP)).

Joe Biden believes multilateral trade deals are key to curbing China's trade practices but his support for the TPP has evolved and he now says parts of the agreement need to be renegotiated, In 2016, then-Vice President Joe Biden tried to build enough congressional support to ratify the TPP. Biden also penned an op-ed urging the next administration to prioritize TPP, arguing the agreement contained strong provisions for workers' rights, the environment, and intellectual property.¹³ As a 2020 candidate, Biden said parts of the TPP/CPTPP would have to be renegotiated before he would join the agreement, although he did not specify which parts would need to be renegotiated.¹⁴ In response to a Council on Foreign Relations 2020 candidates' questionnaire, Biden provided more detail, saying although the TPP was not perfect, he supports the idea to "unite countries around high standards for workers, the environment, intellectual property, and transparency," and that we should "use our collective weight to curb China's excesses."¹⁵

Biden's commitment to multilateral trade agreements demonstrates one of the biggest contrasts between a 2020 Democratic presidential candidate and President Trump's trade policies. One of President Trump's first acts in office was to issue a presidential memorandum withdrawing the United States from the TPP negotiations and agreement.¹⁶ The memorandum notes the Trump Administration's intent "to deal directly with individual countries on a one-on-one (or bilateral) basis in negotiating future trade deals."¹⁷ Diametrically opposed to this position, Biden has said that we need to work with our allies to collectively curb China's trade practices through multilateral trade agreements. We would expect a Biden Administration to work to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), with a focus on workers' rights, the environment, and intellectual property. In addition, we would expect the CPTPP to play a large role in a Biden Administration's approach to China.

China & Section 301 Tariffs

Although candidate Biden supports a tougher approach with China aimed at addressing structural reforms, he does not support the Trump Administration's tariff actions. For example, Biden shares the view that China is dumping steel in the United States and stealing American intellectual property.¹⁸ However, Biden said he would "start getting tough and smart on China without throwing backbone American industries like agriculture and manufacturing under the bus," suggesting he does not support President Trump's Section 301 tariffs.¹⁹ He also criticized President Trump's phase one agreement with China, arguing it will not "resolve the issues at the heart of the dispute."²⁰

However, Biden has not indicated whether his administration would repeal Trump's Section 301 tariffs and he will eventually have to explain on the campaign trail, either in the primary or in the general election, why the Obama Administration was not more successful in pushing back against China's trade ambitions.

Biden's approach to China would rely heavily on multilateral cooperation and trade agreements to curb China's trade practices. Biden has argued the United States must "write the rules of the road for the world or China [will]," arguing "we put China in the driver's seat" by withdrawing from the TPP.²¹ He also promised his trade focus would be on "rallying our friends both in Asia and Europe in setting the rules for the 21st century and joining us to get tough on China and its trade and technology abuses."²² In addition, Biden has suggested using multilateral tariffs to put pressure on China to make environmental changes.²³

Section 232 Tariffs

Biden's does not support using national security claims to impose tariffs. For example, Biden argued that President Trump "impose[d] damaging and reckless tariffs" by designating imports from our allies as national security threats.²⁴ Given Biden's commitment to multilateral cooperation, we would not expect a Biden Administration to impose new Section 232 tariffs, but it is unclear whether he would rollback the Section 232 steel and aluminum tariffs.

Antidumping and Countervailing Duty Investigations

While Biden has said he supports President Trump's steel tariffs, he appears to support more targeted tariffs that result from antidumping and countervailing duty (AD/CVD) investigations rather than Section 232 steel tariffs. For example, Biden argued steel dumping in the United States is "designed to drive down our steel market and our steel production."²⁵ Under the Trump Administration, the number of AD/CVD investigations has increased dramatically and the Commerce Department has self-initiated AD/CVD investigations.²⁶ It is unclear whether a Biden Administration would be as active in the AD/CVD space.

Conclusion

Out of the Democratic presidential hopefuls, we would expect a Biden Administration to be very pro-business and pro-free trade. However, given the shift in trade policy since the 2016 election cycle, Biden may focus more energy on workforce and infrastructure investment before pursuing new trade policies. Once these domestic priorities are in progress, we would expect a Biden Administration to pursue multilateral coalitions and trade agreements to address China's trade policies. Unlike the Trump Administration's approach to trade policy, we would expect the Biden Administration to rely heavily on multilateral cooperation with our allies.

Joe Biden's Trade Positions

© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.