If first impressions matter — and there’s a fair amount of agreement that they do — the new Biden administration’s trade policy seems to be taking on a different tone than did trade policy in the early weeks of the Trump administration.
Time will tell how this plays out, and how much it matters for US dairy trade, but at least the initial impression is that the Biden administration’s trade policy won’t be as antagonistic as the previous administration’s trade policy was.
It may be recalled that President Trump, less than a week after he was inaugurated, made a major trade policy decision, withdrawing the US from the Trans-Pacific Partnership agreement. The TPP included the US along with Australia, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and Brunei.
If it had been implemented with the US included, the TPP would have been the largest plurilateral free trade agreement by value of trade, encompassing roughly 40 percent of world GDP, and could have served further to integrate the US in the dynamic Asia-Pacific region, according to a 2016 Congressional Research Service report.
And the TPP looked like a positive deal for the US dairy industry.
According to a 2016 report from the US International Trade Commission, the TPP agreement would have had “a positive effect on US dairy exports and a positive but more limited impact on US dairy imports.”
Both of those reports, as noted, came out in 2016, which was the last full year of the Obama administration. For what it’s worth, US involvement in TPP talks actually predated the Obama era; President George W. Bush notified Congress of his intention to negotiate with the existing P-4 members (New Zealand, Singapore, Chile and Brunei) in September 2008, along with Australia, Peru, and Vietnam in December 2008. President Obama recommitted to the TPP negotiations in November 2009.
After Trump withdrew the US from the TPP, the remaining countries went ahead and finalized the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which has been in effect for a little over two years now.
Meanwhile, the Trump administration continued to pursue what might be described as a confrontational trade policy. As John Murphy, senior vice president for international policy at the US Chamber of Commerce, put it: “The administration of President Trump, a self-described ‘tariff man,’ championed tariffs and other limits on imports as a tonic for a wide range of economic ills.”
The US during the Trump administration wielded tariffs more readily than in any other period in the post-World War II era, Murphy pointed out. These included US Section 301 tariffs on goods from China, and Section 232 tariffs on steel and aluminum from Mexico, Canada and the European Union, which were imposed in 2018.
Finally, the US in 2019 received a favorable ruling from the World Trade Organization on civil aircraft subsidies being provided by the European Union, and imposed 25 percent tariffs on a variety of cheese and other dairy imports from the EU starting in October 2019. For its part, the EU received a favorable ruling in 2020 in a case involving Boeing, and started imposing its own tariffs on some imports from the US late last year.
Related to those aircraft-related tariffs, over the past week and less than two months into the new Biden administration, the US and the EU have agreed on the mutual suspension for four months of the tariffs related to the aircraft disputes. This suspension “will allow the EU and the US to ease the burden on their industries and workers and focus efforts towards resolving these long running disputes at the WTO,” the US and the EU said in a joint statement.
That announcement actually came one day after the US and the United Kingdom (which was a member of the EU when these aircraft disputes started, but isn’t a member of the EU today) announced a four-month tariff suspension in the aircraft dispute.
Also last week (as reported in a story on page 5 of last week’s issue), the Office of the US Trade Representative delivered Biden’s 2021 Trade Agenda and 2020 Annual Report to Congress. Opening markets and reducing trade barriers are “fundamental” to any trade agenda, and will be a priority for the Biden administration, the report stated.
But it doesn’t look like there will be any new trade agreements being hammered out between the US and other countries in the near future. Instead, it looks like US trade policy will pursue something resembling a return to “normal,” whatever that is.
For example, the report notes that America’s agricultural communities have been “burdened” in recent years by “erratic trade actions that were taken without a broader strategy,” and that these actions “triggered retaliation by our trading partners, leading to billions of dollars in lost exports and precipitating unprecedented mitigation payments.”
The Biden administration will pursue “smarter trade policies that are inclusive and work for all producers,” and its trade agenda “will seek to expand global market opportunities” for agriculture.
The report also stresses that Biden will “make it a priority to work with friends and allies” on trade enforcement, and “seek to repair partnerships and alliances and restore US leadership around the world,” among other things.
How US dairy trade fares under Biden’s trade policies remains to be seen, but at least initially, these policies are notably different from Trump’s, if nothing else.
