ASIAN SECURITYBiden’s Trade Policy U-Turn Bodes Ill for Indo-Pacific Security
America’s economic isolationism is increasingly entrenched, with President Joe Biden’s administration no longer supporting the trade policies advocated by US multinational corporations, retreating instead to a nativist protectionism. The Biden administration’s U-turn last month on digital trade policy was a shock both to the US business community and to the nations that had been negotiating digital trade agreements with the US on the basis of its long-established position of lowering the barriers to digital commerce.
America’s economic isolationism is increasingly entrenched, with President Joe Biden’s administration no longer supporting the trade policies advocated by US multinational corporations, retreating instead to a nativist protectionism.
Creating the conditions for the global expansion of US multinationals had been at the heart of US international economic and political strategy since the end of World War II.
The Biden administration’s U-turn last month on digital trade policy was a shock both to the US business community and to the nations that had been negotiating digital trade agreements with the US on the basis of its long-established position of lowering the barriers to digital commerce.
The US government last month walked away from the digital trade negotiations of both the World Trade Organization and the Indo-Pacific Economic Framework (IPEF). Both had been pursuing agreements that would have prohibited all restrictions to the flow of data across borders, the forced disclosure of source codes and algorithms, and requirements to establish local data centers.
Australia, Japan and Singapore all supported these measures, accepting US arguments that lowering the barriers to e-commerce would foster its growth to everyone’s benefit and were left stranded by the US about-face.
The New York Times cited the secretary general of the International Chamber of Commerce, John Denton, saying: ‘The term we would use is “gobsmacked”. We don’t understand what is going on.’
The Biden administration was influenced by Democrats in Congress who believed the measures gave too much power to the technology giants. The US government wants to reserve its own right to regulate these companies and their data flows.
As well as abandoning its negotiations on IPEF’s digital commerce agreement, the administration decided it wouldn’t proceed with the broader IPEF trade discussions after Democrats complained that it didn’t include enforceable labor and environment provisions.
IPEF was a Biden administration creation, designed to fill the policy vacuum left by the Trump administration’s decision to walk away from the Trans-Pacific Partnership free-trade agreement in 2016.
IPEF was intended to be a new kind of international policy framework, setting standards for cooperation among countries on the environment, tax and transparency, supply chains and trade. The US attracted 13 Indo-Pacific nations to sign up to it.
It was explicit at the outset that the agreement wouldn’t provide members with improved access to the US market, which would have required unattainable congressional approval. Instead, the trade section was to cover trade facilitation, labor standards, regulatory practices, agriculture and the digital economy. In the US,
