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Biden’s Faltering Steps in Global Trade: A Test of Leadership

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In the high-stakes arena of the Asia-Pacific Economic Co-operation summit in San Francisco, the spotlight was on Presidents Joe Biden and Xi Jinping. However, the crucial developments in the rivalry between these two Asian powerhouses were unfolding far from the public’s gaze, raising questions about Biden’s effectiveness in steering the U.S. on the global stage.

The summit was poised to be a landmark for the Indo-Pacific Economic Framework (IPEF), a significant U.S. initiative aimed at 13 Asian economies. This plan was not just about trade; it was envisioned as America’s main lever to boost its economic influence in Asia. Despite these high expectations, the Biden administration’s decision to pause discussions on digital trade has caused a significant part of the agreement to grind to a halt. According to The Economist there will be no announcement on the trade portion of IPEF, one of the deal’s four pillars. This unexpected halt casts a shadow on the U.S.’s commitment, with upcoming American elections only adding to the uncertainty of future progress.

Digital trade, encompassing vital services like online transactions and data flows, is a burgeoning sector. The U.S.’s retreat from the TPP under Trump was already a setback for Asian countries hoping for better access to American markets. Now, Biden’s administration seems to be continuing this trend of withdrawal from global economic commitments, which is concerning.

Doubts about the influence of U.S. tech giants have influenced key Democrats, leading to a cautious stance on digital trade. Senator Elizabeth Warren’s skepticism about relaxed digital trade rules reflects a broader apprehension within the Democratic Party. Sam Lowe of Flint Global, a consultancy, remarks, “Those on both sides of the aisle want to ensure they are not restricted when regulating artificial intelligence (AI),” indicating a significant shift in policy under Biden.

This hesitance has been a series of letdowns for Asian economies seeking deeper ties with the U.S. The 2020 pact signed by Chile, New Zealand, and Singapore, which covered emerging fields like AI and fintech, was an effort to engage America in more comprehensive agreements. However, Biden’s indecision has likely scuttled these aspirations.

Without the U.S.’s robust advocacy, some nations are drifting towards more insular policies like data localization. Nigel Cory of the Information Technology and Innovation Foundation points out, “Without such pressure, countries will be more likely to take a nationalistic path.”

In Asia, Biden’s policy seems narrowly focused on limited bilateral deals, primarily to bolster domestic manufacturing. This approach is a stark departure from previous administrations that pursued broader, impactful multilateral agreements. A case in point is the recent visit of Indonesia’s President Joko Widodo to Washington for battery mineral negotiations, reflecting a limited scope of engagement.

China, in contrast, is expanding its economic footprint. The Regional Comprehensive Economic Partnership, a significant trade deal involving 14 members, is pulling Asian economies closer to China. In this contest of influence, Biden’s America seems to be losing ground, overshadowed by China’s assertive advances.

These developments cast a shadow over Biden’s capability to forge a “new economic world order,” a vision repeatedly touted by U.S. Trade Representative Katherine Tai. The administration’s shift from free-trade and globalization to a worker-centric trade policy is muddled with abstract ideas, lacking concrete direction. Jake Sullivan, National Security Adviser, metaphorically described the Biden economic vision as akin to a Frank Gehry building, implying a complex, unconventional structure.

However, this slow pace in reshaping global economic systems, including transforming the World Trade Organization, sharply contrasts with China’s assertive approach. The risk of igniting a new Cold War and dividing the world into separate trading blocs looms large, with Biden’s strategies appearing hesitant and less visionary.

President Biden’s approach to global trade and the challenge posed by China raises serious questions about his administration’s competency in handling complex international dynamics. As the world navigates through economic turbulence and power shifts, the U.S.’s leadership under Biden is being scrutinized, facing the challenging task of redefining its role on the global stage amidst rising challenges and a seemingly more assertive China.

This becomes more and more embarrassing as our trade partners realize the mess that is coming. They may be forced to fend for themselves.

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