The puzzle of Joe Biden’s ‘middle class foreign policy’

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If there is one thing on which Joe Biden and most of the world would agree it is the failure of Donald Trump’s “America First” foreign policy. The US global trade deficit grew by almost 40 per cent during Trump’s time in office — the yardstick he most cared about.

Biden, by contrast, has adopted a much fuzzier measure for diplomatic success — the health of America’s middle class. Every step will be assessed by its impact on ordinary Americans. 

Biden’s “foreign policy for the middle class” has an attractive ring to it. Like all good slogans it refreshes the brand. But it is not clear how different his product will actually be.

A sceptic would call this approach Trumpism with a human face. Foreign policy for the middle class, in other words, may simply be a euphemism for “no trade deals”. A less jaundiced eye would say that Biden is doing what is needed to rebuild public confidence in a globally engaged America. 

Which will it turn out to be? One of the most striking aspects of Biden’s administration is the gulf in tone between his foreign and domestic policies.

On the home front, Biden has thrown caution to the winds. Contrary to fears of big Democratic party divisions, the left is delighted with their leader’s radical domestic plans.

Nearly the reverse is true of his relatively cautious approach to the world. Among other complaints, liberals are unhappy about Biden’s tough stand on rejoining the Iran nuclear deal, his soft treatment of Saudi Arabia’s crown prince, Mohammed bin Salman, and his China hawkishness. 

Biden faces two problems in showcasing his diplomacy to Main Street. First, the US’s allies are craving more economic engagement. That means trade and investment deals. Biden could differentiate from past ones by focusing on 21st-century issues such as 5G and green technology, as opposed to Trump’s mania for soyabeans and steel.

But unless the US is ready to deal with its Asian and European partners, China will continue to eat into US market share. That would damage both the American middle class and US global standing. Most of America’s Asian partners do much more trade with China than with the US.

Second, any kind of trade talks are now treated as toxic in US politics, in part because many Americans blame globalisation for squeezed incomes. Jake Sullivan, Biden’s strategic-minded national security adviser — and one of the architects of his middle class foreign policy — has argued that the US has allowed the likes of Goldman Sachs and Big Pharma to dictate the terms of past trade deals. This is indisputable. Business lobby groups have always had far greater clout in Washington than trade unions, environmental groups and other stakeholders.

In Sullivan’s view, the only way to rebuild confidence in trade deals is therefore to force US manufacturers to reshore production and close overseas tax shelters. But it is not low-cost China that produces most of America’s drugs. By value, it is Switzerland and Ireland

Again, Sullivan is close to the truth. The problem is that it could take years for such measures to begin altering middle-class perceptions, if indeed Biden can get them done. The biggest test of whether he is prepared to take on China economically is the Trans-Pacific Partnership, a trade deal largely negotiated by Barack Obama.

It would be political suicide for Biden to rejoin the TPP at this stage. Yet it would be a geopolitical disaster for the US if China enters the group, as it has said it might want to do. The prospect is not that far-fetched. While America ponders, China has been busy striking global trade and investment treaties.

The rest of the world is in no position to sway US voters. That role falls to America’s leaders. Biden’s best opening would be to target the American public’s deepening fear of China, which hit a peak of 73 per cent last year according to Pew, with its still surprisingly high support for trade in general.

Americans do not automatically fear more trade — just trade with China. Biden could add that most of America’s industrial jobs erosion has been caused by technology, not trade, and the absence of federal support for those who lose out from trade. Washington has been turning a blind eye to corporate tax avoidance for decades. Generous treatment of shareholders has been matched only by indifference to the fate of workers. 

Given America’s political climate, I would be shocked if Biden rejoined the TPP or initiated trade talks beyond Europe. Yet his advisers are aware that the consequences of US inaction would be anything but masterly.

Sullivan has written that the fate of America’s great power competition with China will “ultimately turn on how effectively each country stewards its national economy and shapes the global economy”.

He has also said that lack of domestic investment is a “bigger threat to national security than the US national debt”. The key to US fortunes lies in how skilfully Biden can do two things at once: bolster America’s middle class while outflanking China on the global economic stage. 

The good news is that Biden is making headway on the first. The bad news is that he cannot afford to wait until his putative re-election before taking political risks on the second. The global economy will not wait for Biden to make up his mind.

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