Bidenomics: multilateralism or bilateralism to be continued

Image credits: ABC News

Biden’s victory in the 2020 US Presidential elections has brought up the debate whether Biden will encourage multilateralism or will stick to the revoked status of trade agreements

By: Toshiva Jain, Thursday 2pm

“I will take immediate steps to renew US democracy and alliances, protect the United States’ economic future, and once more have America lead the world,” said Joe Biden in his victory speech.

The US being the largest world power holds a unique position in world trade. In 2016 when Donald Trump became the president, he backed out from the TPP (Trans-Pacific Partnership,) which is a trade agreement of eleven pacific nations to ensure lesser tariffs for easy trade among the member countries. It backed out because of multiple reasons like the rising deficit in the US budget, to support domestically produced goods and services, etc.

Trump did not leave NAFTA, which is another trade agreement between the US, Canada and Mexico, to eliminate trade barriers. But the US stopped taking active participation. Thus, the working of NAFTA got weakened. He also left the apellet seat from WTO.

Biden has acknowledged the importance of deals like the TPP to enhance multilateralism and to induce a better world economy. The bilateral trade agreements that the US has been following under Trump’s presidency has resulted in increased deficit and the US-China trade war has caused a divide in world trade relations.

But the recent progression of events might help the US to decrease the deficit. China has shown its interest in joining CPTPP ( Comprehensive and Progressive Trans-Pacific Partnership.) If China joins then it will have to agree to the rules and regulations of the agreement. The Biden administration will also most likely try to coordinate with the EU (European Union) and other countries to pressure China for reforms.

Trump believed in bilateral trade agreements because he thought this might help to reduce the deficit as the US will have a better bargain leverage but the deficit increased and also the US relations with fellow countries got bitter. Thus, the Biden administration will focus more on multilateralism to enhance its world relations and will try to restart its work with NAFTA.

The US getting back to TPP is crucial for countries like Australia and other US allies, since they have been majorly dependent upon the US for multilateralism. A Biden presidency promises a return to multilateralism. But it remains to be seen how quickly, and on what terms, Biden returns the US to multilateralism.