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As the pandemic and recession hopefully begin to give way to vaccines and recovery in 2021, the U.S. Chamber’s International Affairs Division is focused on the issues that will dominate international economic policy in the months ahead. Following are thoughts on some of the key dates, deadlines, and decisions that will loom large for the business community, the new U.S. administration, and the international economy in the year ahead.
January: Multilateralism at the Fore
President-elect Biden has signaled that the United States will reengage in multilateral organizations and agreements on day one. The Chamber will support U.S. moves to rejoin the Paris Agreement and reengage with the World Health Organization, from which the Trump administration had initiated but not concluded U.S. withdrawal.
On the WHO, the United States will seek reforms as well as reengagement. The U.S. Chamber has recommended reforms to enhance collaboration between the WHO and industry, governments, other international organizations, and academia to become the high-performing, transparent, science-based global health body the world needs.
Rejoining the Paris Agreement, under which countries set their own greenhouse-gas emission reduction goals, will be cast by the Biden administration as a first step in its climate plans. Look for Special Presidential Envoy for Climate John Kerry to launch new negotiations to build on Paris, with a view toward the UN Climate Change Conference (UNFCCC COP 26) to be held November 1-2 in Glasgow, Scotland. In the Chamber’s view, closer collaboration between governments and businesses will be essential to tackling climate change.
February-March: Engaging with Allies
NATO defense ministers will meet in February to discuss the next steps for their two-decade long mission in Afghanistan and many other issues, and a leaders’ summit to include President Biden is expected shortly afterward. This could take place in conjunction with a proposed springtime, senior-officials-only iteration of the Munich Security Conference.
One top trade issue facing the new administration will be the U.S. Section 232 tariffs on steel and aluminum, which were applied when the Trump administration determined these imports “threaten to impair the national security,” as the statute reads. Close U.S. allies from Britain and Germany to Japan and Korea have bridled at the accusation and at the duties.
Biden’s nominee for Secretary of State Tony Blinken told me in an interview last fall that the new administration will “end the artificial trade war” on America’s allies—a possible nod to these tariffs. The U.S. Chamber and most of the U.S. business community would applaud their elimination. Look for the issue to come up quickly at events like this NATO summit.
March: The President’s Trade Agenda—and China
As required by statute, the President’s Trade Policy Agenda and Annual Report is submitted to Congress on March 1 each year, and the U.S. Trade Representative testifies shortly thereafter before the House Ways and Means and Senate Finance Committees. If confirmed, nominee Katherine Tai will be peppered with questions on a range of global issues at these hearings.
China will be at the fore, and Tai will be urged to hit multiple targets. One will be to win improved access to the Chinese market, which remains the world’s fastest-growing big market for U.S. business. Look for members of Congress to press for additional structural reforms to China’s unfair trade and regulatory policies, possibly in exchange for reciprocal elimination of the tariffs the United States and China have imposed on hundreds of billions of dollars of bilateral goods trade. Members of Congress will also press for details on the Biden team’s pledges to work with allies globally to address shared concerns about China’s state capitalist policies.
On a related note, a high-ranking Chinese delegation is expected to come to Washington to meet with Biden Administration officials early in the new year. Those meetings may set the stage for a later Biden/Xi summit, perhaps on the sidelines of the G20 meetings.
April: Trade Promotion Authority Expires
The Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (known as Trade Promotion Authority or TPA) effectively expires on April 1. Its renewal is usually deferred until an emerging trade agreement makes it necessary, which is not evident at present: Some argue the U.S.-UK Free Trade Agreement could advance without TPA, and the U.S.-Kenya Free Trade Agreement negotiations are at a relatively early stage. In any event, the U.S. Chamber has been a forceful proponent of these negotiations and of TPA and will remain engaged on these fronts.
Also on the congressional trade agenda, the Generalized System of Preferences (GSP) expired on December 31, and legislators failed to pass a new Miscellaneous Tariff Bill (MTB) in 2020. While both enjoy broad support, Democrats’ interest in revising GSP’s eligibility criteria—and some difficult-to-understand concerns about the product coverage of the carefully-vetted MTB package—could not be addressed in the last weeks of the 116th Congress. Both should be addressed swiftly.
Spring: U.S.-EU Summit(s)
The EU has invited President-elect Biden for two summits—one virtual and one in person—in the first half of 2021 to discuss what its leaders see as a “once-in-a-generation opportunity to design a new transatlantic agenda for global cooperation,” according to a European Commission document issued in December entitled “A new EU-US agenda for global change.”
Efforts to unravel transatlantic trade tensions will unfold in the background and, perhaps, on the dais. Look for the Biden administration to seek a settlement for the parallel “large civil aircraft” disputes that will discipline subsidies in the sector and lift retaliatory duties the United States and the EU have imposed on one another. In addition to the aforementioned Section 232 tariffs, digital services taxes will continue to roil transatlantic commerce (see “Global Tax Negotiations,” below). The EU’s ongoing efforts to set global rules for digital commerce, including through its use of antitrust enforcement, will continue to trouble the relationship. The U.S. Chamber will be monitoring the situation very carefully.
May – October: G7 in the UK, G20 in Italy
Britain will host the next G7 summit, which is usually held in late May or early June. Pandemic response and recovery will still dominate the agenda. This is a relatively like-minded group, and with vaccination campaigns hopefully well advanced among the developed economies, the summit may be an opportune moment to address a host of issues pushed aside during the pandemic.
Italy will co-host (with the European Commission) a special G20 Global Health Summit in Rome on May 21. The G20’s annual meeting will also be in Rome on October 30-31, with an agenda expected to focus on macroeconomic challenges and economic recovery.
Those are not the only summits to be scaled: President-elect Biden has spoken of plans to convene a Summit for Democracy in 2021 “to strengthen our democratic institutions, honestly confront the challenge of nations that are backsliding, and forge a common agenda to address threats to our common values.” The G7 countries would form the core of such a meeting.
July: Global Tax Negotiations
Negotiations have been under way for several years under the aegis of the Paris-based Organization for Economic Cooperation and Development (OECD) to address tax-related challenges arising from the digitization of the global economy. A soft 2020 deadline for a deal has been deferred to mid-2021 (though this deadline is far from set in stone), but the establishment of new Digital Services Taxes (DSTs) by France and several other European governments may inject some urgency into the talks.
Governments hungry for tax revenue have crafted DSTs that focus almost exclusively on a small number of large, American companies and break with longstanding rules on where multinationals should be taxed. The United States has pushed instead for a multilateral approach that prohibits these clearly discriminatory approaches.
Some governments are hopeful the Biden administration will engage robustly in the talks. Look for the United States to continue to fight any approach that treats its tech industry as a cash cow, but Washington’s position is not wholly defensive: The United States will seek to establish international recognition for its global minimum tax (the Global Intangible Low-Taxed Income, or GILTI, tax) established in the 2017 Tax Cuts and Jobs Act.
Summer: U.S.-Africa Summit
Calls for a more robust U.S.-Africa relationship have mounted in recent years. For the past two decades the annual African Growth and Opportunity Act (AGOA) Forum—often held in August—has been the main platform for official dialogue on the commercial relationship. It was last held in Côte d’Ivoire, which suggests a U.S. venue is due. This event traditionally draws top U.S. trade officials and African counterparts for intensive dialogue. Separately, the Biden administration may be interested in reprising the successful U.S.-Africa Leaders’ Summit and Business Forum organized late in the Obama administration.
A summit in this time frame would offer a first opportunity for President Biden to articulate his vision for engagement in Africa. The Chamber’s U.S.-Africa Business Center will press for a strong economic and commercial component in an agenda likely to also address democracy, human rights, and sustainable development more broadly.
Fall: Summit of the Americas
The United States will host the Summit of the Americas for the first time since President Clinton convened the first iteration in 1994, most likely sometime this fall. In any event, it is sure to be met with interest from a region expecting significantly enhanced U.S. engagement and from a Biden administration seeking a platform to jumpstart economic growth in the region hit hardest by the pandemic. While some geopolitical focus will remain on Venezuela, look for the Biden Administration to depart significantly from the Trump Administration in its approach to Latin America and the Caribbean.
What does this mean? On the trade front, the Biden administration’s workload in the Americas will be hefty but perhaps less headline-grabbing than during the Trump Administration particularly because the United States-Mexico-Canada Agreement (USMCA) is now in force. The new USTR will face enforcement-related demands from Congress, labor, and industry. Additionally, the Trump-Bolsonaro “bromance” is ending, but the U.S. and Brazilian private sector interest in addressing steel tariffs, ethanol trade, and a comprehensive trade pact to build on the recent “mini-deal” will endure. Look for a whole-of-government program to engage with Central America that will address migration, development, and narcotics trafficking; trade can play a role here as well.
November: APEC in New Zealand
Heads of state and government from the 21 Asia-Pacific Economic Cooperation economies will convene in New Zealand on November 8-12. While the outgoing administration often touted its Indo-Pacific agenda, President Trump’s withdrawal from the Trans-Pacific Partnership in his first week in office was widely seen in the region as a sign of U.S. disengagement. The administration’s failure to send senior representation to the ASEAN summits that traditionally follow the APEC meetings added to the impression of U.S. disinterest.
Why is this critical? The recent conclusion of negotiations for the Regional Comprehensive Partnership Agreement (RCEP) liberalizing trade among China, Japan, Korea, Australia, New Zealand and 10 Southeast Asian nations is a clear sign the region is not standing still. While the Biden team has deemphasized new, formal trade negotiations early in the year, look for U.S. officials to devise a strategy to overcome the mounting disadvantage faced by U.S. exporters in a region that is likely to be the world’s primary growth engine for years to come. For our part, the U.S. Chamber will be a forceful advocate for U.S. engagement in the region and for Indo-Pacific cooperation writ large.
December: WTO Ministerial in Kazakhstan
While the date is uncertain, the World Trade Organization (WTO) is likely to hold its 12th Ministerial Conference in Kazakhstan in late 2021. The Biden administration comes to office with the global trade body in some disarray.
A first task will be to choose a new Director-General; the Trump administration blocked Nigerian economist Dr. Ngozi Okonjo-Iweala, who had secured a clear consensus among the 163-members of the WTO. The Biden administration will first need to resolve this dispute—hopefully early in 2021.
The Trump administration also shuttered the WTO’s Appellate Body, citing concerns about “overreach” in its rulings. The United States came under fire from other members for not offering concrete proposals to resolve its complaints. Look for the Biden administration to issue recommendations to translate the Walker Principles (articulated by New Zealand’s ambassador to the WTO) into a form that can address these concerns, perhaps in a way that can bear fruit by the time of the ministerial.
Revitalizing the WTO as a negotiating forum is another imperative. Long-running negotiations to introduce disciplines for fisheries subsidies are more than ripe and can deliver real benefits by curbing overfishing and restoring fish stocks. Look for the Biden administration to prioritize those negotiations and to seek progress on WTO efforts to write new rules for e-commerce. Again, these issues are high on our list of priorities, and the Chamber will engage actively on this front.
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This look-ahead at the calendar and the agenda facing the new administration is not exhaustive, but hopefully it gives some sense of the road ahead. The U.S. Chamber of Commerce will be engaging intensively on these issues throughout the year.