Asian Voices on the Future of US-Asia Relations: Trade and Economic Policy under the Biden Administration

Abstract

President-elect Joseph Biden faces challenges both at home and abroad in the aftermath of the Trump administration. The COVID-19 pandemic has deeply affected the United States, with over 23.5 million reported cases by early 2021. Much like many nations under lockdown and reeling from supply disruptions and the chilling effect on demand, the US economy is forecasted to shrink in the near term. It is expected to contract by 4.3% in 2020, with a tentative rebound of 3.1% growth in 2021. The roll-out of vaccines in the US commenced in late 2020, and it is a welcome precursor of health and economic recovery, but the second stimulus package was delayed. Meanwhile, the Democrats managed to flip two Senate seats in Georgia, and thus maintain a slim control in both the Senate and the House of Representatives. Nevertheless, unprecedented political turmoil erupted in Washington, D.C. in early January, prior to the inauguration, signalling a difficult and noisy transition to the next administration. Abroad, the one-two punch of the pandemic and populist wave may continue to push many nations towards protectionism, even as multilateralism has been in retreat even before the pandemic. Part of the populist wave was driven by a push-back against globalization, owing to factors such as its un-equalizing impact as well as valid concerns over dominant lobbying by corporations and weak influence from the labor sector. In Asia, the Trump administration abandoned the Trans-Pacific Partnership Agreement while turning to protectionist rhetoric (and some tentative policies) against trading partners like China, Canada and Mexico. Most of these were short-lived as they amounted to more self-harm than any strategic benefits to the US or key segments of the population like its blue-collar workers. Meanwhile, the other TPP countries moved ahead and form the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) even without the US.Meanwhile, China’s sphere of influence in Asia expanded, as the US withdrawal from its traditional leadership role in the multilateral and regional economic policy discussions was matched by a ratcheting of China’s ambitions to solidify its position as a political, economic and military power. The Regional Comprehensive Economic Partnership Agreement (RCEP) was finally signed in November 2020 producing the largest agglomeration of potential consumers (about 2.2 billion people) of any regional trade agreement conceived. And it is seen as the competing China-influenced framework vis-a-vis the TPP which intended as a centerpiece of the US pivot to Asia under President Obama. In addition, China’s ambitious infrastructure plan--the Belt and Road Initiative (BRI)--intended to fuel economic integration in the region while inter-connecting it with key markets in Europe and the Americas. Rather than channel all its resources into existing multilateral platforms, China has also advanced alternative financial institutions such as the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund. China’s influence on “writing the rules” for regional economic integration has been increasing, yet it is not clear to what extent these new rules and institutions reflect existing norms in international cooperation.