A major challenge facing Joe Biden of the U.S. Democratic Party, who has been projected the winner of the U.S. presidential election, is how to build back the economy that has fallen into a crisis due to the effects of the coronavirus.
President Donald Trump, who upholds a policy of “America First,” has imposed a series of punitive duties, dividing the world economy.
Trump also imposed massive tariffs on China, causing an abnormal situation in which the world’s two largest economies are waging a trade war. In a struggle for hegemony in cutting-edge technology, Trump sought other countries to shut Chinese products out.
The outgoing president even made Japan and Europe — allies of the U.S. — into targets of his tariffs. He also dropped out of the Trans-Pacific Partnership (TPP), a free trade agreement among countries in the Asia-Pacific region in which Japan is a participant.
Last year, when Trump’s protectionist policies were at their height, the world’s growth rate was at its lowest since the financial crisis caused by the collapse of the Lehman Brothers. And then to add insult to injury, the coronavirus crisis hit.
Between July and September 2020, the gross domestic product of the U.S. and European countries recovered from the historical slump seen in a period between April and June of this year, but they are far from bouncing back to pre-coronavirus levels. Predictions that infections will multiply again and the economy will be stifled are spreading.
President-elect Biden needs to make a clean break with the protectionism that has brought on futile turmoil, and to rush to rebuild an international coordination system, which is indispensable in climbing out of the coronavirus crisis.
If the world is divided, whether we can overcome the economic downturn caused by the coronavirus remains uncertain. We cannot expect an economic turnaround if, in addition to restrictions on the travel of people across national borders, the stagnation of trade continues.
Free trade has strengthened ties between countries, promoted the globalization of economies, and become the foundations of growth.
The U.S. comprises the keystone to international coordination. Following the collapse of Lehman Brothers, the U.S. proposed the establishment of the G-20, which would include countries such as China, and came up with measures for overcoming the financial crisis. The coronavirus crisis is even more dire. The importance of collaboration has increased.
Biden has indicated that he places importance on coordination and does not view punitive duties in a positive light. For the purpose of economic recovery, these duties should be lifted as soon as possible.
What is worrisome is that there are deeply rooted voices in the Democratic Party that call for protectionism, and that a majority advocates taking a hard-line approach toward China.
Many people worry about increased bankruptcies and unemployment caused by the influx of cheap products from overseas. Biden, too, taking into consideration the anxieties that Americans have over this issue, has revealed plans to give favorable treatment to American companies. Some suggest that his policies may not differ that much from the line Trump has taken.
But it is all too clear that protectionism has not helped the U.S.
Trump emphasized that he would reinvigorate the Rust Belt, but in the majority of this region, employment in manufacturing dropped in 2019. As a result of punitive duties levied on China, raw materials that had been imported from China to make products in the U.S. went up, damaging the performance of U.S. companies. The negative aspects of globalization should be resolved through domestic measures such as job security.
We hope the Biden administration will consider rejoining the TPP. Doing so could have the effect of increasing exports to emerging countries in the Asia-Pacific region, thereby boosting the U.S.’s economic recovery.
Biden was vice president under the administration of then President Barack Obama who promoted the TPP, but there were many in the Democratic Party who were against it, and Biden himself has shown a cautious stance toward the agreement.
The Japanese government should encourage Biden to bring the U.S. back into the partnership.
Another challenge awaiting Biden is the rebuilding of the World Trade Organization (WTO), which has supported free trade.
The WTO lays down universal rules through duties and other measures, and works to resolve trade conflicts. This is because if each country were to make decisions on their own, economies would fall into chaos.
It was Trump who forced the WTO into a state of dysfunction by imposing a slate of punitive duties that went against the rules, and hampered efforts to select committee members to resolve trade conflicts. Allowing a multilateral framework to function will become an opportunity to regain multilateral coordination.
Trump accelerated the trend of anti-globalization, and destabilized the post-World War II international order. However, history shows us what happened after countries tried to function on a policy of putting themselves first.
During the Great Depression before WWII, the U.S. put forth a protectionist policy. Conflict among countries grew fierce, eventually ballooning into a world war. Cordell Hull, who served as secretary of state in the administration of President Franklin Roosevelt, wrote in his memoir that the biggest action the administration took that went against its duty to the world was economic isolationism.
Having learned its lesson, the U.S. has taken on a central role in building postwar order. It is the responsibility of a superpower to stabilize the world economy.
In his victory speech, Biden said, “Tonight, the whole world is watching America … We will lead not only by the example of our power, but by the power of our example.”
The role of the international community’s new leader is to repair the strains of globalization, and to lead the coordination that will allow the fruits of a globalized economy to spread as far and wide as possible.
