Editor's Note: Below is a complimentary research note written by National Security analyst LTG Dan Christman. To access our Macro Policy research please email sales@hedgeye.com.

Why Is The White House Timid On Trade? - 5 10 2021 11 55 42 AM 

The Biden White House has been extraordinarily disciplined in articulating the domestic and foreign policy priorities of the president.

A tight, “speak with one voice” media approach largely reflects what was on offer during the campaign: a focus on COVID and resurrecting the economy, and internationally, strengthening alliances and pushing back hard on China.

While it’s hard to argue with any of these priorities, it remains a mystery why the White House has been so reluctant to step out strongly on international trade, an area linked not just to domestic economic growth, but to the president’s vital strategic aim of countering China’s regional and global ambitions.   

Katherine Tai, President Biden's chief trade negotiator as the U.S. Trade Representative (USTR), has repeatedly stressed that “trade is not on the back burner.” But Tai has strenuously avoided ANY discussion of specific trade opportunities; during her testimony last week to a Senate Appropriations subcommittee, for example, she said nothing about plans to resurrect talks with Kenya, the EU, or the UK.

Just prior to her Senate appearance, Tai did talk by phone with her counterpart in the UK, one of our most important strategic partners. The read-out? A little on WTO reform, and a lot about Airbus/Boeing subsidies, but nothing on suspended negotiations over a U.S.-UK trade pact!   

While the Biden Administration bides its time on trade, neither China nor U.S. allies are waiting on Biden’s timelines.

The PRC, for example, cobbled together late last fall the massive, 15-nation “Regional Cooperative Economic Partnership” (RCEP); it includes the first-ever trade agreement between China, Japan, and South Korea, the latter two, of course, the most important U.S. allies in East Asia. 

In the meantime, strategically critical draft trade pacts that President Trump and his team initiated have been left to gather dust.

Disturbingly as well, “Fast Track” trade authority that would expedite passage in Congress of any final deal will now lapse this summer; the White House never signaled any intent to extend the Fast Track legislation that President Obama signed in 2015.

What had been a modest bipartisan consensus over a decade ago on the economic and strategic importance of expanding trade and global economic integration has morphed, as one analyst recently wrote, into a “growing bipartisan allergy” to trade deals.

This probably explains at least some of the Biden reluctance to expend political chips domestically when he wants to cash in his hand on other priorities.

But it doesn’t explain why he’s reluctant to reassert global leadership to repair glaring shortcomings in the principal institution of international trade and dispute resolution - the WTO - that the U.S. was instrumental in helping to create.   

The best summary of the strategic implications of this disappointing relegation of trade policy priorities was provided a week ago by the Atlantic Council’s Fred Kemp. Framing trade in the context of the deepening U.S.-China rift, Fred wrote that the “biggest hole in the Biden administration’s otherwise encouraging efforts to better compete with China - a void that could undermine all the other pieces - is the lack of an international trade strategy.” Former Treasury Secretary Hank Paulson stated the concerns even more succinctly: ”When it comes to trade,” Paulson said, “American is ceding the field.”

As experienced as the president is on foreign affairs (for eight years either the Ranking member or the Chair of the Senate Foreign Relations Committee), he appears to have a blind spot on the link between trade and geostrategy.

With a mixed trade record as a Senator (supporting the original NAFTA and the free trade deal with Australia but voting against similar deals with Central America and Singapore), it’s been hard to divine his true instincts.

Biden became Obama’s pitch-man on the Transpacific Partnership (TPP), the 12-country Pacific-wide trade pact that would have been the best counter to China’s regional strategic and economic ambitions; but Biden then became mum when Trump pulled the U.S. out of the TPP negotiations in 2017, and he remained that way during his campaign and the first months of his presidency.

Unlike the passion and clarity President Biden has shown toward China and U.S. alliance relations, his trade agenda remains the Churchillian “riddle, wrapped in a mystery, inside an enigma.” 

To be clear, In comparison to the other geostrategic issues challenging the new Administration (China, Russia, Iran, North Korea), the silence on trade and the vacuum on White House policy pronouncements are hardly existential worries.

But unless corrected, as Kemp and Paulson and other experienced hands have counseled, Biden’s silence on trade policy risks undermining not just his China strategy and his commitment to rebuild alliance relationships, but his “middle class-focused” domestic agenda as well. 

Historian Michael Beschloss, author of the recent book Presidents of War, stressed that presidents like Lincoln and FDR who succeeded during perilous times were adaptable and devoted to lifetime learning.

How President Biden handles our international trade agenda over the coming months will demonstrate not just his adaptability and willingness to learn, but whether his assertion that “America is Back” rings true or in the months ahead, resonates embarrassingly.

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LTG Dan Christman, USA, Ret. serves as Hedgeye Potomac Research’s Senior National Security Analyst, providing deep insight into international affairs and national security. Most recently, Dan provided strategic leadership on international issues affecting the business community for organizations such as the US Chamber of Commerce. Dan’s long history of leadership includes his service as a United States Army lieutenant general and former Superintendent of the United States Military Academy. He served in highly visible and strategically important positions and four times was awarded the Defense Distinguished Service Medal, the nation's highest peacetime service award.

He also served for two years as assistant to the chairman of the Joint Chiefs of Staff, during which time he traveled with and advised Secretary of State Warren Christopher. He was centrally involved during this period with negotiations between Israel and Syria as a member of the Secretary's Middle East Peace Team. Further, Christman represented the United States as a member of NATO's Military Committee in Brussels, Belgium.

Graduating first in his class from West Point, Christman also received MPA and MSE degrees in public affairs and civil engineering from Princeton University and graduated with honors from The George Washington University Law School. He is a decorated combat veteran of Southeast Asia, where he commanded a company in the 101st Airborne Division in 1969.