Anyone watching last year's US Presidential debates would have walked away with the feeling that US-China trade relations were headed for troubled waters, no matter which candidate occupied the Oval Office.
Republican challenger Mitt Romney’s repeated promise to designate China a currency manipulator the moment he stepped into the White House became his siren call for stronger measures against China’s alleged unfair trade. In the final presidential debate, Romney claimed that China was engaged in a “silent trade war” against the US.
President Obama, for his part, boasted that his administration had already initiated more trade cases against China than the previous Bush Administration did in its two terms and promised more tough measures to protect US jobs. He triumphantly pointed to the US win over China in the WTO on tires as a showcase of his get-tough policy.
Well, as they say, the rest is history. Romney was roundly defeated, the renminbi has appreciated against the US dollar, and US-China trade tensions have dialed back for the time being.
So where does this leave the Obama administration and its second term trade agenda? We were allowed a sneak preview of what to expect on March 1 when the administration delivered its annual Trade Policy Agenda for the coming year. Strangely, neither a new US Trade Representative nor a Commerce Secretary had yet been named. One can only hope this was not a reflection of the new administration’s priorities on trade, but rather a case of saving the best for last.
Obama’s First Term: Where Was the “Yes, we can?”
While President Obama’s first term trade policies are unlikely to offer hints of what to expect over the next four years, one thing is for sure – Obama II will be different. In Obama I, the president’s energies focused on passing free trade agreements with South Korea, Columbia, and Panama. He also ramped up negotiations on the Trans-Pacific Partnership (TPP). These, however, were largely leftovers from the Bush Administration. Where Obama made his mark was in his high-profile efforts to double US exports by 2014. He also established a US trade enforcement council and made greater use of WTO dispute settlement mechanisms, heightening trade tensions with China in the process.
Critics say this was merely the picking of “low hanging fruit”. They highlight the president’s poor handling of fights with Congress as portents of even tougher battles ahead in his second term, assuming he brings forward some big trade deals. The president’s lackluster trade performance was also evidenced by stalled WTO negotiations on a new trade round and the unwillingness of the White House to push for renewed Trade Promotion Authority (TPA) from Congress, which is a prerequisite for passing any new trade agreements.
To be continued...