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Domestic politics & international economy : what leverage does President Biden have ?

If the arrival of Joe Biden to the presidency has been applauded internationally and has left room for hope according to a part of American society, the Democratic President must however face a country shaken by a global pandemic, an economic recession and the entrenchment of the Trumpist movement in the political landscape. This inventory of domestic tensions illustrates the difficulty Joe Biden will have in moving forward on his major economic projects.  

 

The March 4, 2021 webinar is part of the Fondation Prospective et Innovation’s new series that focuses on the first year of Joe Biden’s presidency, with a particular emphasis on the relationship between the United States and the rest of the world, especially Europe. 

 

Alongside Jean-Pierre RAFFARIN, Former Prime Minister and President of the Fondation Prospective et Innovation, Ron KIRK, Former US Trade Representative, Former Mayor of Dallas, Senior Of Counsel in Gibson, Dunn & Crutcher’s, Karel DE GUCHT, Former European Commissioner for Trade, Former Deputy Prime Minister of Belgium, President of the Brussels School of Governance, Director at ArcelorMittal and Proximus, Member of the Advisory Board of CVC and Jean-Claude BEAUJOUR, Vice-President of France-Amériques, Lawyer at the Paris Bar, discussed the economic issues on which Joe Biden has to make a decision, mainly from the point of view of the domestic political constraints weighing on him. From these lively exchanges, a few points emerged : 

 

 1. Domestic constraints impose a certain economic protectionism 

Joe Biden is dealing with a fragmented America whose divisions are deepening and being sustained by the social and economic crisis and by a strong and aggressive political opposition. He is particularly concerned with rebuilding social cohesion in a country hit by an unemployment rate that now stands at 6.7% compared to 3.5% before the pandemic. This economic crisis is leading to a social crisis for thousands of Americans who are left without an income and are calling for strong measures. 

Joe Biden must also work with the left wing of his political party, embodied by Elisabeth Warren, the unsuccessful candidate in the 2020 Democratic primaries, who wants to raise taxes, as well as with teachers’ organisations who want to reform the American school system in depth. 

Moreover, after his political and media comeback on 28 February, Donald Trump intends to establish a new Republican doctrine and promises to vigorously oppose Joe Biden’s measures, particularly when they concern China or immigration.  

To calm the domestic situation, the Democratic president is obliged to give in to the protectionist wishes of a large part of the population while satisfying the left wing of his party to stabilise his majority. Thus, Joe Biden is not only condemned to succeed, given the economic and political crisis and the opposition to him, but also given the mid-term elections that are less than twenty months away and an electoral campaign that will start in just over a year. 

To succeed, he did not hesitate to propose large-scale measures, such as the 1900 billion dollar economic recovery plan. Joe Biden intends to stimulate the American economy through checks promised to the poorest households, or a weekly unemployment benefit of $300 paid to almost 10 million Americans. 

The « Buy American » policy illustrates the prevalence of American economic protectionism for the American President. Indeed, in order to secure American supply chains and avoid shortages of goods and services, Joe Biden presented an executive order giving priority to American companies and products. Nevertheless, the reinforcement of the 1933 « Buy American Act » is countering transatlantic trade relations and the projects of a Europe that would have preferred a « Buy Transatlantic Act ».   

 

 2. But domestic constraints do not mean that the United States has to withdraw from the international scene 

Although Joe Biden’s protectionist impulses may be disconcerting to Europe, the reality is not as worrying, as the United States’ obligations to the World Trade Organisation (WTO) require international openness. 

From his very first days in the White House, the new president has been calling for a return to multilateralism, notably by rejoining the World Health Organisation (WHO) or joining the Paris Climate Agreement. Aware of the value of international diplomatic alliances thanks to his political experience, Joe Biden admits that the management of the health crisis requires a return to multilateralism, as well as more peaceful relations. This requires a reform of the WTO. Since 2001, no global multilateral agreement has been approved by member countries, so the organisation is sometimes described as a ‘dinosaur’, unable to adapt to globalisation. This reform of dispute settlement, in particular, will not be done by force. It will require dialogue and cooperation between member countries, as well as taking into account the situation in developing countries. The WTO’s dispute settlement mechanism, as well as a calmer transatlantic relationship, may be able to resolve the dispute between Airbus and Boeing. 

Nevertheless, it is necessary to recall that multilateral cooperation will be complex and difficult. It is particularly important to establish an honest and transparent dialogue between countries, to restore confidence in public opinion and to assume its international responsibilities, especially for China. 

In short, with the multilateralism imposed by the Covid-19 pandemic, it is necessary to work together and cooperate by insisting on commonalities rather than differences.  

Among these common points, the defence of democracy appears to be fundamental. Especially since Joe Biden imagines a future in which our democracies will collide with autocracies. It is therefore necessary to adopt a pragmatic point of view to deepen the common values and strengths of our democracies in order to avoid a global conflict. 

From globalisation to planetization, global governance can benefit from a global consensus on climate. The speeches made by Xi Jinping and Joe Biden on the protection of the planet give hope for a common project that responds to the demands of the world’s youth, whether European, American or Chinese. The protection of our world depends on cooperation and multilateral dialogue, as the Covid-19 pandemic has reminded us. The virus, although invisible, is turning our concept of borders upside down. It is no longer enough to dream of European sovereignty and a stronger Union to deal with the health crisis and the American and Chinese powers, but to work towards it, in particular by diversifying our economy, or by sketching out the diplomatic contours of a global consensus on the planet. 

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