The National Security Advisor’s Disquieting Global-Economy Speech: Some Worried Reactions by a Friend

05/08/2023

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Ed Gresser | Progressive Policy Institute

National Security Advisor Jake Sullivan’s April 27 speech at the Brookings Institution, explaining the Biden administration’s global-economy policies, is an odd piece at an important time. Mr. Sullivan covers a lot of ground in a lengthy (4,981-word) speech: “industrial strategy” and subsidies; trade and tariffs; the U.S. relationship with China; brief excursions into finance, aid, and infrastructure, and so on. Parts of it work well, in particular his passage on China policy. Some other parts less so. That on trade especially is a sort of study in breezy missummarization of history, muddy elucidation of current choices, and unclear future direction.

Most important, when taken as a whole and given its timing just as the 2024 presidential campaign begins, the speech seems to be politically out of tune and picking the wrong targets. It is vigorous if defensive in rebuking the Biden administration’s liberal-internationalist friends for their worries that it may be overreaching in industrial strategy and under-reaching in trade policy. It is premature at best in positing that the administration’s global-economy agenda has achieved consensus status as the “project of the 2020s and 2030s,” and does not recognize — despite warnings from allies as important and close to the subject as Japan — the strength of the Chinese counter-“project.” And while spending lots of time in an argument with the 1990s, it elides not only the recent Trump administration record but the domestic political challenge from the administration’s Trumpist/isolationist enemies — which, in a few months, will seek to end the Biden administration, and with it not only Sullivan’s version of international economics but the 80-year liberal-internationalist legacy the speech rightly praises.

Message and Audience: Sullivan’s message throughout is a defense of three aspects of administration policy against concerns from its critical friends, and friendly critics, at home and in allied governments: that (a) its “industrial strategy” risks trying to do too much by expanding into places that private markets can serve pretty well, (b) its trade agenda is trying to do too little, missing opportunities to promote growth and high-wage employment at home and to build alliances abroad, and (c) its overall approach has veered close enough to economic nationalism to appear at times indifferent to the interest of allies and friends, and to risk damaging the “rulesbased order” the administration ably defends in diplomacy and security. Uniting these strands of argument, with special force in the opening and the close, Sullivan seeks to convince the critics that the approach is recognizably in the liberal-internationalist tradition of earlier Democratic presidencies, though appropriately adapted to meet an extensive list of new challenges. Two passages illustrate:

Opening: “The idea that [Biden administration policy] is somehow America alone, or America and the West to the exclusion of others, is just flat wrong. This strategy will build a fairer, more durable global economic order, for the benefit of ourselves and for people everywhere. So today, what I want to do is lay out what we are endeavoring to do.”

Close: “The world needs an international economic system that works for our [American] wage-earners, works for our industries, works for our climate, works for our national security, and works for the world’s poorest and most vulnerable countries. That means … targeted and necessary investments in places that private markets are ill-suited to address on their own—even as we continue to harness the power of markets and integration. It means providing space for partners around the world to restore the compacts between governments and their voters and workers. It means grounding this new approach in deep cooperation and transparency to ensure that our investments and those of partners are mutually reinforcing and beneficial. It means returning to the core belief we first championed 80 years ago: that America should be at the heart of a vibrant, international financial system that enables partners around the world to reduce poverty and enhance shared prosperity. And that a functioning social safety net for the world’s most vulnerable countries is essential to our own core interests. It also means building new norms that allow us to address the challenges posed by the intersection of advanced technology and national security, without obstructing broader trade and innovation.”

China: Some of the specific elements of the speech are very well done. The concise passage on China policy, consistent with Treasury Secretary Janet Yellen’s more detailed April 20th address, argues that the Biden administration’s approach is serious, strict on security-related trade, but also not seeking confrontation and looking for areas of mutual benefit. This clearly explains goals, limits, and methods. Some samples:

Export controls and trade: “We’ve implemented carefully tailored restrictions on the most advanced semiconductor technology exports to China. Those restrictions are premised on straightforward national security concerns. Key allies and partners have followed suit, consistent with their own security concerns. We’re also enhancing the screening of foreign investments in critical areas relevant to national security. And we’re making progress in addressing outbound investments in sensitive technologies with a core national security nexus. Our export controls will remain narrowly focused on technology that could tilt the military balance. We are simply ensuring that U.S. and allied technology is not used against us. We are not cutting off trade. In fact, the United States continues to have a very substantial trade and investment relationship with China. Bilateral trade between the United States and China set a new record last year.”

Summary paragraph: “[W]e are competing with China on multiple dimensions, but we are not looking for confrontation or conflict. We’re looking to manage competition responsibly and seeking to work together with China where we can. President Biden has made clear that the United States and China can and should work together on global challenges like climate, like macroeconomic stability, health security, and food security. Managing competition responsibly ultimately takes two willing parties. It requires a degree of strategic maturity to accept that we must maintain open lines of communication even as we take actions to compete.”

Trade, Tariffs, and the “Projects” of the 1990s and 2020s: Some other sections don’t hold up so well. The lengthier passage on trade policy in fact mixes eccentric history with jumbled policy arguments, and ends with puzzlement about where the administration really wants to go. Here, Sullivan’s point of departure is an ill-grounded sparring match with the U.S. policy agenda of the 1990s, characterized briefly and incorrectly as follows:

“The main international economic project of the 1990s was reducing tariffs.”

As history, “reducing tariffs” might, with some distortion and oversimplification, describe the main trade policy goals (though not the “main international economic project”) of the Roosevelt and Truman administrations in the 1930s and 1940s, or of the Kennedy and Johnson progressivepolicy.org administrations in the 1960s. For the 1990s, it doesn’t work even for trade policy alone. And if the administration feels it must start an argument over policies thirty years in the past, and contrast its own approach with them, it should understand those policies and describe them accurately.

Sullivan-Response-Gresser

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

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