Excerpts from Ed Gresser’s response to National Security Advisor Jake Sullivan’s Remarks. Excerpts from Mr. Sullivan’s remarks follow, below.
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 mis-summarization 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…
“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.
“Trade policy” was obviously an important focus of the 1990s, but far from the decade’s only international economic policy focus. (To wit: the Treasury Department’s organization of international responses to the Mexican peso crisis and the Asian financial crisis and macroeconomic talks on current account balances with Japan; the Labor Department’s negotiation of ILO Convention 182 on the abolition of the worst forms of child labor; Vice President Al Gore’s work to create the OECD Convention on Bribery and Corruption, etc.) Andwithin trade policy specifically, tariffs were often important, but only as elements in larger goals related to the era’s major challenges. These might be divided into five areas:
1. Creating stronger multilateral rules and institutions. This included lowering barriers for U.S. exporters but also (for example) developing a worldwide system for protecting U.S. intellectual property through the WTO’s TRIPs agreement, creating science-based agricultural sanitary and phytosanitary standards through the WTO’s SPS agreement, reducing farm subsidies linked to production levels, developing policy for services trade through the General Agreement on Trade in Services and two multilateral sectoral agreements, and making all of these enforceable through the Dispute Settlement Understanding. Most important in this area, though not the only example, was the creation of the World Trade Organization through the conclusion of the “Uruguay Round” of the GATT in 1994.
2. Deepening and stabilizing core U.S. relationships with America’s neighbors, through NAFTA and the unsuccessful FTAA. With this came similar if less ambitious efforts in other regions, such as the African Growth and Opportunity Act, the Qualifying Industrial Zones project in the Middle East, and the subsequent U.S. free trade agreement with Jordan, followed in the second Bush administration by similar agreements with Arabworld allies Oman, Morocco, and Bahrain. Like the WTO agreements, these reduced tariffs but did much more as FTAs evolved. NAFTA, for example, included chapters dealing with issues ranging from anti-dumping procedures to investment, services, and recognition of nomenclature for whiskey and wine. Later agreements, from the Jordan case to the (post-1990s) agreements with Chile, Bahrain, Morocco, Oman, CAFTA-DR, Oman, Australia, Korea, Panama, Colombia, Peru, and ultimately the Trans-Pacific Partnership, sequentially added issues like telecommunications, labor and environment, electronic commerce, and most recently, the expansion of early e-commerce agreements to cover issues like data flows, and wholly new chapters such as those covering SME trade, state-owned enterprise competition, and more.
3. Integrating the formerly communist countries of Europe and Asia into the global economy, first through aid programs after the revolutions of 1989 and the Soviet breakup in 1991, and then through painstakingly negotiating their entry into Western-designed institutions, in particular the WTO, but also the G-8, the OECD, and others. (A program paralleled by the expansion of relevant regional organizations, including the European Union and ASEAN.) This covered former Warsaw Pact satellites such as Poland
the Czech Republic; Balkan states Albania, Croatia, etc., and the three Baltic countries;newly independent post-Soviet countries such as Ukraine and Georgia; Vietnam, Laos, and Cambodia, and on the largest scale Russia and China -—on one hand in hopes that this would encourage stable growth, rule of law, and western values, and on the other hand on the grounds that attempting to isolate and keep them outside would surely discourage all these things.
4. Responding to the newly invented digital world after the Internet went live in 1989, for example through the WTO’s “duty-free cyberspace” commitment, agreements to develop pro-competitive telecom regulatory systems, ease trade in services, and begin discussions on topics ranging from privacy to cybersecurity.
5. Integrating labor and environmental conditions into trade policy, in parallel with steps like ILO Convention 182 or the Kyoto Protocol on climate change, with a foundation in the 1994 NAFTA side agreements, innovative textile and labor agreements with Cambodia (the foundation of the ILO’s now 12-country Better Work program), launches of labor and environmental discussions in the WTO, and the first inclusion of labor and environmental rules in FTA text in the U.S.-Jordan FTA of 2000.