… But Don’t Expect A Comprehensive Free Trade Agreement
Though it should, America won’t, yet, re-enter the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – because it can’t. The U.S. President’s Trade Promotion Authority expired on July 1, 2021. Biden dare not try to renew it before the November 2022 mid-term elections as trade liberalisation lacks bipartisan support. To seek negotiating power to re-join CPTPP would impede the Democratic Party’s hopes of holding power in Congress. Yet without TPA, no Framework can be as free or open as the CPTPP, so don’t expect the mini-deals to sum to a mega-deal.
For example, don’t expect a major U.S. initiative on special and differential treatment for developing and least-developed countries at the World Trade Organization. Neither the concept nor the institution is popular in Congress. Likewise, don’t expect clear rules on pricing carbon and establishing a border carbon adjustment tax, unless West Virginia Democratic Senator Joe Manchin and his Republican colleagues have an epiphany.
Would America ghosting the CPTPP render China’s entry less haunting? No. Most of the TPP-11 don’t think China could hold to the requirements of the deal without changes that would distort its core principles. They do welcome expansion to include the U.K., South Korea (Japan’s feelings aside), and (China’s feelings aside) Taiwan. Expect U.K. entry.
And, watch Ecuador, which is reversing course on left-leaning protectionism and also applied for CPTPP membership to help it diversify its exports away from oil (it quit OPEC in 2020), bananas, and shrimp.
Expect More Trade Remedies, Export Controls, and Sanctions
There will be no shortage of defensive and offensive trade remedies in 2022.
Defensively, expect no end to the U.S. tariffs on Chinese-origin merchandise under Section 301 of the Trade Act of 1974; rather, expect from U.S. Trade Representative a process for product exclusions from these duties. Expect a four-year extension of President Donald Trump’s Solar Panel safeguards under Section 201 of that Act, which in November the International Trade Commission recommended to President Biden. Expect President Biden to look favorably upon action his Commerce Department may recommend to adjust imports of rare earth magnets using another Trump favourite, Section 232 of the Trade Expansion Act of 1962.
Offensively, expect the Treasury Department to nail yet more Chinese Military Industrial Complex companies, investments by “U.S. persons” in the “publicly traded securities” (including derivatives and global depositary receipts) of which are barred. Especially as to Burma, China, Iran, Russia, and Venezuela, expect the Commerce Department to add firms to its Entity List, to which export transactions by (again) “U.S. persons” are subject to enhanced licencing requirements. Also expect this Commerce Department to identify more Specially Designated Nationals, transactions with whom by persons and businesses in the U.S. are barred.