Biden Reassesses Long-standing Trade Agreements: A Shift Towards Industrial Revival

Bamigboye Akinola Author and Columnist
14,047 views 3 mins 0 Comments
Biden Reassesses Long-standing Trade Agreements: A Shift Towards Industrial Revival

In a significant departure from decades-long policies, President Joe Biden has pivoted away from free-trade agreements to focus on rejuvenating the American industrial sector. This move has stirred reactions from former colleagues in the Clinton and Obama administrations, notable free traders who view this shift with growing concern.

Larry Summers, a former Treasury Secretary, last month voiced his apprehension over what he termed “manufacturing-centered economic nationalism,” deeming the president’s stance “increasingly dangerous.”

Coming from the Clinton administration, I see Biden’s move in a positive light. Both Clinton and Obama were champions of globalization. As Clinton remarked in 2000, globalization was likened to a “force of nature, like wind or water,” something unstoppable.

Yet, globalization isn’t a one-way street. It functions based on pre-agreed regulations determining protections and benefits. While U.S. companies enjoy safeguarded intellectual property rights and Wall Street enjoys unrestricted fund transfers with trading partners, American workers haven’t enjoyed such employment or pay securities.

The principle of “comparative advantage” argues that countries benefit from trade by capitalizing on what each does best. But, what if a nation’s advantage is tied to unsafe or exploitative labor practices? Shouldn’t the U.S. demand better worker rights from its trade partners?

Such questions challenge the traditional perspective of globalization. The rules born out of trade agreements often mirror a nation’s internal politics and power dynamics.

The Clinton administration was a strong advocate for the North American Free Trade Agreement (NAFTA). Following its adoption, we saw the inception of the World Trade Organization (WTO) and the welcoming of China into the global trading community. From 1989 to 2011, trade’s share in the U.S. economy grew from 19% to 31%. However, by 2021, this influence receded to 25%, thanks to the pandemic and Trump’s trade standoff with China.

Business moguls, Wall Street brokers, and others in the financial sector have largely benefited from such trade agreements. On the other hand, the stock market has shown buoyancy towards free trade, with the Dow Jones Industrial Average soaring from 3,799 points in 1993 to over 11,000 by 2001. Although middle and lower-class U.S. consumers have benefited from cheaper goods produced abroad, these agreements have also caused significant job losses and wage stagnation.

Between 2000 and 2017, the U.S. lost five million manufacturing jobs. Imports, especially from China, accounted for half of this decline, while automation was responsible for the rest. This job hemorrhage played a pivotal role in the 2016 election, leading to Donald Trump’s victory. Many analysts assert that if the U.S. had imported only half of China’s exports, Hillary Clinton might have secured the presidency, highlighting the influence of these four critical states: Michigan, Wisconsin, Pennsylvania, and North Carolina.

In conclusion, the impact of globalization, whether positive or negative, hinges on the distribution of its gains and losses. It’s evident that U.S. workers have borne a disproportionate burden for many years, and it’s high time this balance was redressed.