If you look at Russia’s invasion of Ukraine strictly through a security lens, you will miss a lot. NATO expansion played a role in triggering Russian aggression. More important, however, was Russia’s fear of Ukraine leaving its economic orbit. Russia’s repeated efforts to economically coerce Ukraine held less appeal than the inducements offered from the European Union. It was this knowledge that led Putin to feel, according to intelligence analysts, that “he had a closing window of opportunity.”
There is a lesson in this for U.S. foreign policymakers. To attract allies and partners, it is not enough merely to oppose flagrant violations of territorial sovereignty. The United States also needs to be for something — something that is more appealing to the rest of the world than, say, Russian arms or Chinese cash. As Edoardo Saravalle noted recently in Noema, U.S. foreign policy needs to be constructive as well as coercive: “The U.S. bias toward coercion now stymies Washington’s support for Ukraine.”
You know what would be really appealing? If the United States could offer the promise of greater trade and investment with countries in the global South. It would certainly make the open, liberal economic order more appealing for countries if it was, you know, open and liberal.
Readers familiar with the Biden administration’s trade policy to date know where this column is going. That is because the Biden administration’s approach to trade and investment has barely deviated from the Trump administration’s. The Biden team has healed a few festering wounds on sectoral trade issues. Beyond that, however, the administration has sounded almost as economically nationalist as, well, Vladimir Putin:
President Biden at #SOTU: "When we use taxpayers' dollars to rebuild America, we are going to do it by buying American. Buy American products. Support American jobs...Every administration says they’ll do it, but we are actually doing it." https://t.co/MEWOmdMtma pic.twitter.com/viPHcXUbCR— MSNBC (@MSNBC) March 2, 2022
Like the living dead, Biden’s foreign economy policy is lurching forward in an unthinking manner. Biden’s economic nationalism is compromising Biden’s foreign policy initiatives.
Nowhere is this more apparent than the attempt to develop an Indo-Pacific Economic Framework. I noted back in January that the economic component was both vital and missing. A few weeks later, Bob Davis noted in Politico that market access was the one thing that would not be in the economic framework. This is like opening a steakhouse without serving any meat: It doesn’t matter how great the salad bar is without a main course.
Davis also noted that the Biden administration would work out the kinks in this effort over the next few weeks. Fast forward to late March, and nothing has been worked out. The Wall Street Journal’s Yuka Hayashi reports that even Democrats are starting to chafe at the lack of trade liberalization discussions: “Speaking at a Senate Finance Committee meeting Thursday to discuss President Biden’s annual trade policy agenda, several senators, including some Democrats, expressed concerns about the lack of market opening measures such as tariff reduction in the new economic framework the administration is preparing to launch this spring with friendly Asia-Pacific countries.”
The politics behind the Biden administration’s paralysis on trade are understandable: The White House is afraid of alienating some element of their domestic coalition. Unfortunately, this fear has caused way too many White House officials to miss how a more open foreign economic policy would alleviate voters’ greatest concern: inflation. More trade integration would help remove some supply chain stresses, for example.
Similarly, my Washington Post colleague Catherine Rampell is all over how the Biden administration’s reluctance to change the Trump administration’s immigration policies has also contributed to inflation: “They have been so fixated on bad-faith right-wing attacks that they have missed the bigger, and much more serious, immigration-related liability: the millions of immigrants whose absence from the U.S. workforce is putting upward pressure on inflation.” As Rampell notes, more inward migration would be a boon for the service sector and overall economic growth.
For the past 15 months, I have heard Biden White House officials repeat the mantra that they are uninterested in “trade for trade’s sake.” At some point, I hope they get interested in trade for security’s sake, or even trade for inflation’s sake. Otherwise, the administration’s foreign economic policy will go on alienating potential partners and contributing to domestic economic woes.