Opinion: Biden’s lack of trade strategy is hurting California

One year into its four-year term, the Biden administration has no trade strategy but badly needs one. This matters to California because it is a trade leader, has three major Pacific ports, and has deep ties to Asia.

On taking office, Biden’s team indicated that there would be no early consideration of trade agreements, as domestic priorities had first call. The question today is: Is that strategy sustainable?

To understand why it’s not, look at the global scene. In his first major act President, Trump withdrew from the Trans-Pacific Partnership, a 12-nation trade agreement designed by the United States. It lowered trade barriers, contained strong labor and environmental provisions, raised standards for intellectual property protection, barred restrictions on cross-border data flows, and opened Japan’s market for agriculture. The other signatories went ahead without us, and today the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) is a high-functioning trade group where we don’t participate and don’t benefit.

Last year ,15 Pacific nations, including U.S. partners Japan, South Korea, Australia and many in Southeast Asia, signed RCEP, a trade agreement where China holds center stage. RCEP promises to realign regional supply chains, increasing China’s role and leverage. The U.S. was never in those talks, but its absence from both CPTPP and RCEP leaves it outside the key trade frameworks shaping the Asia-Pacific economy.

Then there’s the World Trade Organization (WTO), which has served the U.S. well but needs reform. The Trump administration ignored the WTO, hoping that it would wither. While the U.S. is discussing the reform of its appellate body and rules regarding non-market economies and state-owned enterprises, it is not at the forefront. Leading from the rear, however, won’t produce the results we want.

Other proposed agreements with the UK and India are on a slow boat. India is particularly important because of its size, growth, democratic system and its role as a counterbalance to China. China for its part isn’t waiting: Having sealed RCEP, it wants to join the CPTPP. While it’s unlikely that China could meet CPTPP’s standards for openness, even the prospect of membership has implications. Meanwhile China is pursuing other trade agreements with Japan, Korea and the UAE.

China is already the top trading partner with most Asia-Pacific countries, and as its economic gravity increases, so will its influence. Our own trade strategy with China is built on the Trump administration’s Phase 1 trade agreement, which has failed to deliver.

If you’re not participating in these international processes, you’re not setting standards and don’t have influence. The best strategy to engage China constructively and help our companies compete is through agreements with like-minded partners that shape the rules and set those standards.

The president often says “America is back,” and perhaps it is. But in trade it isn’t, and we’re absent from the field. The administration needs to reconsider its priorities and re-engage. Accelerating talks with the UK and India is one step. Pursuing digital trade agreements or joining the Digital Economic Partnership Agreement that links Asia-Pacific countries Chile, Singapore and New Zealand is another. The first thing the administration needs to do, however, is signal its intent to rejoin the CPTPP.

California’s economy is deeply connected to the Indo-Pacific region and its markets. In 2020, California businesses exported almost $160 billion in goods (not including services) to 227 countries, supporting growth and large numbers of middle-class jobs. To ensure an open trading environment and help our companies compete globally, Washington’s trade policy needs an reset.

Sean Randolph is senior director at the Bay Area Council Economic Institute.