In a recent address to the Brookings Institution, National Security Advisor Jake Sullivan blamed the postwar model of globalization for a litany of problems and said the Biden administration is instead pursuing “a modern industrial and innovation strategy” that addresses today’s challenges. “The game is not the same,” he said. “Our international economic policy has to adapt to the world as it is, so we can build the world that we want.”
Sullivan said “decades of liberalization” have yielded a number of negative consequences that together threaten no less than American democracy itself. An “oversimplified” focus on market efficiency has resulted in “entire supply chains of strategic goods – along with the industries and jobs that made them” moving overseas. The actions of China and Russia have supposedly disproved “the premise that economic integration would make nations more responsible and open, and that the global order would be more peaceful and cooperative” (though Sullivan chose to ignore extensive and widely documented evidence to the contrary in Europe, Africa, South America, and elsewhere). The U.S. and its allies have found themselves economically dependent on autocratic countries that have sought to exploit those situations for economic or geopolitical leverage. And the gains of trade have not been broadly shared as the middle class has “lost ground” and manufacturing communities have been “hollowed out.”
Sullivan laid out a number of ways the Biden administration is seeking to reverse these trends, including developing a new approach to trade that is not centered on further reducing U.S. tariff rates that are already low, both historically and relative to other countries. Today the U.S. is facing challenges like creating diversified and resilient supply chains, modernizing public and private investment for sustainable economic growth, creating good jobs, tackling corruption, reforming corporate taxation, and enhancing protections for labor and the environment, Sullivan said, and to address these challenges “the traditional model doesn’t cut it.” The White House believes that the Indo-Pacific Economic Framework, the Americas Partnership for Economic Prosperity, and similar initiatives are structured to better pursue these goals.
Sullivan made clear that the administration’s trade policy is designed in no small part to counter the challenges posed by China in particular. However, he emphasized that the U.S. is “not cutting off trade” with China, noting among other things that “it isn’t feasible or desirable to build everything domestically.”
Instead, Sullivan said in echoing the recent comments of other senior administration officials, what the U.S. wants is “de-risking and diversifying” from China. For example, the U.S. is working with “like-minded partners” to decrease the reliance on China of global supply chains for key products like semiconductors and critical minerals. The U.S. will also continue to impose “tailored measures” such as “narrowly focused” export controls, enhanced screening of foreign investments in critical areas, and addressing outbound investments in sensitive technologies. These efforts are all “premised on straightforward national security concerns,” Sullivan said, and are not aimed at decoupling the U.S. from China.
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