Background

The Biden administration’s first national security strategy squarely positions China as the United States’ top competitor and outlines trade, economic, and other approaches the U.S. will use to manage that competition.

China is “the only competitor with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military, and technological power to do it,” the strategy states. China, like other autocratic governments, often abuses the global economic order by
weaponizing its interconnectivity and its strengths. Examples include arbitrarily raising costs by
withholding the movement of key goods, leveraging access to its market and control of global digital infrastructure for coercive purposes, and seeking to make the world more dependent on it while reducing its own dependence on the world. At the same time, China is “central to the global economy and has a significant impact on shared challenges.”

To cope with China’s “emergence as both our most consequential competitor and one of our largest trading partners,” as well as other global challenges, the strategy asserts that the U.S. needs to adjust its idea of globalization. This entails moving beyond traditional free trade agreements and longstanding trade rules that “were designed to privilege corporate mobility over workers and the environment” and “fail to cover the frontiers of the modern economy.”

Instead, the U.S. is pursuing what National Security Advisor Jake Sullivan called “a more fair and agile set of economic relationships.” These include the Indo-Pacific Economic Framework and the Americas Partnership for Economic Prosperity, which are focused on “encouraging robust trade, countering anticompetitive practices, bringing worker voices to the decision-making table, and ensuring high labor and environmental standards.” The U.S. is also working to advance related initiatives, such as a global minimum corporate tax, updated global trade rules, and a partnership to improve infrastructure in low- and middle-income countries, to “prove democracies can deliver for their people and the world” and “build robust and durable supply chains so that countries cannot use economic warfare to coerce others.”

Other trade-related priorities mentioned in the strategy include (1) seeking new export opportunities, (2) pushing back on abuses by non-market economies, (3) enforcing rules against unfair trade and labor practices (intellectual property theft, forced labor, etc.), (4) modernizing and strengthening export control and investment screening mechanisms, and (5) addressing outbound investments in sensitive technologies.

Copyright © 2022 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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