When it comes to trade agreements, trade officials must address two big questions: What should those agreements say? And with whom should they be negotiated?
In terms of what issues trade agreements should cover, the modern version of trade agreements emerged in the 1930s, and these agreements have always been about more than just tariffs. Early trade agreements recognized that domestic taxes and regulations could also be used as a means of protectionism, and they established obligations to address this problem. But since the early 1990s, when the North American Free Trade Agreement (NAFTA) and the WTO were established, the scope of trade agreements has expanded considerably. The question for trade officials today is, what is the proper scope of these agreements? In other words, what policy areas should be included?
Of the wide range of options, each potential issue has appeal for one interest group or another and generates opposition from other interest groups. The main substantive policy areas that have been included in trade agreements are tariff liberalization (the scope of which is affected by rules of origin); the liberalization of trade in services; opening government procurement to foreign competition; regulatory trade barriers, including the regulatory process; digital trade; intellectual property; investment protection (and investor‐state dispute settlement); labor; environment (including climate change); competition policy; corruption; currency practices; gender rights; and the rights of indigenous peoples. Sometimes drawing the line as to what belongs in a trade agreement and what does not is difficult, but strong arguments exist for a traditional focus on protectionist measures, with other issues addressed by specialized treaties and international organizations.1
Beyond substantive policy, issues also arise related to governance in trade agreements. Examples include the enforceability of the dispute settlement process (e.g., whether panels can be blocked); the role of monitoring and oversight, through regular committees or occasional review under a “sunset clause”; and the process for withdrawal by a party.
With all these issues in the conversation, designing an agreement that the negotiating governments can support and that can also secure domestic ratification is a challenge. The balance needs to be crafted carefully, and it may change over time, depending on the political balance at a given moment (such as which parties have control over the different branches of the U.S. government).
A Democratic president is likely to push for rules that certain nongovernmental organizations on the left prefer (e.g., the environment and labor) rather than for those sought by business groups (e.g., intellectual property and investor‐state dispute settlement). If the Republicans keep control of the Senate after the 2020 election, the balance a Biden administration tries to draw may need to shift a bit toward the business side. If the Democrats take over the Senate, the calculation will be different.
In addition to decisions about what should be in trade agreements, there is also the question of whom to negotiate with. A Biden administration would have many options. Rejoining the Trans‐Pacific Partnership (TPP), now in a slightly different form after some revisions by the other parties, is an obvious possibility that many people, including Biden himself, have suggested.2 Doing so would require some degree of renegotiation, but the other TPP parties would likely welcome the United States back in. Reviving negotiations with the European Union, which the Obama administration undertook as the Transatlantic Trade and Investment Partnership (TTIP), could also make sense. But these large‐scale negotiations are challenging and could run into hurdles, which they did the first time around. Perhaps a one‐on‐one negotiation with an eager United Kingdom would be easier. This type of smaller‐scale negotiation could also work with New Zealand, which is looking to ensure that it does not become too dependent on China. And Japan presents an interesting case because the Trump administration has negotiated a partial deal already; that deal could be expanded (or folded back into the TPP). The Trump administration has mentioned several other governments as trade‐negotiating candidates as well, including India, Kenya (where free trade agreement negotiations are just starting up), and Switzerland. (Of course, China is the big trading partner out there and is addressed separately later in this paper.)
For the Trump administration, a key consideration has been a preference for bilateral deals over those with multiple partners. But that approach has always been more of an idiosyncratic preference than an evidence‐based view, and a Biden administration should be more practical about this issue. It should evaluate all its options and focus on the negotiations that offer the most value in terms of economic benefits and mending relations with allies.