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Biden's unheralded summit success
Why deals struck at the recent G20 meeting in Rome show what a "foreign policy for the middle class" looks like in practice
President Biden’s recent international summitry in Europe has gotten lost in the shuffle of continued wrangling in Congress over his legislative agenda and close election contests in Virginia, New Jersey, and elsewhere. But he and his administration did make some significant foreign policy progress at these gatherings, especially at the G20 summit in Rome. These agreements have the potential to affect the lives of ordinary Americans for the better – but only if President Biden and his team can explain their benefits in terms that the public can easily understand.
Three main accomplishments stand out:
Agreement to establish a global minimum corporate tax. Building on the work of their finance ministers, the leaders of G20 nations formally agreed that each government would establish a minimum corporate tax rate of fifteen percent. It’s an agreement designed to prevent (or at least slow) the so-called “race to the bottom” when it comes to corporate taxes, where corporations shop around for the lowest possible tax rates and deprive governments of revenues needed to address pressing national problems. Congress still needs to enact this new rate for the United States make good on its G20 commitment, but President Biden has incorporated it into his most recent Build Back Better framework proposal.
An end to U.S.-EU tariff wars. The previous administration placed tariffs on steel and aluminum exports from the European Union, ostensibly to protect American steelworkers and the American steel industry. Europe replied in kind, levying tariffs on American exports like orange juice, whiskey, and motorcycles. The deal struck at the G20 will end existing U.S. tariffs on steel and aluminum imports from the EU and replace them with graduated duties based on historical import levels. In exchange, the EU will suspend its retaliatory tariffs against American goods and both sides will halt the cases they’ve brought against one another in the World Trade Organization. Along with last June’s agreement to put disputes over large commercial airliners on the back burner, the trade relationship between the United States and European Union now stands on a stronger footing.
A multifaceted U.S.-EU agreement on aluminum and steel production. The United States and European Union didn’t just wind down the tariff war started by the previous administration; they forged a new agreement on aluminum and steel production that takes aim at both climate change and China. They committed to negotiate new arrangements on aluminum and steel production that “that take account of both global non-market excess capacity as well as the carbon intensity of these industries.” In other words, the U.S. and EU will impose costs on a carbon-intensive Chinese aluminum and steel industry that floods global markets (U.S. Trade Representative Katherine Tai estimates China “accounts for 60 percent of global steel production”) and undermines its American and European competitors. It’s a deal that kills two birds with one stone, and, while it remains to be fully negotiated and implemented, it represents an important step toward greater U.S.-EU cooperation on global economic problems.
With these deals done, the Biden administration now faces an arguably more difficult challenge: showing the American public how these international agreements will affect their lives and economic prospects for the better. It’s where the rubber of the administration’s proposed “foreign policy for the middle class” hits the proverbial road, a tangible demonstration about how America’s foreign policy and its close relationships with allies can benefit ordinary Americans in their everyday lives. But it won’t mean much if the Biden team can’t connect these policies with concrete improvements either here at home or in America’s global standing.
To ensure that these deals don’t fall through the political cracks, President Biden and his administration will need to actively make the case that they benefit ordinary Americans. That means the administration should do two things when talking about these agreements: keep it simple and put them front and center.
Keep it simple: Agreements like the ones made at Rome are frequently arcane and technical, and for good reason. Washington policy wonks, however, tend to become too enamored with the details and often fail to see the bigger picture of what they propose or what it might mean for ordinary Americans. Few outside the trade policy world (including foreign policy experts!) would be able to tell you what “section 232 duties” are, for instance, without availing themselves of Google. Nor would they be able to discuss the intricacies of the G20’s new global minimum corporate tax in much if any detail.
To counter this tendency toward technocratic jargon, the Biden administration should outline in clear and simple terms what the deals it struck in Rome will do for the American economy and ordinary American workers. It shouldn’t be too hard to explain how the global minimum corporate tax will a) make corporations pay their fair share of taxes, b) generate more revenue for the U.S. Treasury, and c) discourage corporations from shipping jobs and operations overseas; indeed, President Biden himself already speaks about it in this way.
Likewise, the end of tariff wars with the European Union will allow American businesses to sell more of their products to other high-wage, industrial economies while helping reduce prices for European imports bought by Americans. If all else fails, the Biden administration can fall back on the fact that it’s ended its predecessor’s foolish war on French wine and other European delicacies.
When it comes to the wider steel and aluminum deal between the United States and EU, the case is a bit trickier. It’s tempting for the Biden administration to lean heavily on the climate angle, but most Americans see climate as a second-tier foreign policy priority in comparison to protecting jobs. While the administration shouldn’t actively downplay the climate angle of this deal, it should emphasize instead how it confronts unfair Chinese trade practices and ensures American (and European) industry can compete on a level playing field. The agreement has the added benefit of shoring up strategic ties between the United States and Europe after some recent turbulence as well, all while reducing the intensity of carbon use in the steel and aluminum industry.
Some concrete points Biden and his team could make about these deals include:
The international corporate tax deal makes sure that rich companies pay their fair share in taxes to support the public investments in infrastructure, technology and education that ensure American prosperity and discourages them from shipping jobs overseas.
A cease-fire in the trade war with our European allies will help bring down the prices of some imported goods at a time when supply chains remain out of whack due to the pandemic - and that’ll help keep inflation in check at home, too.
Thanks to the aluminum and steel agreement, American aluminum and steelworkers won’t have to compete as much with a Chinese aluminum and steel industry that undercuts its American and European rivals by flooding the global market with cheap and dirty products.
Put these deals front and center: It’s understandable why the Biden administration has put climate front and center. For starters, he went straight from the G20 summit in Rome to the COP26 global climate summit in Glasgow. The issue remains vital in and of itself, for another. Democrats, moreover, see climate change as a more important issue than independents or Republicans.
But the Biden administration does itself a disservice when it elevates climate issues as far over and above other policy moves and issue areas as it does right now. It wouldn’t be unreasonable for even marginally informed citizens to conclude that, contrary to the assertions of some climate activists, the Biden administration cares more about climate change than any other issue.
However, the administration’s problem runs deeper than that. If Americans see climate as its overriding priority, that’s in part because the Biden administration appears reluctant to set priorities in general. Indeed, its own description of the G20 summit amounts to a smorgasbord of priorities and concerns including “the climate crisis, global health and pandemic preparedness, and the global economic recovery.” It’s not hard to see how technical deals on taxation or steel and aluminum production might get lost in the forest of issues the Biden team lays out.
Despite discouraging news on the domestic political front, President Biden returned from his overseas travel with tangible diplomatic agreements that could benefit ordinary Americans in ways his predecessor could only bluster about. It’s a golden opportunity to latch up foreign and domestic policy from the outside in rather than from the inside out – making public investments at home to be strong abroad – as Secretary of State Antony Blinken did in a speech last August.
It’s now up to Biden and his administration to make that case to the American public.