NEW WORLD … WHAT? This weekend — with Biden’s visit to Kyiv and Washington’s claim that China is considering lethal aid for Russia — was a stark reminder that the world has entered a new era of geopolitics and trade. Gone is the end-of-history optimism that liberal democracy and capitalism would sweep the world, replaced by rising tides of protectionism, nationalism, and even renewed, great power competition and — potentially — conflict. The belief that we’ve entered a new age in global politics has become remarkably mainstream in Washington – even as some indicators, like U.S.-China trade numbers, mitigate against the narrative. Or to put it as Senate Intelligence Committee ranking member Marco Rubio put it during a Foreign Relations hearing earlier this month: “At the end of the Cold War … the gamble at the time was if we create this international economic order led by the U.S. and the West built on the global commitment to free trade, the notion [was] that trade and commerce would bind nations together … and it would lead to more wealth and prosperity, that it would lead to democracy and freedom — domestic changes in many countries — and it would ultimately ensure peace.” “Our foreign policy has been built around that,” he added. “Even though it’s an economic theory it basically has been what we’ve built our foreign policy on.” “I think it’s fair to say that gamble failed,” Rubio concluded, calling China and Russia “more authoritarian” and “more violent” than at the end of the last Cold War. “And we’re now entering a new era.” The new conventional wisdom: Rubio’s remarks at the Foreign Relations Committee that day might as well have ripped from the Biden team’s own comments to POLITICO last year about the neoliberal order being torn apart by Covid, China’s rise and Russia’s war. Biden’s trade chief Katherine Tai put it most bluntly when she told the world’s one-percenters at Davos that the administration is seeking a “new world order” in global trade and economics. But “what is that new era?” Rubio asked Deputy Secretary of State Wendy Sherman, in a rare display of earnest theorizing on Capitol Hill. That’s the big question that looms for Western policymakers as they examine the wreckage of a system that many of them helped build. The administration has a line for it. Sherman recited it that day, saying Biden would seek to “align” with allies, “invest” in domestic industry and “compete” with China. That three-pronged approach is the closest we have to a vision for a new world order from the White House, and they’ve had successes in implementing it. The Inflation Reduction Act and CHIPS bills, along with the escalating tech campaign against China, are prime examples. But for Rubio and other lawmakers, that vision leaves something to be desired. “Align, invest, compete” sounds more like an implementation strategy for some larger vision — not a vision for a new world order itself. Certainly, it doesn’t answer what institutions should replace the hollow edifices of the globalization era – like the WTO – or what economic perspective should replace free trade. But so far, either our leading policymakers don’t know, or they aren’t ready to admit the answer. And that includes Rubio, the Republican who labeled Biden’s team back in 2021 as “polite and orderly caretakers of America's decline.” "I don’t know if the administration has clearly outlined what that new world looks like,” Rubio told me outside the hearing, “but I don't know if anybody else has either.” ADEYEMO WARNS CHINA AGAINST ARMING RUSSIA: After Secretary of State Antony Blinken’s warning over the weekend that China could provide lethal aid to Russia’s military, the Treasury Department is warning that any country that does will face stiff consequences. “When it comes to China or any other country, or any company or individual that's providing material support to Russia is going to include us using all the economic tools at our disposal, including sanctions, but also export controls,” Deputy Secretary Wally Adeyemo told reporters yesterday, adding that the administration is “going directly to Chinese companies and financial institutions and making clear to them that we were prepared to put sanctions in place if they were to provide material support to Russia.” Adeyemo’s comments came as he previewed a speech he is slated to give today at the Council on Foreign Relations, reviewing the administration’s economic campaign against Russia ahead of the unveiling of new sanctions against Kremlin-aligned firms expected later in the week. The Treasury’s international policy lead said that those penalties are making it harder for Russia to rearm with the latest weapons. “Russia is unable to produce precision missiles today because they don't have access to the leading edge semiconductors,” Adeyemo said. “Those are only produced by the United States, Taiwan, South Korea and some of our European allies. They can't go to China to get backfill for this because China can't give them what China doesn't produce. So we've been able to use the multilateral coalition to constrain Russia.” Adeyemo’s speech is slated for 10 a.m. today. You can stream it here. TAI, DOMBROVSKIS TO MEET IN MARCH: Trade chiefs from both sides of the Atlantic, Commissioner for Trade Valdis Dombrovskis and USTR Katherine Tai, will meet again in March, Dombrovskis told a panel on Friday evening at the Munich Security Conference. The two held a bilateral meeting on the margins of the MSC to discuss Washington’s Inflation Reduction Act as well as the global arrangement on steel and aluminum. Mark your agendas: Dombrovskis’ visit to Washington in early March coincides with plans by the U.S. Treasury to release a list of criteria for what qualifies as a free trade agreement, potentially making more countries eligible to receive tax credits under the IRA. Who? Dombrovskis will meet with Treasury Secretary Janet Yellen, Commerce Secretary Gina Raimondo and Tai, along with White House officials. What? A spokesperson for Dombrovskis told POLITICO the visit will take place from March 1-3 and will focus on “the Inflation Reduction Act and boosting transatlantic cooperation on clean tech.” The global steel arrangement will also top the agenda. In a statement, Dombrovskis said that despite “positive results” on the lease of electric cars, “we remain concerned at discriminatory provisions for other sectors.” “We must now use the remaining window of time to negotiate better outcomes for the EU,” he added. “Cooperating on clean tech is the only way forward.” We’re friends, right? At the Friday MSC panel, Tai said the IRA had been written to take “friendshoring” into account, and that the U.S. needed to address European concerns during the implementation phase, including by defining what free trade agreements consist of. “It is about building out those elements where there is space in the implementation to accommodate … the shared values and interests that we and the Europeans have,” Tai said. “We recognize Europe’s concerns but stand by that the United States did not get this wrong … We need Europe to succeed strategically, economically, politically and industrially. Our success is bound together.” WTO reform still AWOL: There’s long been talk of reforming the moribund WTO, and panelists were grilled on how they would proceed. The dispute settlement mechanism was debated, with Ambassador Tai saying the system “has really become extremely activist … to the point where it has, in our view, hampered the negotiation function over the last many, many years.” You can rewatch the panel here. And full rundowns of each conference day are available in the Brussels Playbook MSC Special Edition. FUTURE OF BLACK SEA GRAIN DEAL UP IN THE AIR: One year after Russia’s invasion halted Ukraine’s export of grains through the Black Sea, the future of a U.N.-brokered deal that allowed shipments to resume hangs in the balance. With talks starting again this week, both sides have plenty of complaints and demands. They have until March 19 when the deal comes up for renewal to sort them out — or not. The outcome is not only critical for Ukraine’s farmers but for the 345 million people suffering from hunger around the world. From the world’s bread basket…: Before the war Ukraine’s food exports were enough to feed 400 million people. Every month 5 to 6 million tons of grains and oilseeds were shipped out through the Black Sea. …to zero: Russia’s invasion on Feb. 24 halted Ukraine’s exports completely. Net importers like Egypt, Libya and Lebanon took a direct hit. Others were hit by rising prices, as markets reacted first to the invasion and then to the grain export bans imposed in its wake by countries like India. This created a desperate situation for Ukraine’s farmers, and for its economy, which relies to a huge extent on agricultural exports. The Black Sea grain initiative, brokered by the U.N. and Turkey in July, brought some reprieve, enabling 21.5 million tons of Ukrainian produce to be shipped out onto world markets and helping to ease pressure on prices. Read the full story here. MOVEMENTS: William A. Miller is now director for industrial trade policy for the Office of the U.S. Trade Representative. He most recently was senior policy adviser at the Commerce Department.
| 
Comments
Post a Comment