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Hello from DC, where everyone is transfixed by the Democratic primaries. Tempers have run high in the past couple of televised debates, with notable spats between Minnesota Senator Amy Klobuchar and former South Bend mayor Pete Buttigieg. Billionaire Michael Bloomberg has come under heavy fire from all the candidates, who are chaffing at his late entry to the race, powered by sheer cash. But from the sound and fury, there’s a clear frontrunner emerging: Bernie Sanders. Today’s note takes a look at how US trade policy might change under the firebrand from Vermont.
In our Tall Tales of Trade, we look at one thing notable for its absence from the EU’s mandate for the post-Brexit trade deal with the UK, while our chart of the day highlights US military sales to India — particularly aircraft.
Would Sanders rewrite all US trade deals?
“If you think the last four years have been chaotic, divisive, toxic, exhausting, imagine spending the better part of 2020 with Bernie Sanders versus Donald Trump,” said Pete Buttigieg during this week’s televised Democratic primary debate.
The former mayor of South Bend, Indiana, might have a point: the two men are from different planets on most issues. But on trade, they’re not really so different.
A Bernie Sanders nomination is far from a dead cert. But he has become the man to beat: he has charged ahead in the national polls, winning solid victories in New Hampshire and Nevada, and has begun attracting stinging attacks from his fellow Democratic candidates during televised debates as they try to halt the train.
Trade officials and multinational corporations stricken by Trump’s tariffs and unpredictable policymaking will need to prepare for the possibility of a post-Trump world — and that could be a Bernie Sanders world.
So what does that look like? At a glance, Trump and Sanders have a lot in common. They both take protectionist stances, resent globalisation and talk big games on the need to protect American manufacturing. Both tout “Buy American” policies, which Sanders says he would “expand” to boost the number of jobs in the US. Sanders says he would also sign an executive order blocking any corporations which “outsource American jobs” from gaining federal contracts, as well as increasing taxes on companies moving factories abroad by stopping them from expensing their moving costs.
Some good news for multinational corporations, which generally like certainty, is that Sanders has consistently hated most trade deals on similar grounds since . . . always. If Trump positions himself as the consummate dealmaker, Sanders is the consummate deal hater — at least on trade. He generally votes against trade agreements when they pass through Congress, including the recent USMCA bill, which he argued did not do enough to protect well-paid American jobs (he said multinational corporations would now move to Mexico, where labour is cheaper), or the environment. In 1993 he went on a protest march against its predecessor bill, Nafta. In 2000, he voted against normalising trade relations with China, and has railed against the Trans-Pacific Partnership.
Stinging attacks: Elizabeth Warren and Bernie Sanders at a televised Democratic debate in South Carolina this week © AP
The Vermont senator might be consistent and predictable, but that is not to say businesses could expect no change to Trump-era deals. Sanders’ campaign website promises to “fundamentally rewrite all of our trade deals”, which could mean another presidency where tough trade negotiations make big headlines.
But Sanders has a slightly more nuanced, less nationalistic view than Trump, who tends to approach trade and foreign policy by asking what America stands to financially gain from any one deal or agreement, much as if he were running a business. Sanders places greater value in multilateral relationships and friendships than Trump, even if he calls for similar protectionism.
Moreover, the two men blame different trade villains. Trump tends to blame other nation states for any problems, suggesting that US trade negotiators were hoodwinked and had “bad deals” thrust on them. Sanders points the finger at multinationals and their lobbyists — who, he says, have moved factories and jobs overseas, lowering the cost of their workforce at the expense of working Americans.
Whether Sanders will cause more or less geopolitical friction with his trade policy than the current president is tough to say. Any negotiations by President Sanders are likely to insist on labour and environmental protections, as well as championing human rights and enforcing anti-corruption and anti-tax avoidance measures (the policies of Senator Elizabeth Warren are similar). Such economic policing from Washington will not be welcomed everywhere.
But some of Sanders’ views might find sympathy elsewhere in the world. For example, he says that new trade deals should not lead to an increase in the cost of medicines. In the impending US-UK trade negotiations, where drug pricing is a sticking point, he is likely to make fast friends with the Brits.
Charted waters
US president Donald Trump called for India to strengthen its ties with America during his recent two-day visit to the south-Asian country, urging it to look to the US as its “premier defence partner”.
In recent years, US defence and military sales relationships with India have been burgeoning, now reaching almost $20bn. In early February, India announced it would purchase $2.4bn in Sikorsky naval helicopters from the US. These military acquisitions partly stem from India’s growing apprehensions about China.
Tall Tales of Trade
The competing EU and UK mandates for the post-Brexit trade deal talks have let the Brexiters choose between their contradictory characterisations of the EU: either a tottering edifice about to collapse, or a malign superstate bent on crushing all opposition, writes Alan Beattie. They’ve gone for the latter this time, given that Brussels has put in some pretty stiff demands about level playing field conditions.
One thing notable for its absence from the EU mandate, though, is a demand that the UK return the Parthenon Marbles (usually known, with a nod to the 19th-century purloining which eventually landed them in the British Museum, as the Elgin Marbles). There was just a measured reference in paragraph 33 that the parties “consistently with Union rules, address issues relating to the return or restitution of unlawfully removed cultural objects to their countries of origin”. This is basically about stolen artefacts turning up in London auction houses. It’s as if the overheated “The Greeks Want Our Marbles” story, complete with a once semi-serious historian recounting an imaginary conversation with pieces of stone, was nonsense for domestic consumption.
Elgin Marbles: notable for their absence from the EU mandate © Alamy
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Source: Economy - ft.com
