Forecast for US Industrial Policy under Biden Administration and Korea’s Response
|Author||Moon, Jongchol||Date||2020.11.02||Issue No|
Joe Biden’s election foreshadows a relaxation of the tense trade environment of the outgoing Trump administration, but with no guarantees.
● On compliance with World Trade Organization regulations and multilateral negotiations, the Biden administration is expected to have a more flexible response than that of Trump.
● Trade policy, however, will be premised on strengthening ties with the US, making it difficult to separate trade from politics.
● Furthermore, the Biden administration’s attitude toward environmental and labor issues are considered less business-friendly, and thus higher corporate tax rates could ensue.
Once the Biden administration assumes office, improved relations with the WTO, stronger checks on China, and stricter environmental and labor standards for imports and exports can be expected.
● While the excessive use of trade remedies could decrease, business categories where trade union interests are highly involved could continue to suffer.
● Biden’s policies could restrict imports in business categories impacted by the environment or where labor conditions are a problem.
● In Korea-China relations, Seoul might be forced to choose sides between Beijing and Washington.
● Until investment in the US recovers, Washington is highly unlikely to seek a new trade agreement.
Emphasis is needed on stronger checks on China and the localization of supply chains.
● The US-China trade conflict is likely to persist
● The US will expect Korean cooperation in digital and cutting-edge technologies and the building of reliable supply chains.
● The ultimate goal of localizing supply chains is to establish reliable supply chains
The forthcoming inauguration of the Biden administration requires the formulation of policy directions with the following points in mind:
● Prudent judgment must be based on precise calculation of gains and losses in relations with the US and China.
● Preparation is needed for reinforced environmental and labor standards for imports and exports.
● The building of trust in relations with the US is required to seek opportunities to participate in supply chains in America.