International economic challenges for the President-elect: Trade, China, the dollar, and pandemic recovery

Adam S. Posen discussed the policy challenges facing the incoming Biden administration in the international economic realm at a virtual event held by the Research Institute of Economy, Trade and Industry (RIETI) and moderated by WatanabeTetsuya, vice president of RIETI.

The policy challenges for the Biden administration in the international sphere will be defined on the one hand by the secular stagnation of the advanced economies and on the other by the political constraints of a divided US society and legislature. This gives quite a bit of clarity on macroeconomic and financial issues in terms of desired outcomes but little room to pursue them in the near-term. The approach to China and to major allies such as Japan and the European Union is likely to be importantly different from the Trump administration; the inability to make credible lasting commitments in international agreements, however, will remain. The US government remains ill-prepared to reckon with a world economy moving on without the United States. The future of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and agreements on technology oversight could be helpful foreign pressure on US policymakers, as could efforts to address climate change. Japan should continue to pursue principled plurilateralism as it has for the most part in recent years as a constructive pressure on the Biden administration.