World braces for outcome as dust settles on US election

November 09, 2020 | 10:00
The outcome of last week’s messy US election is set to have major knock-on effects across the global economy whatever occurs over the next presidential term. How could the result alter the country’s stance on trade, China, and the climate crisis?
1517 p6 world braces for outcome as dust settles on us election
Even if a new US president is installed, it would take some time for policy in regards to the trade dispute with China to alter widely, photo AFP

As New York and the east coast began to head to bed on Friday night, citizens remained unsure as to who would be US president for the next four years.

Democratic candidate and former vice-president Joe Biden was leading the electoral college vote, inching towards the 270 votes required to move into the White House. Americans were urged to be patient as around 100 million of them took part by mail before November 3, meaning longer was needed to count the votes. In Georgia, the margin was so narrow that the state has already declared that a recount will take place later this month.

Just like in 2000, when it took a month-long series of legal battles for a winner to be officially declared, millions of votes were still uncounted as polls closed on official election day this time around – but that did not stop both President Donald Trump and his opposite number claiming victory.

While controversies are ironed out, nations worldwide having to contend with an increasingly-fraught pandemic and economic downturns are gritting their collective teeth in the hopes of a satisfying conclusion, with both Trump and Biden pursuing wildly different world-views across many issues.

International relations experts believe that the two candidates will offer starkly polarising answers across almost all major foreign policy issues, particularly in regards to climate change and public health. Since becoming president in 2016, Trump has stood firm with an “America first” stance while showing hostility towards multilateral organisations, as demonstrated in his decisions to withdraw from the World Health Organization (WHO) and the UN Human Rights Council, as well as a threat to withdraw from NATO.

The same can be said for climate change with Trump removing the US from the Paris Agreement, calling it “one of the greatest disasters of all time”. Biden, conversely, has voiced support for renewing US support for NATO and continuing WHO membership, while declaring that he would rejoin the Paris climate accord “on day one”.

On the other hand, Edward Alden, professor at Western Washington University and writing for foriegnpolicy.com, believes that altering US relations with others will not be near the top of Biden’s wishlist should he be inaugurated as president in January. For example, Biden has previously stated that he would not enter into any new trade agreements until major investments have been made domestically, according to Alden.

“Don’t expect a Biden-led US to join the Comprehensive Agreement for Trans-Pacific Partnership (CPTPP), restart talks on a new agreement with the EU, or pursue trade deals elsewhere anytime soon, if ever,” he said.

However, Biden also said last year that the US should negotiate pieces of the CPTPP in order to review concerns over labour and the environmental. Vietnamese economist Nguyen Tri Hieu added that under Biden, the US might consider rejoining the formerly-named TPP, which the Trump administration withdrew from in 2017.

Hieu said that should the US eventually rejoin the partnership, Vietnam would benefit from lower tariffs in major export categories and would see exports to the country grow even faster.

Tariff trouble

A Biden presidency may promise little breathing space in the country’s trade dispute with China. As well as calling for stricter trade enforcement, Democratic senators announced a $350 billion spending plan last month to address “the clear and present threat China poses to our economic prosperity.”

If anything, Prof. Alden added, Biden’s plans may likely make trade conflicts more complex, at least in the short term. “His showcase economic proposals include preferential treatment for US-made goods, a long list of subsidies to domestic industries, and a ban on foreign companies from government procurement. These are exactly the kinds of protectionist practices that past trade agreements have sought to contain,” he explained.

The Biden plan calls for inundating US corporations with federal support to repatriate important supply chains in sectors such as medical equipment, semiconductors, and communications technology. This could signify an escalating subsidies dispute, not just with China but also with close US allies.

Nevertheless, China remains the biggest foreign policy risk facing the US, according to Liz Economy, a senior fellow at Stanford University’s Council on Foreign Relations. However, the two candidates have competing views on how to confront the situation.

“Significant China-related policy shifts in a Biden administration may include a reestablishment of bilateral US-China dialogue and exploring areas of common purpose in order to avoid a spiral into a new cold war,” she explained.

As president, Trump has waged a trade war with China, increased scrutiny of Chinese companies doing business in the US, and taken aim at popular companies like TikTok. As a result, capital flows between the two have dropped to a near-decade low, according to Rhodium Group.

If Biden were to win the White House, the Democratic candidate says he too will be tough on China. What is unclear, according to foreign policy experts, is whether he will remove Trump’s nearly $400 billion tariffs on Chinese goods, which Biden has called “self-defeating.”

Surging trade

Other Vietnamese experts are divided on how the domestic economy can benefit depending on the which side is victorious.

Economist Le Dang Doanh said that a victory for Trump may favour Vietnam, as the taxes he has placed on China in recent times has allowed the country to increase exports to the US and triggered a wave of multinationals shifting their factories to Vietnam as they diversify their supply chains.

“If Trump stays in place for another term, the policies will likely continue, creating a knock-on effect for Vietnam with potential added benefits in its trade relations with the US,” Doanh added.

The production shift from China has so far seen Apple begin assembling its wireless AirPod Pro in Vietnam, while the world’s largest contract manufacturer Foxconn confirmed that Vietnam is its largest manufacturing hub in Southeast Asia.

Meanwhile another economist, Can Van Luc, said that Trump’s administration has been focusing on promoting diplomatic relationships with India and within the Asia-Pacific region, including Vietnam. The visit of US Secretary of State Mike Pompeo just over a week ago was one such example of the administration being strongly committed to strengthening bilateral trade ties, Luc added.

Vietnam has recorded a large trade surplus with the US, which has risen further in the past year. That surplus is in part a reflection of the supply chain advantages Vietnam has mustered due to multinationals diversifying in order to circumvent the States’ higher tariffs on Chinese-made goods.

Vietnam has fewer reasons to be concerned with the actual result of the presidential election when ranked with other Asian nations, according to Asia Times. President Trump mostly maintained policy on Vietnam that was established by Barack Obama, who considered the country as a key ally in the region and a rising economic power, it said.

In addition, under the current administration, US-Vietnam trade has surged, while the two sides have also explored the possibility of upgrading formal relations towards a strategic partnership in recent times.

“We expect a bumpy period as US election results are finalised, but also remain optimistic about the eventual outcome,” said Chad Ovel, vice chairman of the American Chamber of Commerce in Ho Chi Minh City. “As we celebrate 25 years of diplomatic relations, the US-Vietnam partnership is arguably at its strongest level ever, with growing trade and investment ties. Whoever wins the election will continue to seek fair, transparent, predictable policies and opportunities for US exports to promote prosperity for both the US and Vietnam.”

By Quang Bao

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional