Steptoe Lawyers Say Biden Will Continue Decoupling Push, Section 232 on Europe May Not Be Lifted

Steptoe & Johnson trade lawyers say that although President-elect Joe Biden will be interested in repairing strained relationships with the European Union, and will be less inclined to use unconventional trade tools like Section 232 and the International Emergency Economic Powers Act, the trend of policymakers pushing reshoring and decoupling won't abate.

“Everyone needs to be looking carefully at their supply chains,” Jeff Weiss, a partner at Steptoe & Johnson, said during a webinar broadcast Nov. 17 on trade policy during a Biden administration. Weiss said curbing imports of pharmaceuticals and protective gear will be first in line, and industrial policy to boost semiconductor chip manufacturing also will be a top priority. He said he expects the Biden administration to continue actions to shape the telecommunications supply chain, produce critical minerals domestically (see 2010010048) and restrict imports from adversaries for the bulk power system (see 2005040040).

“Despite the fact that there’s similarity on the substance,” he said, he expects the administration to work through rulemaking or legislation, rather than through IEEPA or executive orders. “If things are stalled, they might eventually come around to that approach,” he said.

Steptoe partner Darryl Nirenberg said that before President Donald Trump leaves office, there could be attempts to move political appointees who are hawkish on China into career spots, and crackdowns on Chinese labor practices outside Xinjiang. He said that Sen. Marco Rubio, R-Fla., is trying to get unanimous consent to pass the Uighur Forced Labor Act, which would create the presumption that any product imported from Xinjiang is made with forced labor, and therefore inadmissible. He said it's also possible the Uighur Forced Labor Act, which passed the House, could be attached to must-pass legislation in December.

Next year, according to Steptoe partner Eric Emerson, Biden may seek to renew Trade Promotion Authority sooner than people expect because of the need to respond to the new Asian nation trade agreement, the Regional Comprehensive Economic Partnership, or RCEP. “There will be a battle royale over U.S. trade policy,” Emerson said. He said that Section 232 reform may be part of the next TPA, or it could limit the president's authority to negotiate agreements outside TPA, so there could not be something like a Japan mini-deal in the future.

The lawyers are quite pessimistic about re-animating the appellate body at the World Trade Organization. They say that any move to do so by the U.S. without securing changes to WTO rules that tackle Chinese trade distortions would be too politically costly for Biden -- and that no such changes can be achieved in a consensus-oriented body. Weiss said it would be difficult for Biden to resolve the appellate body impasse in a first term. Emerson added, “Maybe not in a second or third or fourth administration, either.”

In Europe, Emerson said, while Biden “might want to smooth the waters with some of our trading partners” by removing Section 232 tariffs on steel and aluminum, the steel tariffs are quite popular with steel producers, so it would be politically difficult. “If there is to be any relaxation on steel and aluminum tariffs, it will only be in exchange for something else,” he said, such as more trade remedies or managed trade. The European Union, however, has been consistent in saying it will not agree to quotas, as South Korea and Brazil did.