Joe Biden
U.S. President Joe Biden speaks during a brief appearance at the White House in Washington, U.S., January 25, 2021. REUTERS/Kevin Lamarque

Incoming U.S. president Joe Biden is tasked with resetting his country’s geopolitical relations as outgoing president Donald Trump leaves behind a wake of chaos. While Trump’s imposition of tariffs and sanctions contributed to many viewing him as an aggressor, Biden is expected to remain firm in his handling of geopolitical relations, but operate more diplomatically than his predecessor, lawyers say.

Rod Hunter, a partner at Baker McKenzie and former Special Assistant to the President for National Security Affairs says that under the Biden administration, businesses in both Asia and the U.S. can expect “more predictable policymaking.”

It appears the impact is already being felt. In mid-January, the details of Biden’s economic relief American Rescue Plan saw Asian shares rise after a late Wall Street dip, Reuters reported.

There is speculation that under Biden’s leadership, the U.S. may rene-gotiate an Asia-Pacific focused trade deal, deepening ties, while foreign policy expert Kurt Campbell is expected to step into the newly created role of Asia tsar, further illustrating the significance Biden places on better managing Asia relations during his administration.

But Baker McKenzie’s Hunter, who expects Biden’s leadership to attempt to return to U.S. foreign policy and trade policies of prior administrations and reject the “policy by tweet” approach, does expect the trade and security concerns identified by the Trump administration to “constrain the opportunity for cooperation with China.”

While there will be room for China and the U.S. to collaborate on matters such as climate change “It is unlikely that there will be a quick change of direction on trade policy regarding China,” says Hunter.

Dean Collins, a Partner at Dechert Singapore, says that while Biden may look for opportunities to reduce tensions, abrupt changes are unlikely.

“Biden has emphasised a desire to take a multilateral approach to trade and global affairs. However, we anticipate continued trade and foreign investment regulation efforts limiting cross-border China-related M&A activities,” he says.

Kerry Contini, international trade partner in Baker McKenzie’s Washington, DC office, says sanctions under Biden’s administration are still likely, although these may be handed out “less aggressively and with less heated rhetoric.”

Contini expects these to be more deliberate, targeting companies deter-mined by the U.S. government to be involved in forced labour or other human rights abuses in the Muslim-majority Xinjiang region, Hong Kong, or else-where in China.

“We will also likely see further additions of Chinese entities to the Entity List based on civil-military fusion concerns shared by the Trump and Biden Administrations,” Contini says.

But it is a possibility, says Contini, that some of the Trump Administration’s actions that target China that the Biden Administration consider too aggressive may be relaxed — “particularly those imposed by Executive Order.”

There are questions about “whether or how strongly” Biden’s government will impose November 2019 sanctions that prohibit investments in Chinese companies determined to be connected to the Chinese military, Contini adds.

Born out of the circumstances brought about the pandemic, another key focus for the Biden administration that concerns Asia will be its focus on supply chains to ensure domestic supplies of personal protective equipment and other critical products.

“I expect the Biden Administration to continue the trend of focusing on supply chains, including intervening when deemed necessary to avoid shortages of critical supplies,” says Contini, citing last July when the Biden campaign published a plan to rebuild U.S. supply chains in order to avoid the country facing future shortages of equipment including medical supplies, semiconductors, key electronics and telecommunications infrastructure.

“The basic premise of the plan is that the United States and its allies should not be dependent on supplies of critical equipment from countries like China and Russia,” says Contini, adding that Biden has outlined the possibility of a “carrot and stick” approach to redirect critical supply chains away from China and Russia through import restrictions and incentivise bringing production to the U.S.

“If Biden follows through on the statements made during the campaign, Chinese companies in U.S. companies’ supply chains for critical equipment may find new barriers to bringing their products to the U.S. market,” Contini adds.

 

To contact the editorial team, please email ALBEditor@thomsonreuters.com

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