Jake Sullivan on a New Economic Alliance

Biden’s national security adviser takes on old-style free trade agreements and makes the case for putting American economic security at the heart of American foreign policy.

The post Jake Sullivan on a New Economic Alliance appeared first on Washington Monthly.

American trade and economic policy have undergone a significant shift since 2016. While the George H.W. Bush, Bill Clinton, George W. Bush, and Barack Obama administrations pursued and maintained free-trade agreements that were similar in nature, such as the North American Free Trade Agreement and the Trans-Pacific Partnership, it’s been different since Donald Trump was inaugurated in 2017 and Joe Biden in 2021. But while both Trump and Biden have veered away from an older free-trade model, the similarities largely end there. Where the Trump administration tended to act unilaterally and deploy tariffs aggressively, the Biden administration is deeply engaged in a multi-lateral effort to forge economic agreements to boost working and middle-class incomes at home while checking the economic predations of China and Russia.  

That new approach was evident on March 23 when National Security Advisor Jake Sullivan spoke at an event in Sausalito, California, sponsored by the William & Flora Hewlett Foundation, that focused on what a future “post-neoliberal” economic order would look like. (The Washington Monthly is a Hewlett grantee.) The long-time Biden foreign policy adviser emphasized the importance of “ensuring that the gains that flow from global growth actually reach working people, middle-class people here in the United States.”

“And from my perspective,” Sullivan said, “that has to be a national security priority as well as a domestic economic priority, because the American middle class is the foundation of our capacity to project strength in the world.” 

The idea of strengthening America’s economic agreements to bolster the American middle class has been a concern of this magazine. Much of what Sullivan had to say about the Biden administration’s efforts to negotiate new economic agreements, especially in Europe, on issues like climate change, labor standards, and competition policy echoes the vision for a “New Atlantic Alliance” that Wesley Clark, the retired general and former NATO supreme allied commander, articulated in 2021 in these pages and that other authors in the Washington Monthly have been advocating since 2019. (See here, here, here, here, and here.) If the world wants access to this Atlantic market—which approaches half of the world’s GDP—they’ll need to conform to its standards. 

Sullivan noted that an agreement on aluminum and steel currently being forged between the E.U. and the U.S. could be “the first of its kind” to put greenhouse gases at the heart of a trade agreement. “We think that if we can prove it out with steel and aluminum, it could begin to be applied to other sectors of the economy as well.” 

Sullivan was interviewed via Zoom at the inaugural “New Common Sense” conference by Rana Foroohar, the global business columnist and associate editor at the Financial Times. 

He noted that the National Security Council, which he chairs, maintains a keen interest in antitrust policy, also a long-time concern of this magazine. In response to a question posed from the audience by Paul Glastris, the Monthly’s editor-in-chief, Sullivan pointed out that the Biden administration’s vigorous approach to battling illegal economic concentration strengthens the middle class and can alleviate supply chain problems. “From the National Security Council’s perspective, the competition agenda that (Biden) is pursuing has a critical national security nexus and international economic dimension,” he said. 

The importance to foreign policy of the CHIPS and Science Act, the Inflation Reduction Act, and the Bipartisan Infrastructure Law was something Sullivan pointed to repeatedly. He noted that these Biden administration achievements bolstered American foreign policy goals of battling climate change, waging an economic and national security struggle with China, and ensuring a supply of raw materials and finished products to bolster American national security.  

Describing Biden as “the most pro-labor president in generations,” Sullivan underscored that shoring up labor in the U.S. was central to each of the president’s domestic initiatives. “The instinct and intuition of our President is to ensure that whatever we do on this front lifts the standards and creates more opportunity for union workers in the United States to be able to benefit from every public dollar that is being invested under the IRA, under the CHIPS Act, under the infrastructure law, and under every other measure that that he has passed, 

Sullivan underscored the new approach to global economics that the administration is taking in his discussion of the Indo-Pacific Economic Framework, a policy model for approaching trade and other issues with American allies in south and east Asia. “The kind of traditional free trade model pursued under previous administrations is not tailored to the economic realities that we face today,” Sullivan observed. “That goes for large macro trends like the nature of supply chains: Are workers at the center of our economic arrangements? IPEF does put workers at the center of them.” 

Sullivan acknowledged that the Biden approach differs dramatically from earlier eras, noting that the tariff reductions negotiated in 1990s trade agreements stemmed from an era of high import duties, which have since decreased dramatically and are no longer the drag on global growth that they once were.  

He also questioned the tenets of previous administrations that bet that freer trade would necessarily promote broad middle-class wealth and lead to more democratization around the globe. The Biden administration’s new approach, Sullivan said, recognizes “that markets alone are neither solving for global public goods like the climate crisis nor efficiently allocating capital in ways that ensure that we sustain the kind of industrial strength we need for our economic and national security.” 

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