Now that the victory of former Democratic Vice President Joe Biden has become certain in the U.S. presidential election, Washington's economic policies are expected to undergo a major change.
It is hoped that the United States will break away from the "America First" policy and also become a world leader in the economic arena as well. To drive the global economy, the United States must first and foremost rehabilitate its own economy, which has been in a downturn due to the novel coronavirus outbreak.
In his victory speech, Biden pledged to "control the virus" and "build prosperity" as infections are resurging.
It is desirable that Biden will shift from the administration of U.S. President Donald Trump's stance of disregarding the virus crisis, and instead use scientific analysis to maintain the balance between implementing measures against infections and economic activities.
To realize this, it is essential to compile additional economic stimulus measures.
Biden is aiming to establish big government that emphasizes public spending. Over the next four years, he plans to invest 2 trillion dollars (about 210 trillion yen) in environmental and infrastructure projects, generating financial resources for them through tax increases on large companies and the wealthy.
The Republican Party, which will become the opposition, is against big government. Should the Republicans hold a majority in the Senate, Congress will likely be divided, leaving it uncertain whether Democrats' proposals can be realized. With his 36 years of experience as a senator, Biden's ability to coordinate amid these circumstances will be tested.
Environmental policies have a great impact on Japan. Unlike Trump, Biden has committed to returning to the Paris Agreement, an international framework for combating global warming, and to promoting electric vehicles (EVs) and renewable energy.
Industrial sectors in Japan should strengthen technological innovation such as hydrogen utilization and EV strategies so that the move will be an opportunity for them.
Prime Minister Yoshihide Suga has set a goal of reducing greenhouse gas emissions to net zero by 2050. The government needs to devise concrete measures as soon as possible to achieve this goal while cooperating with the United States.
The focus of trade policies will depend on whether a Biden administration can change direction to put an end to protectionism. Trump is reluctant to hold multilateral negotiations and has used punitive tariffs as a bargaining chip in bilateral trade. Biden has been critical of this and is highly likely to review it.
However, as the United States is expected to maintain its policies of prioritizing domestic employment and industries, it remains unclear whether Washington will return to the Trans-Pacific Partnership (TPP) trade agreement led by the administration of former Democratic President Barack Obama.
Regarding trade issues with China, such as the infringement of intellectual property rights, Biden has reportedly expressed his intention to cooperate with U.S. allies. To this end, the TPP, which is aimed at keeping China in check, will be useful. It is hoped that Tokyo will strongly urge Washington to return to the trade pact.
It is also important for Japan and the United States to work together to reform the World Trade Organization to restore multilateral cooperation.
-- The original Japanese article appeared in The Yomiuri Shimbun on Nov. 16, 2020.
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