<article><p class="lead">US president-elect Joe Biden is signalling that his administration is not looking to join trade deals in Asia-Pacific, where key US allies along with China have launched the Regional Comprehensive Economic Partnership (RCEP) free trade agreement.</p><p>The White House under Biden will focus on increasing the competitiveness of US workers and insist on tough labour and environmental standards in any trade deals it negotiates, he says, following discussions with the Australian, Japanese and South Korean leaders. The statement rules out quick action in joining RCEP or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP) that was originally negotiated by former US president Barack Obama's administration — where Biden served as vice-president — to provide a counterweight to Beijing's trade expansion. But it also tests Biden's promise to restore alliances in Asia-Pacific in order to curb Beijing's political and economic ambitions.</p><p>"I do not think you can wait two or three years to begin to re-engage with this vitally important region," says Michael Froman, who led the TPP negotiations as US trade representative under Obama. President Donald Trump abandoned the agreement in one of his first decisions in office, but the remaining participants eventually concluded a modified version in 2018.</p><p>"My recommendation is to find areas of potential common interest," such as the digital economy, Covid-19, supply chains or the environment, Froman says. The US should not join the RCEP because of its shortcomings, leading business group the US Chamber of Commerce says. But it adds that Washington should adopt a more strategic effort to promote US economic interests in the region, instead of focusing on trade issues with China.</p><p>Biden is offering an olive branch to the allies with a promise to end indiscriminate trade penalties imposed under Trump, who cited national security consideration to place tariffs on steel imports, including from US allies. Protectionist duties on imported steel — the subject of one of the few complaints directed at Trump by the US energy industry, because they raised infrastructure build-out costs — appear likely to be adjusted, including through greater use of exemptions. But US oil and gas exporters are more vested in the potential resolution of US-China trade disputes — and in this area Biden's team has offered little guidance.</p><h2>Crude calculations</h2><p class="lead">China was the top destination for US crude exports in May-September, in part because Beijing has leaned on state-owned enterprises to keep buying US crude in compliance with the countries' "phase one" trade deal signed in January. This commits China to buying $69bn of US energy commodities in 2020-21. US crude exports to China almost tripled on the year to 444,000 b/d in January-September (see chart). Washington-based experts expect China to continue implementing the deal as best as it can until at least the end of Trump's term, if only to avoid providing ammunitionfor a lame duck White House that is keen to disrupt any potential re-engagement with China under Biden.</p><p>Opening a dialogue with Beijing on climate change and other unrelated issues could allow Biden to appeal for structural reforms in US-China trade, bringing about change to "a bipartisan consensus that is much more negative on China than it has been in the past", Froman says. Removing punitive tariffs on imports from China could be a quick way to boost the US economy, given the opposition from Republican lawmakers to another major economic stimulus package. The cumulative impact of trade wars with China and other countries has amounted to $1,600 per US worker for affected firms, and destroyed 200,000 jobs, Syracuse University professor Mary Lovely estimates.</p><p class="bylines"><i>By Haik Gugarats</i></p><p><div class="picture"><div><span class="pic_title">US crude exports</span> <span class="units"></span></div><img src="https://argus-public-assets.s3.amazonaws.com/2020/11/19/page519112020042642.jpg"></div></article>
