Following the inauguration of Joe Biden, there is growing expectation among economists and policymakers that a reset in US approaches to international cooperation on trade, taxation, aid and the environment will soon emerge.
Crucially, this could include the leadership of the World Trade Organization. The international trade body has yet to agree on a candidate to occupy the post of Director General after the US Trade Representative under President Trump opted to back South Korea Trade Minister Yoo Myung-hee over the largely favoured candidate, the former Nigerian finance minister Ngozi Okonjo-Iweala.
According to the Financial Times, if the Biden Administration were to drop their support for Myung-hee, ‘it would go a considerable way towards reassuring other WTO members that the Biden Administration, while not uncritical of the trade body, is a government they can engage with’. That might also unlock the stasis over the WTO dispute resolution system, where US intransigence has blocked progress.
Also on the trade agenda is international tax cooperation. Proposals brought forward by the OECD have called on members to implement a minimum rate of corporation tax globally that would see multinationals pay tax on profits generated countries where they are not domiciled. OECD members have remained divided over the proposals, particularly the consequences for digital businesses.
Nevertheless, Pascal Saint-Amans, director of the Centre of Tax Policy and Administration at the OECD is optimistic that the change of administration in Washington ‘pointed to good factors’ in the pursuit of an agreement.
Saint-Amans’s sentiment is shared by German finance minister Olaf Sholz, who noted that an agreement on taxation by the summer was likely.