GOP senators versus Trump’s TPP and trade tirades

Yesterday in New Zealand the text of the Trans-Pacific Partnership (CPTPP) was released. Next month it is likely to be signed by the eleven countries who renegotiated some parts of the agreement after Donald Trump pulled the United States out soon after becoming president.

Trump had strongly criticised the TPP during the presidential campaign. It’s hard to know whether he thought it was a ‘bad bad deal’ or it was an attempt to sound tough on trade in order to get more favourable deals.

If it was a bluff it failed, because the TPP is proceeding without the US.

Last month (26 January 2018) Trump appeared to soften his stance on the TPP in an interview with CNBC while at DAVOS: Read President Trump’s full remarks on trade deals to CNBC

  • In an interview with CNBC, he says he could rethink the Trans-Pacific Partnership if the U.S. can secure a better deal.

Trump’s remarks on the TPP:

Trump: I like bilateral, because if you have a problem, you terminate. When you’re in with many countries — like with TPP, so you have 12 if we were in — you don’t have that same, you know you don’t have that same option. But somebody asked me the other day, ‘Would I do TPP?’ Here’s my answer — I will give you a big story. I would do TPP if we made a much better deal than we had. We had a horrible deal. The deal was a horrible deal. NAFTA’s a horrible deal, we’re renegotiating it. I may terminate NAFTA, I may not — we’ll see what happens. But NAFTA was a — and I went around and I tell stadiums full of people, I’ll terminate or renegotiate.

(NAFTA is an agreement between the US and two TPP countries, Canada and Mexico. Trump insisted on it being renegotiated, but that appears to be bogged down. See below.)

Kernen: So you might re-enter, or? Are you opening up the door to re-opening TPP, or?

Trump: I’m only saying this. I would do TPP if we were able to make a substantially better deal. The deal was terrible, the way it was structured was terrible. If we did a substantially better deal, I would be open to TPP.

Kernen: That’s interesting. Would you handicap … ?

Trump: Are you surprised to hear me say that?

Kernen: I am a little bit, yeah, I’m a little taken aback.

Trump: Don’t be surprised, no, but we have to make a better deal. The deal was a bad deal, like the Iran deal is a bad deal, these are bad deals.

Yesterday the Washington Post reports: 25 GOP senators urge Trump to restart TPP trade talks, a deal he called a ‘disaster’

Twenty-five Republican senators, including Senate Majority Whip John Cornyn (R-Tex.), sent President Trump a letter Friday asking him to “re-engage with the Trans-Pacific Partnership.” It’s the latest attempt by Republican lawmakers to get Trump to take a softer stance on trade, even though his administration is gearing up to erect more trade barriers. Trump withdrew from the TPP in his first week in office after calling the trade deal a “disaster” and a “rape of our country” during his presidential campaign.

“We encourage you to work aggressively to secure reforms that would allow the United States to join the agreement,” the senators wrote. “Increased economic engagement with the 11 nations currently in TPP has the potential to substantially improve the competitiveness of U.S. businesses, support millions of U.S. jobs, increase U.S. exports, increase wages, fully unleash America’s energy potential, and benefit consumers.”

There is a sharp divide between congressional Republicans and the Trump administration on how to handle trade. Trump blasted America’s trade deals during his campaign and vowed he would either renegotiate many deals or scrap them, but many senators believe harsh action on trade would backfire, causing the loss of U.S. jobs and businesses.

Ripping up the TPP was a key talking point of Trump’s campaign. He portrayed it as a deal that President Barack Obama and Democratic candidate Hillary Clinton concocted. It would lower tariffs — better known as taxes — on goods traded between the United States and 11 other countries in the Pacific Rim (Canada, Mexico, Japan, Australia, New Zealand, Chile, Peru, Malaysia, Singapore, Vietnam and Brunei).

Supporters of free trade, including many Republicans, worried that Trump had made a mistake. They feared the United States was giving up its leadership role and ceding even more power to China. China was excluded from the TPP in an attempt to counter the communist country’s growing influence on the global economy.

After the United States pulled out of TPP in January 2017, Canada took over the leadership role.

Actually Japan probably took over more of a leadership role, and Canada caused a few hiccups in Vietnam last November, but eventually agreed on the CPTPP.

Many of the GOP senators who signed the letter are from states with a lot of agriculture, including Joni Ernst of Iowa, John Barrasso of Wyoming and Ben Sasse of Nebraska.

“Farm states were a lot of the big losers from the United States not going ahead with TPP,” said Chad Brown, a senior fellow at the Peterson Institute for International Economics. “TPP would have lowered agriculture tariffs in a couple of countries where they had been high.”

Perhaps the best example is that Japan was willing to lower its tariffs on U.S. beef, opening a potentially lucrative market for American farmers. But now that the TPP is moving forward without the United States, Australian and New Zealand farmers probably will be the biggest beneficiaries.

Yesterday the Canadian Globe and Mail reported in Where do NAFTA talks go from here?:

“We got a blunt and sobering message last week from Steve Verheul, Canada’s head NAFTA negotiator, telling us that negotiations with the Americans are bogged down and, apart from some agreement on peripheral things, there’s absolutely no movement on the really tough issues.

The fundamental problem, Mr. Verheul said, is that the United States isn’t approaching the negotiations with the objective of concluding a balanced deal. The Trump administration’s position is “America First” and “America Only,” reflecting the tone of the President’s bellicose inaugural address.

As a result, the United States has tabled one-sided, intransigent positions, non-starters for Canada from day one. U.S. negotiators have no room to compromise because of orders from the White House. It’s clear that there’s a long, slow and painful road ahead in trying to achieve a North American free-trade deal, with agreement pretty remote at this stage.”

The US also faces trade problems in Europe. Forbes – EU Tells Trump: No Paris Climate Deal, No Free Trade

When Donald Trump took office last year, the assumption was that the transatlantic trade and investment partnership was dead.

The controversial free trade deal between the EU and the U.S., known as TTIP, was already years in development and was a big focus in Europe, particularly with left-wing protesters who said the EU would necessarily have to lower its environmental, health and safety standards to American levels. When Trump was elected on an anti-free-trade platform in 2016, these activists found themselves in the uncomfortable position of being on the same side as the new U.S. president.

Work on TTIP has come to a halt, although the European Commission has been keen to stress that it is not officially dead and talks could continue if the U.S. administration were to indicate interest. No such signal from Washington has been forthcoming.

It is in this context that France’s foreign affairs minister Jean-Baptiste Lemoyne told the French Parliament last week that his country will insist that TTIP never be revived if Trump carries through on his promise to leave the Paris Agreement.

“One of our main demands is that any country who signs a trade agreement with EU should implement the Paris Agreement on the ground,” Lemoyne said. “No Paris Agreement, no trade agreement. The U.S. knows what to expect.”

The US under Trump’s leadership is at risk of isolating itself on trade as the rest of the world continues to negotiate and make trade agreements.

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  1. Reply
  2. Mefrostate

     /  February 22, 2018

    Trump fundamentally does not understand the economics of trade. He sees it as a zero-sum game where exporters are winners and importers are losers. By withdrawing from the TPP he’s not only sacrificed his country’s economic growth, but significantly weakened the US’s influence in the region and one of the crucial prongs for pushing back against China.

    Ironically, though, his withdrawal resulted in the CPTPP being better championed as a multilateral deal between small, open, democratic nations. While the US used its economic weight to push for some ugly pills for NZ to swallow, these have now been weakened.

    So ironically, by putting “America First”, Trump has accidentally created a trade deal that’s far better for all the remaining countries. Doubly-so when cooler heads prevail in the US and they re-join the CPTPP under ‘our rules’ not theirs.


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