On Monday, President Donald Trump fulfilled one of his big campaign promises, pulling the United States out of the Trans Pacific Partnership, a proposed 12-nation trade pact. Coupled with Trump’s announced intention to renegotiate the North American Free Trade Agreement, the moves highlight the administration’s intention to reshape long-standing U.S. trade policy away from multilateral deals and back to bilateral deals with individual countries.
The formal U.S. departure from TPP — which was already doomed in Congress — will open the door for China to play a bigger role in shaping the future economic environment in Asia, and will likely dismay U.S. allies like Japan. China is championing a rival Asian trade grouping, the Regional Comprehensive Economic Partnership, and will be better positioned to set the standards on issues like labor rights and environmental protections. Throwing NAFTA open to fresh talks also sows plenty of uncertainty over U.S. trade prospects with its first- and third-largest trading partners, Canada and Mexico.
“We’ve been talking about it for a long time,” Trump said, as he held up the executive order formally withdrawing from the trade pact which was the centerpiece of Barack Obama’s pivot to Asia. “Great thing for the American worker.” During the presidential campaign, both Trump and Democrats Hillary Clinton and Bernie Sanders attacked the deal, whose popularity sank after its terms were made public in 2015.
“If President Trump is serious about a new policy to help American workers then I would be delighted to work with him,” Sen. Sanders (I-Vt.) said in a statement.
Big labor, which hated the TPP, welcomed Trump’s move. AFL-CIO president RIchard Trumka called it “an important first step toward a trade policy that works for working people.”
But some Republican lawmakers slammed the decision. Withdrawing from TPP, said Sen. John McCain (R-Ariz.) is a “serious mistake that will have lasting consequences for America’s economy and our strategic position in the Asia-Pacific region.”
The White House website says that Trump is willing to negotiate “tough and fair agreements,” leaving the door open to another Asian trade deal down the line. But the president has made no public comments on his desire to revisit TPP, and his trade advisers — including his pick for Commerce Secretary, Wilbur Ross, and his nominee for U.S. Trade Representative, Robert Lighthizer, who is promising an American first trade policy — prefer crafting bilateral trade pacts with individual countries, which they see as being more beneficial for the United States.
That contrasts with Trump’s stance on NAFTA, which he had likewise threatened to pull out of, but will instead try to renegotiate. “We are going to start re-negotiating on NAFTA, on immigration and on security at the border,” Trump said Sunday at a swearing-in ceremony for his top White House advisers.
Pulling out of the TPP will allow Trump to chalk up a victory with his supporters. Many Rust Belt states turned out for Trump believing that free trade had helped hollow out U.S. manufacturing and sent jobs overseas. White House spokesman Sean Spicer said killing the free-trade pact will promote “free and fair trade throughout the world.”
But simply pulling out of the trade pact won’t bring back those lost jobs, experts say. Most of the jobs shed in the manufacturing sector since the turn of the century were replaced by automation, not by cheap foreign labor. Some experts suggest that pulling out of the pact could actually hurt U.S. workers, since it will make it a bit harder to export.
Many U.S. companies were eager to see the TPP’s tariff reductions on thousands of U.S. goods in order to open up inroads in big, growing markets. Even after his election, big business and agriculture groups were lobbying Trump to rethink his opposition to the pact.
Ironically, given the Trump administration’s hawkish stance toward China, abdication of the TPP will likely make life easier for Beijing. China was not a part of the TPP, which would have covered 40 percent of the global GDP. But it is the driving force behind RCEP, which gathers nearly 30 percent of the world’s economy.
“We must remember, TPP, at its core, was never about trade,” Harry Kazianis, director of defense studies at the Center for the National Interest, said. “What it did do was ensure America was tied to the Asia-Pacific region in an important way at a time when China was rapidly growing in power and influence throughout the region.”
Beijing is happy to take the opening it’s been offered, said Zhang Jun, a senior Chinese diplomat. “If anyone were to say China is playing a leadership role in the world I would say it’s not China rushing to the front but rather the front runners have stepped back leaving the place to China,” he said, according to Reuters.
“If China is required to play that leadership role then China will assume its responsibilities,” he said.
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