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America Missed the Boat on Joining TPP

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Thursday, 12 July 2018 09:13 AM Current | Bio | Archive

Donald Trump made good on his promise to withdraw the U.S. from the Trans-Pacific Partnership (TPP), which was one of the cornerstones of his campaign, claiming that TPP is an example of an unfair trade practices that robbed American manufacturers and workers. But now, Trump and others in his administration, are having second thoughts.

In April, Trump tweeted that he would only join TPP “if the deal were substantially better than the deal offered to Pres. Obama. We already have BILATERAL deals with six of the eleven nations in TPP, and are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years!”

As a reminder, TPP was originally a 12-nation trade pact that included the U.S. and was designed to create favorable trade agreements among the partners, while trying to diminish China’s influence throughout Asia.

The New York Times reported that  “Mr. Trump’s reconsideration of an agreement he once denounced as a ‘rape of our country’ caught even his closest advisers by surprise and came as his administration faces stiff pushback from Republican lawmakers, farmers, and other businesses concerned that the president’s threat of tariffs and other trade barriers will hurt them economically.”

It has been reported that even Larry Kudlow, Trump’s top economic adviser, was surprised by Trump’s announcement, and his team is considering restarting TPP negotiations.

U.S. Wheat Associates, the National Association of Wheat Growers, and 33 organizations representing 19 states have sent a letter to U.S. Trade Representative Robert Lighthizer, urging the Trump administration to prioritize rejoining the agreement.

Hog farmers are seeing a dramatic leap in production, which makes cheaper access to Asian markets a key priority.   

Trump vowed to stay out of TPP unless America received major concessions from its Asian trading partners. However, many TPP partners are still smarting from America’s snub, and may not be in the mood to accept trade demands from the U.S. and are ready to move ahead with the current TPP-11, derailing America’s leverage to dictate terms.

In addition, it only takes six countries to ratify TPP, which is expected to occur in the spring of 2019. Once they do, America can’t even start negotiating until late 2019. What’s more, all 11 current TPP members must agree to admit a new member.

America lost a real opportunity to lead TPP in January of 2017 when, after pulling out, Canada took over the leadership role. Canadian Prime Minister Justin Trudeau used his own speech in Davos to announce the other 11 nations had reached an agreement without the United States.

While some countries are still displeased with America’s initial snub, The Wall Street Journal reported that countries like Malaysia, Vietnam, and Japan joined TPP to gain better access to U.S. market. Japanese Prime Minister Shinzo Abe is actively lobbying Trump to have the U.S. rejoin TPP.   

Time magazine notes that Sen Ron Johnson, R-Wis., was among a handful of senators who recently visited China to meet with government and business leaders. He is quoted as saying: “I have to believe President Xi is smiling all the way to regional domination as a result of our pulling out of TPP. I don’t think we can get back into the TPP soon enough.”

China is the 800-pound gorilla in the region since it remains the world's largest exporter, having exported $2.2 trillion of its production in 2017. The EU briefly took the No. 1 spot in 2016. It is now second, exporting $1.9 trillion. The United States is lagging behind in third, exporting just $1.6 trillion.

China shipped 18 percent of its exports to the United States in 2017. This resulted in our $375 billion trade deficit with China, which is unsustainable.

China is not a big fan of TPP since TPP could diminish China’s economic and political influence throughout the Asia/Pacific region. The Australian Institute of International Affairs suggests that the central objection to the TPP was China’s hesitation with Western concepts of commercial fairness. “The inclusion of protections on intellectual property (IP) for instance — particularly on pharmaceuticals and technology — was enough to preclude Chinese involvement by itself. However, following the U.S. departure, the biggest voice for these kinds of protections has vanished and with it, so has the impetus for the remaining nations. Many of the nations only agreed in order to gain greater access to the huge U.S. market.”

The time to re-engage with TPP is apparent. Twenty-five Republican senators, including Senate Majority Whip John Cornyn, R-Tex., sent President Trump a letter earlier this year 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.

I am an American manufacturer and export products all over the world, including to Asia. I also own and operate a factory in China. I’m a big proponent of free trade agreements, and while they all are slightly flawed, they are a tremendous benefit to America. Consequently, walking away from trade agreements is never a good idea.

I urge the president to re-engage with TPP. He has a talented group of advisers, including Larry Kudlow, who can help ensure that American exporters get the best deal possible.

When we stand alone on trade, it sends a bad signal to our allies and to the rest of the world. America is strongest when it leads the world on global trade.     

Neal Asbury is chief executive of The Legacy Companies.

© 2018 Newsmax Finance. All rights reserved.

   
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Donald Trump made good on his promise to withdraw the U.S. from the Trans-Pacific Partnership (TPP). But now, Trump and others in his administration, are having second thoughts.
america, join, tpp, missed
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2018-13-12
Thursday, 12 July 2018 09:13 AM
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