Trump flips on joining Pacific-Rim trade pact
Washington — As automakers await the fate of the North American Free Trade Agreement, President Donald Trump is reopening the door to the U.S. participating in the Trans-Pacific Partnership, the free-trade deal that he withdrew from immediately after taking office.
In a major about-face from its earlier position, the White House said Thursday that Trump has asked trade officials in his Cabinet to explore the possibility of rejoining the TPP, which was intended to establish freer trade in the Asia-Pacific region. The trade pact was ratified by the remaining 11 countries in March after the U.S. withdrew from the talks. It’s unclear whether those countries would welcome the U.S. back.
White House deputy press secretary Lindsay Walters said Trump’s reversal is consistent with his campaign promise to negotiate better trade deals for the U.S. than his predecessors.
“Last year, the president kept his promise to end the TPP deal negotiated by the Obama Administration because it was unfair to American workers and farmers,” Walters said. “The president has consistently said he would be open to a substantially better deal, including in his speech in Davos earlier this year.”
To that end, he said, Trump has asked Trade Representative Robert Lighthizer and chief economic adviser Larry Kudlow “to take another look at whether or not a better deal could be negotiated.”
The striking reversal comes as the Trump administration has faced pressure from automakers and farmers about the impact of protectionist trade policies that he has pursued since taking office. In addition from withdrawing from the TPP, Trump has exchanged tariff threats with China and has insisted on changes to NAFTA that would increase the percentage of car parts that would have to come from the U.S., Canada or Mexico to qualify for duty-free treatment.
The original TPP deal was publicly supported by the Association of Global Automakers, which lobbies for international car manufacturers. The American Auto Policy Council, which lobbies for Ford Motor Co., General Motors Co. and Fiat Chrysler US LLC, raised concerns about potential trading partners in the TPP taking steps to make sure the U.S. dollar trades lower against their currencies in a bid to boost profits for their nations’ industries.
The groups declined to comment Thursday.
Farmers have warned the Trump administration about the risks of a trade war with China.
“China has become the largest customer for America’s farm products, buying well over $20 billion per year,” Casey Guernsey, a spokesman for Americans for Farmers & Families, which lobbies for farmers, said after testifying before a House committee Thursday. “Losing access to this important market will restrict access to millions of customers and billions of dollars.”
U.S. Sen. Ben Sasse, R-Neb., who was present in the meeting, cheered Trump’s apparent reversal on the Asia-Pacific trade pact.
“The president multiple times reaffirmed in general to all of us and looked right at Larry Kudlow and said ‘Larry, go get it done,” he said in an interview with Fox Business.
“The best thing the United States can do to push back against Chinese cheating now is to lead the other 11 Pacific nations that believe in free trade and the rule of law,” Sasse added in a statement.
AFL-CIO President Richard Trumka offered a starkly different take. He tweeted Thursday :“@realDonaldTrump#TPP was killed because it failed America’s workers and it should remain dead. There is no conceivable way to revive it without totally betraying working people.”
Charlie Chesbrough, senior economist and senior director of industry insights for Cox Automotive, said Trump may be trying to leverage the possibility of rejoining the TPP to gain the upper hand in the tariff fight with China and in the ongoing NAFTA talks.
“You’ve got to wonder if the two aren’t related,” he said. “That he is not somehow leveraging renegotiating on one treaty to improve renegotiations on another.”
Chesbrough said it would be better for automakers if the U.S. was participating in both trade deals.
“The big argument for the TPP was that it was going to open up a half-billion new consumers,” he said. “Not being in it makes it harder to sell U.S. products. It’s good news for the industry that President Trump is considering rejoining again.”
Chesbrough said rejoining the TPP could have serious ramifications for the ongoing NAFTA talks, noting that the president’s proposal to require that 85 percent of a cars parts come from the U.S., Canada or Mexico — and 50 percent from the U.S. — fly in the face of the goals the remaining TPP countries have agreed to.
“What the president has been requiring for NAFTA is not going to hold up with TPP,” he said. “The president would have to be very flexible on that.”
He said it is difficult to predict the trade stances that the Trump administration will take. “It’s hard to know how serious the president is,” he said.