Trade balance: Trump's TPP reversal could hurt or help politically

WASHINGTON (Circa) — During his first week in office, President Donald Trump fulfilled a central campaign promise and withdrew the United States from the Trans-Pacific Partnership (TPP), the 12-nation free trade agreement signed by his predecessor, President Barack Obama.

At the White House Thursday, Trump signaled a reversal on TPP, telling federal and state lawmakers he will consider rejoining the trade pact he previously denounced as "the death blow for American manufacturing" and equated to an economic "rape of our country."

Republican U.S. senators who attended the meeting told reporters that Trump agreed to deputize U.S. Trade Representative Robert Lighthizer and National Economic Council chairman Larry Kudlow to explore the option of reentering the TPP.

"I think it's really good news," Sen. Ben Sasse of Nebraska said, praising the president for listening to his advisers. The president's about-face "good news," a sharp departure from his recent criticism of Trump's trade policy as "dumb" and "Kooky 18th-century protectionism."

Sasse, who recently called Trump's trade policy "dumb" and "kooky" admitted he was skeptical Trump would follow through and rejoin the deal. "The president is a guy who likes to blue-sky a lot and entertain a lot of different ideas, but he multiple times reaffirmed the point that TPP might be easier for us to join now."

Trump's economic advisers were reportedly caught off guard. "There's out of the blue, and there’s, I guess, out of the dark, navy blue," Kudlow told The New York Times, describing the TPP announcement as "dark, navy blue."

One of the reasons for the apparent turnabout had to do with the impact Trump's tariffs are having on American farmers, explained Sen. Pat Roberts of Kansas, chairman of the Senate Agriculture Committee. The Thursday meeting was initially scheduled to discuss aid to subsidize farmers who are losing money as a result of the tit-for-tat tariffs between the U.S. and China.

"Everybody there insisted and really made their point to the president that we wanted trade, not aid," Roberts explained in an interview with PBS Newshour. "I think that message was well-delivered. Then there was a considerable effort made to talk about the possibility of TPP."

American agriculture has been the first casualty in President Trump's so-called trade war. According to multiple reports, many of the farmers and growers who are losing are the same voters who overwhelmingly turned out to put Donald Trump in office.

Roberts summarized the politics of the situation, "What you don't want to do is really hurt the very folks who brought you to the dance."

FODDER FOR POLITICAL OPPONENTS

Striking a balance between contradictory campaign promises may prove challenging for the president, especially as Republicans head into a tough midterm election in November.

Trump took to Twitter after the meeting to clarify, "Would only join TPP is the deal were substantially better than deal offered to Pres. Obama."

The tweet was similar to a statement earlier this year on the sidelines of the Davos World Economic Forum when he teased, "I would do TPP if we were able to to make a substantially better deal."

Some of the organizations and officials who applauded Trump for scrapping TPP in January 2017 cried foul, accusing the president of "betraying" his campaign promise and American workers.

Trade unions that met with Trump the day he signed the TPP order did not respond to requests for comment on his apparent reversal. The unions voiced strong support at the time for pulling out of the trade deal, but some have been critical of his recent tariffs.

Sen. Bernie Sanders of Vermont, who also campaigned in 2016 on a populist, anti-free-trade platform, said, "There is no way to resuscitate the job-killing Trans-Pacific Partnership without betraying the working families of our country." He added, the United States should "fundamentally rewrite our failed trade policies" rather than rejoining the TPP.

Sen. Elizabeth Warren of Massachusetts, the progressive Democrat who openly feuded with President Obama over TPP, called Trump's reversal "ridiculous" and "a slap in the face to hard-working Americans Trump promised to fight for."

The head of the AFL-CIO labor union, Richard Trumka, tweeted "there is no conceivable way to revive [TPP] without totally betraying working people."

Citing the central role TPP opposition played in his election, the progressive activist network, Public Citizen, said Trump's reversal "could bring short-term joy to Democratic campaign operatives but for the rest of the country it would signal that Trump does not give a crap about working people and cannot be trusted on anything."

IS REJOINING TPP POSSIBLE?

It is difficult to tell whether President Trump is serious about rejoining the trade agreement or if his statement to the farm state representatives was a whim.

Some TPP nations have expressed reservations about reopening the talks in response to Trump's latest tweet, including Australia, Japan and New Zealand. In the past, other members have shown similar reluctance to restart the talks that have been ongoing for more than eight years.

Wendy Cutler, who negotiated TPP as acting Deputy U.S. Trade Representative under President Obama, described the president's openness to reconsidering TPP as "encouraging" and "a step forward. At the same time, she questioned how flexible the remaining parties to the agreement will be to new U.S. demands.

"[T]he other countries would undoubtedly welcome renewed U.S. interest in stepped up economic engagement in the Asia-Pacific region," she said in a statement to Circa. "However, after negotiating the TPP once with the U.S., then a second time without the U.S., it’s not clear how much bandwidth they would have to entertain requests for significant changes to the agreement."

Since the United States left the TPP, the remaining 11 members, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam have moved on. In early March the TPP 11 signed a revised version of the deal which will eliminate thousands of tariffs and create a free-trade zone encompassing approximately 13 percent of the global economy.

"There's money on the table," said Carlo Dade, director of the Canada West Foundation's Trade and Investment Centre. Given Trump's tendency to change his mind, Dade suggested waiting for an official U.S. government policy shift before celebrating a single tweet.

Dade agreed with Cutler, saying the door is open if the Trump administration decides to rejoin the trade pact. However, it may be difficult to claw back some of the concessions the TPP 11 got rid of when Trump announced the U.S. withdrawal.

The original version, agreed to in February 2016 and signed by President Obama, would have covered 40 percent of the world economy, opened markets to U.S. agricultural exports and established labor, environmental and intellectual property standards. The new deal got rid of the protections for intellectual property and biologics that the United States fought to include.

However, the TPP 11 preserved many of the reductions in trade barriers and increased market access that the United States helped negotiate. Dade compared the United States walking away from the deal to a poker player getting to the final round and instead of cashing in, throwing the chips on the table to be divvied up by the rest of the players.

The Obama administration also proposed TPP as a strategic arrangement that allowed the United States, not China, to "write the rules of the road" on trade standards in the Pacific. As negotiations were ongoing, China was brokering a rival, 10-nation regional trade agreement that included seven countries involved in the TPP. The Chinese Regional Comprehensive Economic Partnership has yet to be finalized.

Having North American-style rules of trade in the Asia Pacific is one of the main reasons "everyone wants the Americans back in," Dade stressed. "We're establishing rules for international trade and the rules carry more force if the Americans are part of them, helping enforce them."

In the coming weeks Trump's seriousness about rejoining TPP will be put to the test. At the end of April, President Trump will host Japanese President Shinzo Abe at his Mar-A-Lago resort. The two are expected to discuss trade and the Trans-Pacific Partnership may be on the agenda.