The Trans-Pacific Partnership has been a corpse since both Donald Trump and Hillary Clinton opposed it in the presidential campaign. In one of his first executive orders, President Trump kicked dirt on the TPP by withdrawing the United States from the deal the Obama administration negotiated.
While the fate of the trade deal hasn’t been in doubt, business interests in the Pacific Northwest that rely heavily on exports into Asia are wondering what impact its death will have. There also are questions about what, if anything, will take the place of what would have been the largest regional trade deal in history.
In his inaugural speech, Trump fired a warning round about trade pacts, saying US policy would be “America first,” which may not be the best opening line for regional or even bilateral trade talks. Trump is seeking meetings with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto to broach renegotiation of the 22-year-old North American Free Trade Agreement (NAFTA). The first head of state Trump will meet in person is British Prime Minister Theresa May, who faces her own challenge of orchestrating an exit from the European Union.
The new Trump administration may not have the bandwidth or even interest in working on a different approach in the Asia Pacific region while focused on NAFTA and a bilateral deal with Britain. Veteran trade negotiators warn that trade deals don’t materialize overnight. For example, it could take two years for Britain to negotiate the terms for its exit from the EU., which would be necessary before the United States and Britain could entertain a detailed negotiation on a bilateral trade deal.
Meanwhile, Chinese President Xi Jinping has already seized the moment by touting the Free Trade Area of the Asia Pacific negotiations, which some think could be the next big trade game and one of the first since World War II not piloted by the United States. China was not included in the TPP.
The prospect of the United States being on the outside looking in on an emerging Asian regional economic partnership concerns business leaders in the Pacific Northwest. Sandra McDonough of the Portland Business Alliance, which supported the TPP, told Oregon Public Broadcasting that 500,000 jobs in Oregon rely on international trade, much of it with Asia.
Oregon Senator Ron Wyden, the ranking Democrat on Senate Finance that oversees international trade, gave a blunter assessment in a prepared statement: “There is as much transparency into Trump’s trade policy as there is into his conflicts of interest with foreign governments.”
The demise of the TPP works a particular hardship on New Zealand and Vietnam, which lack any bilateral trade deal with the United States. Many exporting businesses had counted on the TPP to increase market access in Japan, lend greater protection to intellectual property and regulate cross-border data flows.
An irony of tossing TPP in the trash can is that state-owned enterprises in Asia will remain largely unregulated and a source of competition that hinds U.S. Job growth. It’s also possible that some of the TPP’s provisions could resurface on the agenda of the World Trade Organization.
There are business and union allies that support Trump’s TPP position and reopening NAFTA. The Washington Post quoted Scott Paul, president of the Alliance for American Manufacturing, as saying tougher stands could create leverage to address currency manipulation and result in rules that dictate how much domestic production must occur to qualify for free trade status.