October 22, 2018

Trump Weighs Return to Trans-Pacific Partnership. Not So Fast, Say Members.

“We’ve got a deal” already, said Steven Ciobo, Australia’s trade minister, who added, “I can’t see that all being thrown open to appease the United States.”

[Read about President Trump’s reversal on the Trans-Pacific Partnership, which came at a gathering of politicians from farm states that stand to lose from any trade war with China.]

An early test of the potential for the United States to rejoin could come as soon as next week, when Shinzo Abe, Japan’s prime minister and an ardent champion of the pact, is to meet with Mr. Trump at his Mar-a-Lago resort in Palm Beach, Fla.

Mr. Trump’s renewed interest in the pact depends on whether the United States could strike a better deal than President Barack Obama did, Mr. Trump said in a Thursday night tweet. Still, negotiations with a group of longtime trading partners could hold appeal at a time of increasing tensions with China.

Mr. Trump faces a growing domestic backlash from corporations, farmers and others over fears that he is igniting a trade war with China, the United States’ largest single trading partner. Mr. Trump has warned that he could levy tariffs on $150 billion in Chinese goods, prompting Beijing to threaten retaliatory measures aimed at American soybeans, airplanes and other products.

Negotiating a new pact could take years. Still, rekindling negotiations could make it hard for China to play off the United States against its allies by promising to shift business from one to another if a trade war breaks out. It could be a way to assuage American farmers and businesses hurt by Chinese tariffs by assuring robust markets for American products in countries that signed onto the deal, like Japan, Australia and South Korea. It would give the pact a great deal more heft and help position it as an economic counterweight to China, which increasingly dominates the Asia-Pacific region.

More broadly, it signals to the region that the United States is not giving up on trade, despite Mr. Trump’s sometimes harsh words. Even as officials in other countries expressed skepticism on Friday, they said they would like to hear what Washington has to offer. “Japan would like to listen to the U.S.’s view,” said Mr. Suga, the Japanese official.

What Is TPP? Behind the Trade Deal That Died

On his first full workday in office, President Trump delivered on a campaign promise by abandoning the enormous trade deal that had became a flashpoint in American politics.

The barriers to a new pact are considerable. Many current members of the pact feel they already gave considerable ground to the United States to strike the original deal, particularly in sensitive areas like protections for pharmaceutical companies.

Advertisement

Continue reading the main story

For its part, the Trump administration worries that the partnership will become a zero-tariff backdoor for Chinese goods into the American market. It worries that companies that have moved much of their supply chains to China could make components there, ship them to a member of the Trans-Pacific Partnership for assembly, then sell them in the United States tariff-free. It wants to toughen requirements for how much of the product is made within a participating country, which could make the goods less competitive.

Their worries focus largely on Vietnam, a member of the current version of the pact. It has a large population, and a few big American companies, like Intel, have already invested heavily in setting up factories there that make products practically from scratch. But many other companies that are exporting goods from Vietnam rely heavily on imports from China. Vietnam’s huge garment industry, for example, relies greatly on fabric and accessories imported from China, according to garment manufacturing executives.

Newsletter Sign Up

Continue reading the main story

Vietnamese officials did not respond to requests for comment on Friday. Frederick Burke, managing partner for Vietnam at the American law firm Baker McKenzie, said that the Vietnamese government is “very aware of and focused on the issue of circumvention” in trade.

Renegotiating the Trans-Pacific Partnership may not be quick. Mr. Trump’s trade negotiators already have their hands full this spring trying to complete changes to the North American Free Trade Agreement. They need to decide whether to extend temporary exemptions from the president’s new tariffs on imported steel and aluminum. Above all, they are locked in a series of increasingly acrimonious trade spats with China.

China is making its own outreach efforts in the meantime. Wang Yi, its foreign minister, will travel to Tokyo on Sunday. China has played up free trade talks with Japan and with South Korea, which is not a member of the partnership.

Sheila A. Smith, a Japan expert at the Council on Foreign Relations in Washington, said the Trump administration may have realized that it does not have the leverage it thought to renegotiate a new trade deal with Japan, and that embracing the regional pact may be the best fallback.

The Trump administration “could walk right back in with the exact same deal from last year that they walked out of, and claim victory,” said Ms. Smith, who noted that the government of Mr. Abe “has been continuously and quietly encouraging the U.S. administration to take another look” at the pact.

One lingering question would be how China would react. The pact’s rules were designed in part to challenge China by encouraging members to loosen state support of their economies and relax trade rules — steps Beijing would have to take if it hoped to someday join the pact and enjoy its lower trade barriers.

Advertisement

Continue reading the main story

China is not likely to be troubled by a United States move to join the Trans-Pacific Partnership as long as the Trump administration is doing so for strictly trade reasons, said He Weiwen, a former Commerce Ministry official and trade specialist who is now a senior fellow at the influential Center for China and Globalization in Beijing.

But the Chinese government is likely to be dismayed if the United States is reconsidering it as part of any revival of the Obama administration’s geopolitical pivot to Asia, or as part of any attempt to isolate China, Mr. He cautioned.

“That’s what we should be careful about,” he said.

Some current members of the pact greeted Mr. Trump’s comments on Thursday warmly. A spokeswoman for Singapore’s Ministry of Trade and Industry said it welcomed the American interest. “The TPP was designed to be an inclusive agreement, which is open to like-minded countries willing and able to meet its high standards,” the spokeswoman said.

Still, even American allies suggest a long road ahead if Mr. Trump moves forward.

“If the United States genuinely did wish to re-enter, that would trigger another process of engagement and negotiation,” Jacinda Ardern, the prime minister of New Zealand, said on television, adding that she still planned to go forward with the deal as-is. “It’s not just a matter of slotting into an existing deal.”

Continue reading the main story

Article source: https://www.nytimes.com/2018/04/13/world/asia/trump-tpp-asia.html?partner=rss&emc=rss

Speak Your Mind