WASHINGTON – US President Donald Trump, in a sharp reversal, told a gathering of American state lawmakers and governors on Thursday morning that the United States was looking into rejoining a multi-country trade agreement known as the Trans-Pacific Partnership (Agreement), a deal he pulled out of days after assuming the presidency.
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.
Larry Kudlow, Trump’s top economic adviser, said in an interview on Thursday with The New York Times that the request to revisit the deal was somewhat spontaneous.
“This whole trade thing has exploded,” Kudlow said. “There’s no deadline. We’ll pull a team together, but we haven’t even done – I mean, it just happened a couple hours ago.”
Trump’s decision to throw out the Trans-Pacific Partnership and his pledge to tear up the North American Free Trade Agreement were bedrock promises of his populist campaign, which centred heavily on unfair trade practices that he said had robbed American manufacturers and workers.
But, as he often does, the president started to change gears after hearing complaints from important constituents – in this case, Republican lawmakers who said farmers and other businesses in their states would suffer from his trade approach since they send many of their products abroad.
At the White House meeting on Thursday, Senator John Thune, Republican of South Dakota, questioned Trump about returning to the pact, arguing that the Trans-Pacific Partnership was the best way to put pressure on China.
Trump, who has put China’s “unfair” trade practices in his cross hairs, turned to Kudlow and Robert Lighthizer, his trade negotiator, and asked them to look into re-entering the agreement.
Rejoining the pact could be a significant change in fortune for many American industries that stood to benefit from the trade accord and for Republican lawmakers who supported it. The deal, which was negotiated by the Obama administration, was largely intended as a tool to prod China into making the type of economic changes that the United States and others have long wanted. Many economists say the best way to combat a rising China and pressure it to open its market is through multilateral trade deals like the Trans-Pacific Partnership, which create favourable trading terms for participants.
“The idea was to set a framework that eventually China would have to accommodate,” said David Autor, an economist at M.I.T.
Farmers would stand to benefit from new access to markets, especially Japan, if Trump rejoins the pact. For instance, ranchers in Australia can currently send beef to Japan more cheaply than ranchers in the United States.
Michael Miller, the chairman of US Wheat Associates and a farmer in Washington, said rejoining the deal would allow his industry to compete on a level playing field with competitors in Australia and Canada, which both remained in the accord.
But rejoining it could be a complex task. The remaining countries, like Japan, moved ahead without the United States, and spent months renegotiating a pact before finally agreeing to a sweeping multinational deal this year. Trump, who has demanded that any such deal benefit the United States, is unlikely to rejoin the Trans-Pacific Partnership without further concessions for what he has criticised as a terrible agreement. That could complicate talks, since Japan maintains that it has already given all the concessions it could, said William A. Reinsch, a trade expert at the Centre for Strategic and International Studies… CONTINUED…