By THÉRÈSE MARGOLIS
U.S. President Donald J. Trump’s penchant for political reversals is now considered par for the course in his topsy-turvy White House, but his abrupt about-face on Washington’s membership in the multinational trade Trans-Pacific Partnership (TPP) last week was definitely a doozy.
After having lambasted the pact throughout his political campaign, denouncing its potential impact on the U.S. economy as a “rape of our country,” and having pulled the United States out of the proposed 12-member bloc just days after taking office, suddenly he said he was ready to revisit the deal.
And while there are those that are shoo-shooing Trump’s unexpected decision to remull TPP membership as just another example of the U.S. president’s yes-no-maybe approach to political decision-making, his spasmodic turnabout this time around may be a example of cooler (and better informed) minds prevailing and of Trump learning to acknowledge his own mistakes.
Not only does Trump’s willingness to reconsider TPP signal that his threats to nullify the North American Free Trade Agreement (NAFTA) may be more bark than bite, but it also suggests he is beginning to have a better grasp of the realities of the global trade playing field.
Despite Trump’s former nonstop protectionist spiel and anti-globalization fearmongering, he seems to finally understand that joining and maintaining membership in crucial trade blocs is not only a positive step for Washington, but a necessary one, especially with the threat of a mounting trade tiff with China.
U.S. participation in the treaty could act as a counterbalance against China’s ever-expanding dominance over global trade as supplier of manufactured goods to the world, and it would reaffirm the United States’ role as a major commercial force to be dealt with, which is what Trump has always said he wants to accomplish.
In the last decade, the United States’ international economic clout has been severely eroded as China and India rev their marketing engines and new trade blocs take shape around the world.
Meanwhile, U.S. monetary policy has been stretched to the limit and there has been a reluctance by corporations to spend.
The United States needs to reignite the spark of trade to fuel economic growth.
And the Trans-Pacific Partnership is precisely the way to get that done.
Rather than eliminating jobs in the United States (and other member nations), the treaty forces participating countries to increase workers’ wages and better regulate harmful pollution.
More importantly, it forma a commercial and economic bond between the signatory nations.
Certainly, there are issues of TPP that may need to be tweaked, and bringing in a fresh team of financial and economic specialists to review details of the agreement is a coherent rational and decision.
And while the treaty might open the door to possible job losses or increased imports in some sectors, it potential merits – both for the United States and for global markets in general – are indisputable.
As former U.S. Ambassador to Mexico and current Woodrow Wilson International Center Public Policy Fellow Earl Anthony Wayne pointed out in his article “Pacific Nations Leave U.S. in Rearview Mirror on Trade” (see Pulse News Mexico, March 26, 2018), while the U.S. administration has been focused on defending its domestic market against perceived attacks and using what many criticize as counterproductive and ultimately harmful tactics its former TPP partners are focused on deepening trade cooperation and boosting mutual prosperity.
“The United States is asking partners to negotiate their way out of new steel and aluminum tariffs, while the TPP-11 are inviting others, including the United States, to join their new high-standards agreement, which includes best practices originally suggested by the United States,” Wayne writes.
“The new TPP-11 agreement, or Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP), as it is officially named … includes markets of about 500 million people, which account for about 13 percent of global gross domestic product.”
Wayne also points out that an October study by the Peterson Institute of International Economic (PIIE) estimates that the TPP-11 will produce a global income benefit of $147 billion for its members (as compared to a $490 billion boost if the United States were a member).
“PIIE estimates that the United States will lose $2 billion from forgone trade opportunities (as compared to a $131 billion gain if the United States were still in the TPP),” Wayne continues, adding that, according to a study by the Canada West Foundation, the 11 members countries will grow by 2.43 percent on average.
“While many thought the TPP would flounder without the United States as a member, the countries rallied together to demonstrate that multilateral agreements could still bear fruit,” the ambassador says.
“After the United States pulled out of the TPP, many expressed concern that China would dominate the region with its own visions of trade and commercial agreements. The CPTPP accord thus fills an important political and geographic space with a market-oriented, high-standards and rules-based agreement.”
As Wayne notes, “the agreement itself incorporates many best practices from previous free trade agreements and the most modern and comprehensive chapter on internet commerce and protections that exists. It also covers labor, the environment, small and medium enterprises and other areas that take it well beyond tariffs.”
“The new CPTPP embodies the idea of building opportunities for prosperity through economic integration among partner countries, while setting new, higher trade standards. It is based on the idea that trade agreements can be win-win, if done well.”
The treaty is a natural consequence of and advocate for increased trade, with clear-cut rules and regulations that will facilitate commerce in all fields.
It eliminates more than 18,000 tariffs that have become obstacles to trade, and it streamlines the export of goods and services for all member countries.
Moreover, it forces participating nations to increase workers’ wages and better regulate harmful pollution.
And finally, it forms a commercial and economic bond between the signatory nations.
Trump has his faults – and plenty of them – but his decision to rethink his withdrawal from the Trans-Pacific Partnership is a sign of maturity, not whimsicality.
Hopefully, with a more expansive view of global trade, he will opt to court U.S. membership in the CPTPP.
The big question now is whether the current members will still have him.
Thérèse Margolis can be reached at email@example.com.