President Trump said on Thursday that he’d rejoin the 11-country free trade agreement known as the Trans-Pacific Partnership if he can negotiate a better deal for the US than President Obama did.
But experts say Trump already squandered the best chance he had to extract concessions from other countries when he brashly pulled out of negotiations for the deal just days after taking office.
Back then, he could’ve threatened to walk out if things weren’t going his way, much the way he has with negotiations over NAFTA, the free trade agreement the US has with Canada and Mexico. Since the US was by far the largest player in the TPP, he might have been able to win some concessions with those threats.
But things are different today. After Trump pulled out of TPP talks in January 2017, the other countries’ trade negotiators carried on without the US, and in March they signed an agreement between themselves. Currently, the TPP countries, which include Canada, Mexico, Japan, and Australia, are in the process of officially ratifying the agreement.
Analysts say that while other countries want America back in the deal — the US has a huge market for their exports — they’re going to be reluctant to make major changes to accommodate Trump. They’ve already wrapped up grueling negotiations, and Trump has established a reputation for being highly unpredictable during trade talks.
Even though they want the US in the TPP, they have to weigh that against the risk of the whole agreement falling apart if Trump tries to force them to concede to radical proposals.
“There are going to be political costs domestically for every nation that reopens the agreement — and Trump is a wild card,” Edward Alden, a trade scholar at the Council on Foreign Relations, told me.
Powerful TPP countries are already signaling their hesitation about renegotiating. “We’ve got a deal ... I can’t see that all being thrown open to appease the United States,” Australian trade minister Steven Ciobo said on Friday. Yoshihide Suga, Japan’s chief cabinet secretary, compared the agreement to “a glasswork,” and said “it is extremely difficult to take out one part and renegotiate.”
Analysts say that Trump might be interested in any number of proposals, like forcing Japan to import more US cars or agreements on patent laws that benefit US pharmaceutical companies. But he might have sabotaged his best chances to secure those policies in his first week in office.
Trump wants to join the TPP because he’s worried about China
Trump stunned Washington when he notified lawmakers and governors on Thursday morning that he had instructed his advisers to look into rejoining the deal. On the campaign trail, he had slammed the TPP as the “rape of our country,” framing the agreement as a US job killer. And on January 23, 2017, he signed an executive order withdrawing from negotiations for TPP, heralding the move as a “great thing for the American worker.”
But Trump’s concerns about the costs of a trade war with China have inspired him to reconsider the agreement. Beijing has threatened to impose 25 percent tariffs on US agricultural exports, and Trump told lawmakers that he saw the TPP as a way to help American farmers deal with the blow by opening up new markets for their crops.
But Trump hasn’t just said that he’s looking to rejoin the TPP — he’s signaled that he wants to reshape it to make it a better deal for the US. “Would only join TPP if the deal were substantially better than the deal offered to Pres. Obama,” he tweeted Thursday night.
Japan, Australia, and New Zealand have all cautiously welcomed the idea of the US possibly returning to the TPP, and there are a couple of reasons for it.
Todd Tucker, a trade scholar at the Roosevelt Institute, told me that the other countries in the TPP have a very real interest in having the US rejoin the agreement since it has such a big economy. Back when the US was in talks, it represented 60 percent of the TPP countries’ combined GDP, Tucker said. The US provides a bigger market for selling goods and services than any of the other countries in the agreement.
There’s another big reason the TPP countries would want the US back in: fighting China. The TPP serves as a counterweight to Beijing’s increasing economic influence in the Pacific. Eliminating trade barriers and encouraging trade among a bunch of Pacific Rim countries gives those countries alternatives to selling goods in the Chinese market and reduces China’s economic leverage over them. And that counterweight to China is much stronger if the US is part of the pack.
But analysts say that as much as the TPP countries want the US back in, there are limits on how much they’ll compromise in the process. They’re going to fight to minimize the changes the US can make to the agreement, and they know they have more leverage since the US is already outside the deal at this point.
Should Trump enter negotiations to rejoin the TPP, there are a number of possible proposals he might be interested in. He could, for example, look to get Japan to drop some of the environmental and safety standards it has that limit the import of American cars into Japan.
He might call for strengthening “rules of origin” standards that mandate that a certain percentage of specific finished products must be made in a TPP country in order to be considered eligible for the TPP free trade treatment (a policy that encourages domestic manufacturing).
He might also push for robust intellectual property protections that allow American pharmaceutical companies to hold patents on their products for a longer period of time and edge out foreign competition.
But Trump will have a lot more difficulty negotiating for those policies than he would have before he pulled out. The democratic countries in the agreement know they could face domestic criticism if they make big concessions to the US at this stage in the process.
The sheer number of countries involved in talks could be an issue — there are more possibilities for potential disagreement. The Trump administration has already struggled for months to get Canada and Mexico to agree to the proposals it has rolled out during NAFTA renegotiations. “If they’re having difficulty dealing with two countries, it’s unclear they have the chops to deal with a bigger set of countries,” Tucker told me.
TPP countries are also not going to be sure if Trump can convince Congress to ratify an agreement. In all likelihood Congress wouldn’t be voting to approve any agreement until after the midterm elections in November, after which Democrats might control the House of Representatives. If Trump can’t get his own government to sign off on the deal, then all the negotiations will have been for naught.