The Trans-Pacific Partnership trade deal among 12 Pacific Rim countries was the centerpiece of President Obama’s Asia policy and the other countries involved have dreaded a pullout by Mr. Trump. President Trump formally pulled out of the deal Monday, declaring it a “bad deal”.
Trump said, “That doesn’t mean that we don’t trade, because we do trade,” he said. “But we want to make our products here … We’re going to start making our products here. There are going to be advantages to companies that do in fact make our products here.”
Trump also intends to open up NAFTA with Canada and Mexico.
He said he will cut taxes and regulations by as much as 75%.
“We’re going to have regulation massively,” he said. “Now we’re gonna have regulation, and it’ll be just as strong and just as good and just as protective … as the regulation that we have right now.”
The goal is to improve the job environment for U.S. workers.
President Trump said we will have plenty of trade but it will be one-on-one – bilateral trade agreements.
Trump Was Applauded by Unions
Trump was applauded by the union leaders at the meeting he held today. TPP was perceived as a globalist trade deal that would outsource even more US jobs.
China Will Take Our Place
Senator John McCain and others denounced pulling out of the “free trade” deal.
The unions and many in the Democrat Party support the move. Republicans are always in support of trade deals and this is a setback.
— Candace (@roycan79) January 23, 2017
The fear by many and expressed by McCain is that China will take the leadership role.
“President Trump’s decision to formally withdraw from the Trans-Pacific Partnership (TPP) is a serious mistake that will have lasting consequences for America’s economy and our strategic position in the Asia-Pacific region,” McCain said in a statement.
McCain later tweeted out his concerns.
— John McCain (@SenJohnMcCain) January 23, 2017
This decision “will create an opening for China to rewrite the economic rules of the road at the expense of American workers. And it will send a troubling signal of American disengagement in the Asia-Pacific region at a time we can least afford it,” McCain argued.
China is already talking about playing a greater role in international trade and globalization.
“China will not shut its door to the outside world but open it more,” Chinese President Xi Jinping said at the Asia Pacific Economic Cooperation (APEC) summit in November last year, indicating that China will attempt to play a greater economic role in the region through the Regional Comprehensive Economic Partnership (RCEP) and the Free-Trade Area of the Asia Pacific (FTAAP).
“Pursuing protectionism is like locking oneself in a dark room,” Xi said last week at Davos in a veiled criticism of Trump’s protectionist policies.
“The front runners have stepped back leaving the place to China,” explained Zhang Jun, director general of the international economics department in the Chinese Ministry of Foreign Affairs. “If China is required to play that leadership role then China will assume its responsibilities.”
Australia is open to allowing China and Indonesia to join TPP. Others can join now that the U.S. has pulled out.
Powerful Reasons to Oppose TPP
They were succinctly summarized on Laura Ingraham’s website:
- It does not include provisions prohibiting currency manipulation or enforceable penalties for doing so. Currency manipulation has cost the U.S. thousands of factories and millions of jobs over the last two decades.
- TPP fails completely to address across-the-board Value Added Taxes imposed on our goods at the border of every TPP country but Brunei. VATs raise the cost of U.S. goods and make them less competitive. Worldwide, VATs are estimated to cost U.S. firms $350 billion a year.
- TPP guts Buy America provisions in U.S. law by allowing firms in any TPP country to bid on U.S. procurement, including Chinese state-owned firms located in Vietnam. Our tax dollars can thus go to China instead of to U.S. producers.
- TPP has rules that allow Japanese automakers to incorporate Chinese parts in their cars and still receive favorable tariff treatment entering the U.S., thus harming the American auto industry.
- TPP will produce no job growth, and add at most only 0.04% to our GDP by 2025. This is pocket change. Major studies by the Peterson Institute (2011), the U.S. Department of Agriculture (2014), the World Bank (2016), and Tufts University (2016) show little benefit — or actual job loss — from TPP. The Washington Post Fact Checker gave Obama 4 Pinocchios for claiming the TPP would add 650,000 jobs.
- TPP will not prevent China from dominating Asian markets, by having the U.S. “write the rules for 21st Century trade,” in Obama’s words. TPP members aren’t going to stop trading with China on China’s terms because the U.S. has put some rules in an agreement. And China is certainly not going to follow U.S. rules anyway.
- TPP will not constrain China economically. China just launched the Asia Investment and Infrastructure Bank to develop the entire Asia region. Fifty seven countries joined up, including our major European allies, in spite of Obama’s telling them not to.
- TPP will not complete Obama’s “Pivot to Asia.” We can’t pivot because Obama’s Mideast policies have resulted in multiple regional wars in which we are involved. And the pivot is just a PR ploy to reassure our Asia friends that we will stay involved.
- One indication of public hostility is that President Obama spent only 28 seconds out of his 70-minute State of the Union speech advocating for it. This is the dog-whistle approach: Don’t stoke the opposition of the average American by raising TPP’s visibility. But signal the free-traders in Congress (mostly Republicans), Wall Street, and multinational corporations that the White House will lobby hard for it, so that they will too.
It wasn’t popular with much of the electorate, including Republican voters who support free trade.