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US President Donald Trump said the US would only join the Trans Pacific Partnership (TPP), a multinational trade deal his administration walked away from last year, if it offered “substantially better” terms than those provided under previous negotiations.
His comments, made on Twitter late Thursday, came only hours after he had unexpectedly indicated the US might rejoin the landmark pact, and amid heightened volatility in financial markets as Washington locked horns with China in a bitter trade dispute.
Trump had told Republican senators earlier in the day that he had asked United States Trade Representative Robert Lighthizer and White House economic adviser Larry Kudlow to re-open negotiations. In his Twitter post, which came during Asian trading hours, Trump said the US would “only join TPP if the deal were substantially better than the deal offered to Pres. Obama. We already have BILATERAL deals with six of the eleven nations in TPP, and are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years!” Policymakers in the Asia-Pacific region on Friday responded to the possibility of the US rejoining the trade deal with scepticism.
“If it’s true, I would welcome it,” Japanese Finance Minister Taro Aso told reporters after a cabinet meeting on Friday and before Trump’s tweet. Aso added that the facts needed to be verified.
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Trump “is a person who could change temperamentally, so he may say something different the next day”, Aso said.
Australian Prime Minister Malcolm Turnbull, commenting after Trump's tweet, said it would be “great” to have the US back in the pact though doubted it would happen.
“We’re certainly not counting on it,” Turnbull told reporters in Adelaide in South Australia. The TPP, which now comprises 11 nations, was designed to cut trade barriers in some of the fastest-growing economies of the Asia-Pacific region and to counter China’s rising economic and diplomatic clout. However, members of the 11-nation Asia-Pacific trade pact said Friday they opposed any renegotiation of the deal to accommodate the US should it decide to rejoin at a later date.
Ministers from Japan, Australia and Malaysia welcomed President Donald Trump directing officials to explore returning to the TPP, a pact he withdrew from shortly after coming to office. But they also cautioned against making any significant changes. “We welcome the US coming back to the table but I don’t see any wholesale appetite for any material re-negotiation of the TPP-11,” Australia Trade Minister Steven Ciobo said Friday.
Toshimitsu Motegi, Japan’s minister in charge of TPP, also said it would be difficult to change the deal, calling it a “balanced one, like fine glassware.” Malaysia’s International Trade and Industry Minister Mustapa Mohamed echoed these remarks, saying that renegotiation would “alter the balance of benefits for parties.”
The S&P 500 Index closed up 0.8 per cent and the Dow Jones Industrial Average added almost 300 points, or 1.2 per cent, as investors assessed the changing trade dynamics. Asian stocks climbed as equities in Japan and Australia advanced.
US Commerce Secretary Wilbur Ross later said the administration needs to see concrete actions from China to reach a deal. The remarks were another conciliatory signal from the administration following tit-for-tat tariffs proposals from the world’s largest two economies that rattled markets. Trump also indicated that talks are progressing toward successful renegotiation of the North American Free Trade Agreement.
Trump withdrew the US from the accord during his first week in office. The pact, which was conceived as a counterweight to China’s rising economic power in the region, had been negotiated under the Obama administration but never approved by Congress. Senator Ben Sasse, Nebraska Republican who participated in a meeting with Trump on Thursday where he spoke about rejoining the deal, said: "He multiple times reaffirmed the point that TPP might be easier to join now."
The news drew a rebuke from opponents of the multilateral trade pact. AFL-CIO President Richard Trumka, head of the main trade union group, said on Twitter that TPP “was killed because it failed America’s workers and it should remain dead.” Democrat Senator Sherrod Brown, said he was “very open to a new TPP” as long as it had strong labor rights protections and currency provisions. “You’d need a whole renegotiation.”
The 11 remaining nations represent 13 percent of global output and include Japan and Canada. They finalized a revised version of the trade pact last month, renaming it the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
One of the White House officials said that while the president prefers negotiating bilateral trade deals, a multilateral deal with the TPP countries would counter Chinese competition and would be faster than negotiating one-on-one with each of the 11 other nations.
Trump, who opposed multilateral trade pacts in his election campaign in 2016 and criticised the TPP as a “horrible deal”, pulled the US out of the pact in early 2017. He argued bilateral deals offered better terms for US businesses and workers, and signaled an intention to raise trade barriers.
But Trump is struggling to get support from other countries for his recent threat to impose import tariffs on China and the US farm lobby is arguing that retaliation by China would hit American agricultural exports.
Trade experts believe Trump is probably trying to placate his political base in the wake of criticism over the US-China China tariff standoff.
"Well I think you have to take it seriously but I think there is an enormous chance that this is simply posturing or a tactical decision taken to placate concerned governors and senators from agricultural states that could be affected by China imposing tariffs," said Charles Finny, a Wellington-based trade consultant and a former New Zealand government trade negotiator.
"I think it's very important for people to realize, particularly given this most recent tweet, if there is a negotiation it will not be an easy one. It will take a long time and also there is huge risk around ratification."
New process
Even before Trump's official withdrawal last year, US participation in the pact was seen as increasingly unlikely due to opposition in the US Congress.
The United States entered TPP negotiations in 2008. In 2016, then President Barack Obama's administration abandoned attempts to push the pact through Congress.
The other 11 countries forged ahead with their own agreement without US participation, and in the process eliminated chapters on investment, government procurement and intellectual property that were key planks of Washington's demands.
New Zealand Prime Minister Jacinda Ardern, noting the progress made by the 11 countries after Trump abandoned the deal, also flagged challenges to the Untied States rejoining the pact.
"If the United States, it turns out, do genuinely wish to rejoin, that triggers a whole new process," she told reporters in Auckland.
"There would be another process and so, at this stage we are talking hypotheticals."
The 11-member pact includes Mexico and Canada, which are in the process of re-negotiating the terms of the North American Free Trade Agreement with the United States.
A Canadian government official said on Thursday there had not been any formal outreach from the United States about the pact.
Japanese Prime Minister Shinzo Abe will meet Trump next week. Japan, a close US ally, is a member of the TPP.
