Trump considers joining TPP one year after signing executive order pulling US out of trade pact

Billionaire demands terms 'substantially better than deal offered to President Obama'

Tom Embury-Dennis
Friday 13 April 2018 17:23 BST
Donald Trump would consider TPP with a 'substantially better deal'

Donald Trump is exploring the possibility of the US joining the Trans-Pacific Partnership, more than a year after signing an executive order withdrawing America from the proposed trade pact.

The president said the US would "only join TPP if the deal were substantially better than the deal offered to President 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!" he wrote on Twitter.

It comes amid mounting pressure from Republicans in farming states anxious his protectionist trade policies could spiral into a trade war with China that would hit rural America.

The billionaire spent the 2016 presidential campaign ripping into the multi-national pact, saying he could get a better deal for US businesses by negotiating one-on-one with countries in the Pacific Rim.

But he hinted at the possibility of joining the trade deal in January, when he told the World Economic Forum in Davos he would "do TPP if we made a much better deal than we had".

"Last year, the president kept his promise to end the TPP deal negotiated by the Obama Administration because it was unfair to American workers and farmers," the White House said in a statement.

The president assigned his top trade advisers, US trade representative Robert Lighthizer and his new chief economic adviser, Larry Kudlow, "to take another look at whether or not a better deal could be negotiated".

Mr Trump first disclosed his request on Thursday to a group of lawmakers at a White House meeting on trade. Members of Congress have been pressing Mr Trump to shift course after escalating trade threats, including China's plan to slap tariffs on soybeans and other US crops.

The apparent decision comes after the 11 other TPP countries went ahead last month and signed the pact in Santiago, Chile. The agreement is meant to establish freer trade in the Asia-Pacific region and put pressure on China to open its markets to compete with and perhaps eventually join the bloc.

It was not immediately clear how committed Mr Trump was to embark on a new path of potentially thorny negotiations. Mr Trump frequently equivocates on policy when faced with opposition, only to reverse course later.

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"I'm sure there are lots of particulars that they'd want to negotiate, but the president multiple times reaffirmed in general to all of us and looked right at Larry Kudlow and said, 'Larry, go get it done,"' said Ben Sasse, a Republican senator Nebraska.

The president has mused publicly about rejoining the deal before, suggesting he would re-enter if he could negotiate more favourable terms. He has not said precisely what provisions he would want changed.

It's unclear how willing the other 11 countries would be to reopen the agreement and make concessions to lure the US back, though its economic power would likely be an appeal.

"If the Trump administration doesn't pose too many demands, it is likely that the other TPP members will see the value of the bringing the US back into the fold," said Eswar Prasad, Cornell University professor of trade policy. "Undoubtedly, a TPP that includes the US would be stronger and more formidable than one that does not."

Lawmakers on Capitol Hill have been renewing their pitches for TPP - rather than Mr Trump's threats of steep tariffs on steel and other products - as a way to counter China on trade. Ron Johnson was among a handful of senators who recently visited China to meet with government and business leaders there. He said it is time to work with a coalition of trading partners to increase pressure on China.

"I have to believe President Xi is smiling all the way to regional domination as a result of our pulling out of TPP. I don't think we can get back into the TPP soon enough," Mr Johnson said when talking to reporters about the trip.

Public Citizen's Global Trade Watch, which was highly critical of US involvement in a pact it viewed as lowering labour and environmental standards, said Mr Trump's reversal on the issue would signal that the president "cannot be trusted on anything," said Lori Wallach, the group's director.

The US International Trade Commission, an independent federal agency, has projected in 2016 that TPP would increase economic growth and create jobs, but the gains would be small: After 15 years, the deal would add just 128,000 jobs, an increase of less than a tenth of 1 percent. Exports would increase, but imports would increase more. Agriculture and the business services industry would see gains, but manufacturing output and employment would decrease slightly under TPP.

In the meeting with farm state lawmakers, Mr Trump also suggested the possibility of directing the Environmental Protection Agency to allow year-round sales of renewable fuel with blends of 15 per cent ethanol.

The EPA currently bans the 15 per cent blend, called E15, during the summer because of concerns that it contributes to smog on hot days. Gasoline typically contains 10 per cent ethanol. Farm state lawmakers have pushed for greater sales of the higher ethanol blend to boost demand for the corn-based fuel.

North Dakota governor Doug Burgum said Mr Trump made some "pretty positive statements" about allowing the year-round use of E-15 ethanol, which could help corn growers.

The White House meetings came as an array of business executives and trade groups expressed concerns at a congressional hearing about the impact that tariffs will have on their business. Still, there were some supporters, too.

"Withdrawing the threat of tariffs without achieving results would be tantamount to waiving the white flag of trade surrender," said Scott Paul, president of the Alliance for American Manufacturing.

Additional reporting by AP

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