Benefits to US from rejoining pact, but talks may be fraught

Mr Larry Kudlow, US President Donald Trump's top economic adviser, said the President's request to revisit the deal was somewhat spontaneous, and that a team would be pulled together.
Mr Larry Kudlow, US President Donald Trump's top economic adviser, said the President's request to revisit the deal was somewhat spontaneous, and that a team would be pulled together.

WASHINGTON • US President Donald Trump's reconsideration of an agreement he once denounced as a "rape of our country" caught even his closest advisers by surprise.

Mr Trump's top economic adviser Larry Kudlow said in an interview on Thursday with The New York Times that the request to revisit the deal was somewhat spontaneous. "This whole trade thing has exploded," Mr Kudlow said. "There is no deadline. We will pull a team together, but we haven't even done - I mean, it just happened a couple of hours ago."

Mr Trump's decision to throw out the Trans-Pacific Partnership (TPP) and his pledge to tear up the North American Free Trade Agreement were bedrock promises of his populist campaign, which centred heavily on unfair trade practices that he said had robbed United States manufacturers and workers.

As he often does, the President started to change gears after hearing complaints from important constituents - in this case, Republican lawmakers who said farmers and other businesses in their states would suffer from his trade approach because they send many of their products abroad.

Rejoining the pact could be a significant change in fortune for many US industries that stood to benefit from the trade accord and for Republican lawmakers who backed it.

The deal, negotiated by the Obama administration, was largely intended as a tool to prod China into making economic changes that the US and others have long wanted. Many economists say the best way to combat a rising China and pressure it to open its market is through multilateral trade deals like the TPP, which create favourable trading terms for participants.

"The idea was to set a framework that eventually China would have to accommodate," said Massachusetts Institute of Technology economist David Autor.

Farmers would stand to benefit from new access to markets, especially Japan, if Mr Trump rejoins the pact. For instance, ranchers in Australia can send beef to Japan more cheaply than ranchers in the US.

Mr Michael Miller, chairman of US Wheat Associates and a farmer in Washington, said rejoining the deal would allow his industry to compete on a level playing field with competitors in Australia and Canada, which both stayed in the accord.

But rejoining it could be a complex task. The remaining countries, like Japan, moved ahead without the US, and spent months renegotiating a pact before finally agreeing to a sweeping multinational deal this year. Mr Trump, who has demanded that any such deal benefit the US, is unlikely to rejoin the TPP without further concessions for what he has criticised as a terrible agreement. That could complicate talks as Japan maintains that it has already given all the concessions it could, said trade expert William Reinsch of the Centre for Strategic and International Studies.

Japan's Chief Cabinet Secretary Yoshihide Suga yesterday cautioned against any efforts to change the agreement to accommodate Mr Trump, calling it a "well-balanced pact" that addressed the needs of the 11 nations that signed the deal.

It is also unclear how serious Mr Trump is about rejoining. In the past, he has floated policies that appeared to run counter to his earlier positions, such as cooperating with Democrats on legislation governing immigration and gun rights, then quickly abandoned them.

Deputy White House press secretary Lindsay Walters pushed back on the notion that Mr Trump was reversing his promises. He had "kept his promise to end the TPP deal negotiated by the Obama administration because it was unfair to American workers and farmers", she said. "The President has consistently said he would be open to a substantially better deal."

NYTIMES

A version of this article appeared in the print edition of The Straits Times on April 14, 2018, with the headline 'Benefits to US from rejoining pact, but talks may be fraught'. Print Edition | Subscribe