In a surprise about-face, President Donald Trump has proposed that the US consider re-joining a trade agreement that he called a “rape of our country” during his election campaign.
Why Trump wants back into a trade deal he once ridiculed
Trump pulled the US out of the Trans-Pacific Partnership (TPP) just three days into his presidency, warning that unfair trade terms would cost Americans jobs.
But on Thursday, Trump asked his trade advisers to re-open negotiations on the agreement, adding he wanted a “substantially better” deal than the one reached by the Obama administration.
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!— Donald J. Trump (@realDonaldTrump) April 13, 2018
China has never been a part of the trade deal, but concerns about Beijing have played a key role in the US’ apparent flip-flop.
Here’s what you need to know:
What’s the big deal?
The US entered the TPP negotiations in 2008 as part of the Obama administration’s strategy to “pivot to Asia.”
The 12 nations taking part in the negotiations, including the US, together represented 40% of global GDP and one-third of world trade, making the deal the largest regional trade accord in history.
The countries agreed to offer each other low tariffs given they also followed a number of labor, environmental and intellectual property standards.
The Obama administration framed the pact as a tool to promote US trade standards in the Asia-Pacific region and force China to eventually accommodate them.
Why Trump withdrew
After the US and 11 other countries signed on the TPP in 2015, the deal ran into strong opposition in the Congress due to worries that it would cost US manufacturing jobs.
Although Republicans have traditionally advocated for free trade to appeal to business groups, Trump took a protectionist stance during and before his election campaign, claiming that such pacts hurt average American workers.
The Trans-Pacific Partnership will increase our trade deficits & send even more jobs overseas. This is a bad deal. Time for smart trade!— Donald J. Trump (@realDonaldTrump) June 3, 2015
Trump officially withdrew the US from TPP days after he took office in January 2017, and the remaining 11 countries agreed to move ahead without US participation.
Trump has also threatened to tear up the 24-year-old North American Free Trade Agreement (NAFTA) with Canada and Mexico, demanding terms more favorable to US manufacturing.
Why the US’ absence benefits China
Analysts have said that Washington’s withdrawal from TPP left Asia open for Beijing, which has been extending its economic and political influence abroad.
Since 2012, China has been pioneering an alternative trade pact – the Regional Comprehensive Economic Partnership (RCEP) – to rival TPP.
The 16 participants RCEP, which include India, make up almost half of the world’s population and 30% of global GDP.
Following the US exit from the TPP, RCEP has become even more attractive for smaller nations by providing access to the expanding Chinese market.
Singapore’s trade minister said last month that talks on the deal could be concluded by the end of the year.
RCEP also seeks to promote free trade among its participants, but unlike the TPP it lacks labor or environmental protection rules that prevent governments from favoring state-owned enterprises.
Proponents of TPP in Washington have warned that US influence in Asia would wane by letting China write the trade rules.
Why Trump wants back in
Trump has yet to reveal what prompted his sudden change of mind, but it is likely to do with China.
The renewed discussion on TPP began on Thursday when Senator John Thune, Republican of South Dakota, told the president that the pact was the best way to put pressure on China, The New York Times reported.
Trump then asked his economic advisers to look into re-entering TPP, the report said.
The continuing trade dispute between China and US have seen Beijing threaten to raise tariffs on American wheat, soybeans and pork.
The agricultural and industrial sectors, both key constituents for Trump, are increasingly worried that Trump’s stance on trade will hurt their export businesses.
Re-joining TPP will potentially open up more markets for American farmers and add to Trump’s bargaining power when it comes to negotiations with Beijing.
It remains to be seen whether the rest of the TPP countries, which reached a final version of their own deal last month by eliminating some US-backed terms, will give Trump a warm welcome.