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US needs Asian partners in economic fight with China

Trump right to reconsider TPP even if allies resist renegotiation bid

| North America
Right call this time, but rejoining the Trans-Pacific Partnership will be much harder than getting out.   © Reuters

President Donald Trump pulled the United States out of the Trans-Pacific Partnership on his third day in office. "A great thing for American workers," he said, as he signed the executive order January 23, 2017, terminating U.S. participation in a trade agreement he had called "another disaster done and pushed by special interests."

Now, 15 months later, he has directed his top trade officials to look for a way back into the TPP. If successful, it would undo one of the worst blunders of his administration, which has not exactly been error-free. And it would reassure Japan and other U.S. trading partners in Asia that the strategic interests of the U.S. in the region are strong enough to overcome Trump's impulses. In the face of an increasingly assertive China, the TPP countries have a strong stake in doing everything possible to bring the U.S. back into the fold. But reopening the door on TPP is certain to be far harder than closing it.

Trump's turnabout has come in the face of the escalating U.S. trade conflict with China. China alone accounted for more than 60% of the $566 billion U.S. trade deficit in 2017, and the administration is now threatening tariffs on close to $150 billion in imports from China to ratchet up pressure on Beijing to address the problem.

Trump had been advised repeatedly before taking office that TPP was an important source of leverage over China; the promise of zero tariffs and reduced regulation inside a bloc covering some 40% of the global economy would have been a strong magnet for multinational companies that are increasingly frustrated at the difficulties of doing business in China. Beijing would have faced the tough choice of watching investment dollars flow to other countries in the region, or launching new reforms to move China in the direction of the TPP rules.

For Trump, however, opposing TPP was one of the signature issues that brought him to office. He won the election in Rust Belt states like Pennsylvania, Ohio and Michigan by promising to rip up or reform the unpopular North American Free Trade Agreement and to pull out of the TPP, which he called "another massive international agreement that ties us up and binds us down." He made good on that campaign promise by killing TPP before his administration had even begun to design its trade strategy toward China.

That Trump is now reconsidering that decision is certainly a good sign. He has shown some limited ability to change his views in the face of new evidence; he had promised in the campaign, for example, to name China as a "currency manipulator" but backed away after business advisers persuaded him that his concerns were a decade out of date. His second thoughts on TPP provide some hope that he is growing into his job as president.

But there are three big obstacles to the U.S. returning to the fold.

The least of these is Trump's own unrealistic expectations. When news filtered out last week of his about-face on TPP, he quickly tweeted that the U.S. would only return "if the deal were substantially better than the deal offered to Pres. Obama." That is unlikely to be the case, but the administration has already shown that the president's reach far exceeds his grasp. Similarly tough talk on the U.S. trade agreement with South Korea was resolved by a modest deal, and the U.S. is backing away from its most extreme proposals in the NAFTA renegotiation with Mexico and Canada.

A bigger hurdle is the lukewarm reception from other countries. Having been burned by the U.S. once on TPP, they will be reluctant to make the same mistake twice. It was just last month that the remaining 11 countries managed to conclude a new deal without the U.S., and the initial reactions from Japan, Australia and others suggest no great desire to start all over again just because Trump has changed his mind. Like him, their leaders have powerful domestic business lobbies to contend with.

The biggest hurdle, however, is back in Washington. The resignation of House Republican speaker Paul Ryan last week is the latest sign that Trump's unpopularity at home is setting the stage for a Democratic sweep of the House of Representatives in November. That means any renegotiated TPP will have to pass a House controlled by Democrats who were hostile to TPP even when it was championed by one of their own, Barack Obama. A Trump Pacific Partnership will be even less appealing.

For all the challenges, however, the U.S. and the TPP countries should make every effort possible to come together again. The stakes are much higher than the domestic politics of any one nation. With China's rising strength in the region, all of its neighbors have a strong interest in a United States that is fully engaged economically as well as militarily.

The TPP remains the best hope for that engagement. While the odds are long, it is worth another try.

Edward Alden is a senior fellow at the Council on Foreign Relations and the author of "Failure to Adjust: How Americans Got Left Behind in the Global Economy."

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