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International relations

Trump opens door to TPP return

US president says move would require 'substantially better deal'

U.S. President Donald Trump gestures as he arrives for the World Economic Forum annual meeting in Davos, Switzerland, on Jan. 25.   © Reuters

DAVOS, Switzerland -- U.S. President Donald Trump on Thursday said he would rejoin the Trans-Pacific Partnership trade deal, which he decided to exit back in January 2017, if "we made a much better deal than we had."

"I would do TPP if we were able to make a substantially better deal," he said in an interview with American broadcaster CNBC at the World Economic Forum here.

The 11 remaining TPP members just Tuesday set a date for signing a revised version of the deal. Trump had previously refused to rejoin the trade pact despite repeated calls by Japanese Prime Minister Shinzo Abe, choosing instead to focus on bilateral agreements. But he appears to have changed tack amid pressure from U.S. business leaders.

Trump did not comment on specific conditions for a return. He could touch on the topic again at his planned speech at the forum on Friday.

Trump is expected to call for "reciprocal trade" in the speech, seeking to reduce America's huge trade deficit. With his mention of a "substantially better deal" for the U.S. as a condition for a return to the TPP, the 11 remaining members face negotiations with a hard-line Trump administration.

The future actions of Trump, who calls himself a deal-maker, are hard to predict. And there are uncertainties over how the remaining TPP members will react to a potential U.S. return. In any case, for a Trump administration that has announced an exit from the Paris Agreement on climate change and has shown a tendency to shun global cooperation, rejoining the TPP would be a first step toward the nation once again getting involved in the crafting of international frameworks.

The 11 countries are scheduled to sign an agreement in March. This would lead to a free trade zone making up 13% of the world's gross domestic product, but the figure would jump to 40% if the U.S. participates. Since the TPP is positioned as a way to counter China, which is expanding its own economic sphere, a U.S. return would also mark a major shift in America's Asia policy.

The U.S. could press Japan to increase imports of American beef and automobiles. If the Abe administration decides to renegotiate the terms with the U.S., it will have to coordinate again with various industry groups and others. Some believe that the U.S. will demand the inclusion of a foreign exchange provision in the pact to prevent a weakening of trading partners' currencies.

Twelve nations, including the U.S., reached a basic agreement on the TPP in the fall of 2015. An accord was officially signed in February 2016, and the members began the process of ratifying the treaty back home. Trump, who later won the U.S. presidential election, followed through on his campaign promise and announced a U.S. withdrawal from the agreement immediately after taking office.

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