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Politics

Is the US heading back to the TPP? Not so fast

Even if Trump is serious, renegotiation will take time and effort

U.S. President Donald Trump speaks at the World Economic Forum annual meeting in Davos, Switzerland, on Jan.26.   © Reuters

A year after officially withdrawing from the Trans-Pacific Partnership, U.S. President Donald Trump now says he would reconsider a "substantially better deal." At Davos, Trump told an audience of business leaders that he "would consider negotiating with the rest either individually or perhaps as a group if it is in the interests of all."

These comments have left the 11 remaining countries of this Pacific Rim trade agreement scratching their heads. Is Trump serious? What caused this shift? Might the U.S. actually return to this agreement? And if so, on what terms and timetable?

Having served four presidents at the Office of the U.S. Trade Representative, I have witnessed positions evolve once a new administration enters the White House. Trade issues are tough and complex. What helps one industry may hurt another. Trade negotiations take time. And, America's trading partners do not stand still while the U.S. reassess its strategy.

I suspect all of these realities are setting in for the Trump administration, making TPP an increasingly attractive option.

As the Trump team shapes its trade policy toward China, it is easy to conclude what has not worked, but far more difficult to craft an effective policy without serious downsides. While the administration has broadcast its preference for negotiating "fair and reciprocal" bilateral deals, so far there are no takers. The ambitious timeline set for the renegotiations of the North American Free Trade Agreement is slipping and some speculate the talks may go into next year. And, as a recent Asia Society Policy Institute report notes, trade negotiators across the Asia-Pacific region have been busy over the past year, concluding and launching their own deals without the U.S. Most notably, the 11 remaining members of TPP reached an agreement last week in Tokyo, ironically on the very day of the one year anniversary of U.S. exit from TPP.

While the president's opening to TPP is welcome, the remaining TPP countries should not allow it to slow down the agreement's ratification process. First, it is not at all apparent how serious the U.S. is about TPP. Trump's statement at Davos was quite vague. Second, it is not clear the so-called TPP-11 countries would welcome the "substantially improved deal" the U.S. would seek. Third, the opportunity to get in place high standard TPP rules in areas such as labor standards and digital trade  is finally at hand and long overdue.

It is also hard to see how the Trump administration could turn to TPP until the fate of the NAFTA negotiations with Canada and Mexico, two TPP members, is clearer. The outcome on issues such as automotive rules of origin, government procurement, dispute settlement, and a "sunset clause" that would cause NAFTA to expire every five years unless renewed by all three members, would be important markers in any TPP negotiation.

That is not to say it is impossible for the U.S. to return to the party. The TPP-11 have emphasized they would welcome back the U.S., having left in place procedures for the U.S to rejoin relatively quickly if it were serious about it.

But it would take time and effort for the U.S. to regain the trust of the TPP-11 countries. Officials from these countries were disappointed, after spending significant political capital domestically to push for TPP, when the U.S. could not get the deal through Congress in 2016, not to mention the blow they felt when Trump withdrew on day three of his tenure.

To rebuild credibility and regain trust of the TPP-11 countries and other trading partners, I suggest the following:

First, senior U.S. trade officials should consult with each TPP-11 county to understand their priorities and concerns.

Second, the U.S. NAFTA negotiating team should show the flexibility and creativity needed to bridge differences on controversial U.S. proposals, while trying their best to accommodate requests made by Canada and Mexico.

Third, the U.S. should ensure that the trade actions it takes in the coming months are consistent with World Trade Organization rules, and not unilateral actions that go against the rules of global trade.

Fourth, the administration should consult and seek the understanding and potential support of trading partners throughout Asia as it embarks on its China trade strategy.

Finally, it will be important to demonstrate to the TPP-11 countries that a majority of Congress is onboard, because at the end of the day legislators would need to approve any deal.

All of this will take time. In the meantime, the TPP-11 countries should not take a "wait and see" approach to President Trump's overture. Instead, they should take the necessary steps to bring the agreement into force among the 11, while working with the U.S. to assess what this opening means.

Wendy Cutler is vice president at the Asia Society Policy Institute and a former negotiator in the Office of the U.S. Trade Representative.

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