On Monday, President Donald Trump signed an executive order removing the United States from the Trans-Pacific Partnership (TPP), a 12-nation trade agreement that would have tied together nearly 40 percent of the world’s GDP.
The TPP, which was finalized last year and was awaiting ratification by Congress as well as from several Pacific Rim nations, was incredibly unpopular in the United States. Not a single presidential candidate — of either party — supported the deal, though it was considered the cornerstone of former President Obama’s trade policies.
From the right, the TPP was criticized for undermining U.S. manufacturing and jobs. From the left, it was criticized for not going far enough on human rights and environmental protections.
But the major argument in favor of the TPP was to make sure that the United States was a leading voice in determining how trade would be conducted in Asia in the coming decades. The deal was seen as a way to contain China’s influence and to ensure that a modicum of environmental and human rights protections — though ultimately not enough to satisfy advocates — was put in place.
It’s unclear how, or whether, the Trump administration will replace the deal. At a press conference Monday afternoon, White House Press Secretary Sean Spicer told reporters that bilateral agreements were preferable to multilateral agreements, but he did not offer specifics on any trade proposals.
“The real question is, what comes next?” Sierra Club executive director Michael Brune said in a statement. “Will Trump’s trade policy, including any renegotiation of NAFTA, benefit the billionaire class or working people, healthy communities, clean air and water, and a more stable climate?”
Even Brune, whose group has vehemently opposed the TPP, suggested that what comes next might be worse. “Given that Trump is working to stack his cabinet full of billionaire supporters of status-quo trade deals who believe that climate change is a hoax, there is reason to be more than skeptical,” Brune said.
A major issue with the TPP, as written, was the Investor-State Dispute Settlement (ISDS) clauses, which would allow companies to sue countries that get in the way of their money-making. (This is the same type of clause that allowed Transcanada to sue the United States for denying the Keystone XL permit).
But there is no reason to think that Trump will avoid ISDS clauses in any trade agreements he strikes. It’s not apparent that he has ever addressed ISDS in any of his critiques of the TPP.
Trump’s anti-leadership agenda
While there were significant issues with the TPP, there were also benefits. Key among these, for the Obama administration, was exercising U.S. leadership. The TPP was specifically intended to shape trade and manufacturing rules in Asia.
“As the cornerstone of the Obama administration’s economic policy in the Asia Pacific, the Trans-Pacific Partnership reflects the United States’ economic priorities and values,” the Office of the U.S. Trade Representative said.
This benefit was not entirely lost on politicians and policymakers, even if they didn’t fully support the agreement as written.
“President Trump’s decision to formally withdraw from the Trans-Pacific Partnership (TPP) is a serious mistake that will have lasting consequences for America’s economy and our strategic position in the Asia-Pacific region,” Sen. John McCain (R-AZ) said in a statement Monday. “This decision… will create an opening for China to rewrite the economic rules of the road at the expense of American workers. And it will send a troubling signal of American disengagement in the Asia-Pacific region at a time we can least afford it.”
Disengagement signals from the Trump administration are coming fast and furious.
During Trump’s inaugural address last week, he said, “We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs. Protection will lead to great prosperity and strength.” He called for only buying things made in America. It will be very difficult to control trade rules in other countries without engaging with them.
Secretary of State nominee and former CEO of Exxon Rex Tillerson echoed Trump’s anti-global community approach during his confirmation hearing. Specifically on climate change, Tillerson said that the United States would no longer lead international efforts on climate change.
“I think it’s important to have a seat at the table, but I also think it’s important that others need to step forward and decide whether this is important to them or not,” Tillerson said.
“If America is the only one willing to lead, then my conclusion is the rest of the world doesn’t think it’s important,” he said, suggesting that if other countries don’t lead on climate issues, the United States won’t either. Addressing climate change has been one of the international community’s highest priorities in recent years, culminating in the 2015 Paris climate agreement. Backing down from its position on climate — as Trump has promised to do — will likely diminish U.S. standing in the world.
Moreover, scuttling the TPP is not likely to win Trump any friends in Asia. The deal was years in the making, and Japan, Australia, and other major economies were already on board.
Desperately opposed, desperately needed
Proponents of the agreement say that it would have helped protect workers across Asia, while improving U.S. position in the world. The U.S. Trade Representative website — still functional as of Monday afternoon — even says the agreement would benefit ordinary workers and small businesspeople in the United States.
“TPP will make it easier for American entrepreneurs, farmers, and small business owners to sell made-in-America products abroad by eliminating more than 18,000 taxes and other trade barriers on American products across the 11 other countries in the TPP — barriers that put American products at an unfair disadvantage today,” the site says.
Whether or not the TPP would have offered short term improvements to the U.S. economy, the fact remains that establishing humanitarian and environmental standards in trade agreements is a powerful tool. It’s not clear how the United States can push other countries to stop abusive labor practices, illegally mined minerals, or unsustainable fishing without a trade agreement.
Now, it’s not clear whether the country will even try.