Rejoin the TPP
President Trump, apparently, is open to rejoining the Trans-Pacific Partnership (TPP). Yes, thatTPP, the same multilateral trade deal that Trump savaged during the 2016 presidential campaign and withdrew the United States from in the early days of his administration. Last week, during a meeting with farm-state lawmakers, the president said his administration would revisit the deal and instructed advisers to look into the matter.
Of course, it’s hard to know whether to take the overture seriously. Tuesday night, Trump threw cold water on the idea via Twitter, expressing a preference for bilateral trade deals. Regardless, rejoining the TPP is a good idea.
The simplest reason why is that it would boost the American economy. The signatories of the agreement — including Canada, Australia, New Zealand, Japan, Singapore, Malaysia, and Chile — account for roughly 40 percent of American trade. With ratification fast approaching, and the U.S. on the outside looking in, American exporters trying to sell goods in TPP-member countries soon will find themselves at a disadvantage. Rejoining would help keep American companies competitive and boost foreign direct investment in the U.S.
The TPP has its opponents, especially among self-described economic nationalists. We share the belief that trade agreements ought to be pursued with the national interest in mind. But opponents of the TPP tend to ignore what it actually entails, perhaps because the TPP is in the national interest. Increased trade and investment are good things, and the signatories are generally not the sort of countries to which American manufacturing jobs tend to flee. In any case, it is a question not of whether the TPP would help the overall economy but of how much: The per-year boost to GDP would range from $57 billion to $78 billion.
There are compelling diplomatic reasons to rejoin the agreement as well. Japan’s Shinzo Abe went out on a political limb to shepherd the agreement through, only for the U.S. to pull out. Trump’s attempt to forge a bilateral trade agreement with Japan has, to this point, failed. The two are set to meet this week, and a signal from Trump that he is serious about rejoining the TPP could help paper over any divisions between the U.S. and Japan at a time when it is obviously crucial to maintain strong diplomatic relations with our allies in Asia.
When President Trump withdrew from the agreement back in January 2017, we objected chiefly on the grounds that the decision risked ceding influence in the Pacific to China. Now Trump seems to be grasping for ways to counteract Chinese mercantilism without setting off a catastrophic trade war. The TPP is the best place to start. China is negotiating a trade deal called the Regional Comprehensive Economic Partnership (RCEP) that would go a long way toward enshrining many of its worst practices. Potential parties to RCEP include Malaysia, Vietnam, and Singapore: all fast-growing countries, all signatories to the TPP. The lesson here is that if the U.S. doesn’t set the terms of global trade, someone else will. Rejoining the TPP would reassert America’s role in forging a global free-trade alliance that can speak with one voice against Chinese mercantilism.
The TPP is not a perfect agreement, nor will rejoining it be a silver bullet to counteract Chinese misbehavior. Negotiating a favorable return to the agreement — which has been rebranded as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP — will not be easy: Since our withdrawal, the CPTPP has been shorn of provisions on intellectual property and patent protection that were key to American negotiations. It will be difficult to secure the reinstatement of those provisions, let alone the tougher measures forbidding currency manipulation that the Trump administration should push for.
But the president has an opportunity here to reassert American influence in the Pacific, and help American exporters in the process. He should take it.
Originally Posted: April 18, 2018 5:00 PM
By: THE EDITORS