Trump Begins Setting US Trade Policy Course During First Week in Office

26 January 2017

The first week of Donald J. Trump’s presidency of the United States has included both executive action and plans for meetings focused on trade, giving some early signals of the possible direction of the White House trade agenda and other policy priorities.

Trump took the oath of office on Friday 20 January, giving a brief yet heated inaugural address that called for pursuing an “America First” policy and claiming that the US of today is suffering from an “American carnage” that he attributed to an allegedly prolonged economic decay, excessive deference to foreign interests and needs, and heightened levels of domestic crime. 

“We’ve made other countries rich while the wealth, strength, and confidence of our country has disappeared over the horizon. One by one, the factories shuttered and left our shores, with not even a thought about the millions upon millions of American workers left behind,” he said at the time, with the remainder of the speech along similar themes.

TPP: US withdrawal

As one of his first acts in office, Trump issued a presidential memorandum to the US Trade Representative (USTR) on Monday 24 January, directing him to “withdraw the United States as a signatory of the Trans-Pacific Partnership (TPP), to permanently withdraw the United States from TPP negotiations, and to begin pursuing, wherever possible, bilateral trade negotiations to promote American industry, protect American workers, and raise American wages.”

“It is the policy of my Administration to represent the American people and their financial well-being in all negotiations, particularly the American worker, and to create fair and economically beneficial trade deals that serve their interests,” said the memorandum.

Trump made the TPP one of his major targets on the campaign trail last year, repeatedly calling it a “potential disaster” for the US. The 12-country accord had been one of the Obama Administration’s top priorities, both in terms of advancing trade rulemaking and in cementing deeper ties with the Asia-Pacific region.

Though the TPP negotiations were finalised and the Agreement signed almost exactly a year to the date of Trump’s reversal, the deal proved to be a source of heated controversy with American politicians and the public, particularly throughout the electoral campaign. The nature and tone of the debate ultimately raised scepticism in some quarters over whether the current version could get ratified in Washington at all. (See Bridges Weekly, 11 February 2016)

Trump had already stated in November his plans to formalise a TPP withdrawal, though some of the other signatories continued moving forward with their own domestic ratification processes. Prior to this week’s presidential memorandum, Australian officials were among those suggesting that the US might just need some additional time to get back on board.

Under the TPP, any signatories that wish to withdraw must notify the agreement’s “depositary,” which is New Zealand. They must also notify other TPP members. Under the “Final Provisions” listed in TPP Chapter 30, the withdrawal notification then kicks off a six-month window before the actual exit from the accord will take effect, though the deal’s members can choose to proceed on a different timeframe.

The TPP’s other signatories include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. After the presidential memorandum, some have indicated that they aim to find a way forward, even without the US.

“We’ve been having some preliminary discussions about how we might be able to capture within a new, reformulated TPP those gains [from the original deal], just less the United States,” said Australian Trade Minister Steven Ciobo in an interview with CNN.

Mexican President Enrique Peña Nieto told CNN that his country would be looking into talking with other countries “to generate new bilateral trade accords with the other countries in this partnership.” Meanwhile, a spokesperson for the Singaporean Ministry of Trade and Industry has suggested that since the TPP cannot take effect in its current form without the US, the Asian city-state will be looking to continues its involvement in other regional integration initiatives.

Chile, for its part, has also expressed an interest in moving forward even without the US, with Foreign Minister Heraldo Muñoz confirming plans this week to invite fellow TPP officials to a summit on next steps in March. Officials from two non-TPP members – China and South Korea – would also be invited, according to comments reported by Reuters.

NAFTA meetings, renegotiation plans

The coming days are also expected to see announcements over the planned renegotiation of the North American Free Trade Agreement (NAFTA), a decades-old trade deal between the US, Canada, and Mexico that similarly drew harsh criticism from Trump in the run-up to the November 2016 election.

The leaders of both Canada and Mexico have expressed an initial interest in upgrading the trilateral trade deal, with some meetings on the subject already in the pipeline. Trump is scheduled to meet with Mexican President Enrique Peña Nieto on 31 January.

The US-Mexico relationship was a recurring theme during Trump’s campaign, with the business mogul calling repeatedly for the need to stem illegal immigration. The issue of migration and ensuring positive bilateral ties may come up next week between the two leaders, particularly after the news that Trump had issued another executive order this week regarding the construction of a “border wall” between the two North American countries – another campaign trail promise.

The new US president is also expected to meet with Canadian Prime Minister Justin Trudeau in the near term, though an official date had not been announced at press time.

EU, UK relationships

Trump will also meet with UK Prime Minister Theresa May on Friday, for a discussion whose topics are reported to include the possibility of a bilateral US-UK trade deal once the latter country has finalised its Brexit negotiations with the European Union.

Despite this shared interest, the two leaders have given differing opinions on the merits of EU integration. While May has made clear that a strong, united EU remains in the United Kingdom’s best interests, Trump has lately called the European bloc a “vehicle” for Germany and suggested that other member states could follow the UK’s lead in exiting.

The new US president has given no public indication as to whether he will proceed with the Transatlantic Trade and Investment Partnership (TTIP) negotiations, an initiative between the US and the EU which also began under Barack Obama’s tenure. European officials have indicated, however, that they expect those talks to remain on hold for some time.

Speaking to a Brussels audience on 24 January, EU Trade Commissioner Cecilia Mamlström reiterated her past statements that the EU-US talks are likely to be “firmly in the freezer at least for a while.” However, she downplayed the potentially negative implications this might have on advancing the EU’s wider trade policy agenda.

“Even if the US is our most important partner, and a necessary one, the world is bigger than one country. Trump or no Trump, we have a long list of many others willing to deal with the EU, and about 20 more trade deals already in the pipeline,” said the EU trade chief.

Controversial start and other steps

Along with the above-mentioned moves on trade, Trump has also taken a series of other executive-level steps on various aspects of American policy.

Trump’s first days in office saw an overhaul of the White House website which saw the removal of the section on climate change in favour of a page detailing an “America First Energy” policy. The USTR website, as well as those of other agencies, have undergone similar changes. Trump has also issued presidential memoranda to restart work toward the construction of the Keystone XL and Dakota Access pipelines.

Construction on both projects had been blocked by Obama, citing environmental grounds. The Keystone XL decision had also been the subject of an investor-state dispute under NAFTA, which was launched last year by the TransCanada oil company that was behind the project. Whether the NAFTA dispute will continue in this new context was not yet clear at press time. While Trump has said that advancing the Keystone process will be subject to a renegotiation of terms and has insisted that the project use pipes made in the United States, the move has nonetheless been welcomed by Trudeau as a potential way to boost jobs. (See Bridges Weekly, 12 November 2015 and 14 January 2016)

ICTSD reporting; “TPP unravels: Where the 11 other countries go from here,” CNN, 24 January 2017; “Mexico braces for confrontation with Trump team,” FINANCIAL TIMES, 24 January 2017; “Trump Team in Talks with U.K. on Post-Brexit Trade Deal,” BLOOMBERG, 22 January 2017; “Chile eyes new deals with Pacific trade pact members: minister,” REUTERS, 23 January 2017; “Trump and Trudeau look ‘forward to meeting soon’ after Saturday phone chat,” CBC NEWS, 21 January 2017; “Trudeau welcomes Trump’s Keystone XL decision,” CBC NEWS, 24 January 2017.

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