US Officials Look to Next Steps on Trade Negotiating Agenda

19 April 2018
Flags of USA and Japan

The past week has seen a series of potential signals from the US on next steps for different trade negotiating processes, amid varying statements from US President Donald Trump on whether he may pursue re-entry into a Pacific Rim trade deal, as well as a leaders’ level meeting with Japan and a regional summit in Peru.  

Trump met with Japanese Prime Minister Shinzo Abe from 17-18 April at the US leader’s Mar-a-Lago resort in Florida, where trade was a top item on the agenda. The US has been calling for launching bilateral trade talks with the Asian economic giant, with the hopes of getting market access gains in the fields of agriculture and automobiles, among other objectives, but Japan remains non-committal towards the prospect of a bilateral deal. 

The US-Japan leaders’ meeting, which ultimately saw the two sides pledge to hold deeper discussions on future trade cooperation, including on trade agreements, also drew additional scrutiny given recent conflicting statements from Trump on whether the US might ask to negotiate re-entry into a regional trade deal involving Japan. 

This accord is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the successor to the Trans-Pacific Partnership (TPP). The TPP had previously included the US. 

Last week, Trump announced on the social media platform Twitter that he would consider rejoining the CPTPP if the deal were “substantially better than the deal offered to [former President Barack] Obama.” The US leader had pulled his country out of the older agreement, the TPP, just over a year ago, after having highly criticised the trade deal when campaigning for the presidency. 

In addition to his statement on Twitter, Trump reportedly directed his officials to review options for moving forward in this regard and begin preliminary discussions. “We already have BILATERAL deals with six of the eleven nations in TPP, and are working to make a deal with the biggest of those  nations, Japan, who has hit us hard on trade for years!” said Trump on 13 April. 

National Economic Council (NEC) Director and Assistant to the President for Economic Policy Larry Kudlow told reporters on Tuesday 17 April that it was “too early” to say how the CPTPP would feature in leaders’ level talks between Trump and Abe, while acknowledging that there were “discussions and consideration” already underway between the relevant officials. 

“If we choose to go down that path, however, to ‘improve [the CPTPP],’ we will have to be convinced that it’s worth our while.  And I don’t think the President is yet convinced of that, to be honest.  I don’t think he is,” said Kudlow, without ruling it out. 

On Wednesday 18 April, however, Trump issued a new statement on Twitter suggesting that the option of asking to re-join the CPTPP is still entirely off the table. 

“While Japan and South Korea would like us to go back into TPP, I don’t like the deal for the United States. Too many contingencies and no way to get out if it doesn’t work. Bilateral deals are far more efficient, profitable and better for OUR workers. Look how bad WTO is to US,” Trump said

Abe told reporters on Wednesday that he still prefers the CPTPP as a trade framework, as opposed to a bilateral deal with the US. Japan had helped play a leading role in advancing the CPTPP trade deal with the 11 remaining members, following the US withdrawal. The coalition signed a revised version of the trade deal, suspending nearly two dozen of the original provisions, this past March. (See Bridges Weekly, 22 February 2018

South Korea is not a CPTPP member, though Seoul officials have indicated possible interest in requesting accession talks. Trump did not clarify whether his statement was based on discussions with his South Korean and Japanese counterparts or not. He also did not explain what he meant by not being able to “get out,” given that the CPTPP does outline a clear procedure for any party’s withdrawal. 

NAFTA process continues

Meanwhile, a separate regional initiative involving the US and two other CPTPP members, Canada and Mexico, remains ongoing. That effort involves the negotiation of an updated version of the North American Free Trade Agreement (NAFTA), the decades-old deal that has set the rules for regional trade among them and facilitated the deep interlinkages of regional value chains. 

The Summit of the Americas, held this year in Lima, Peru from 13-14 April, did not bring about any concrete announcement of progress on the negotiations for an updated North American Free Trade Agreement (NAFTA), despite previous speculation that it might do so. (See Bridges Weekly, 12 April 2018)

Although Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto attended the summit, Trump did not participate in person, citing recent developments in the Syrian crisis. US Vice President Mike Pence attended in his stead. 

Previously, reports suggested that a side meeting between the three countries’ chief trade negotiators might bring the discussions closer towards a conclusion, at least for an agreement in principle. US Trade Representative (USTR) Robert Lighthizer also cancelled his attendance at the Summit, sending Deputy USTR C.J. Mahoney in his place. 

In his opening address to the conference, Pence referred briefly to the status of the NAFTA negotiations, amid a wider discussion on other regional issues. 

“As we speak, I’m pleased to report the United States is working very closely with Canada and Mexico to modernise the North American Free Trade Agreement.  We believe we are fairly close to a deal, and we’re going to be working earnestly to make that a reality for all of our nations,” said Pence at a summit plenary session. 

In statements reported by Reuters, Mexican Economy Secretary Ildefonso Guajardo suggested that he may be meeting with his NAFTA counterparts, US Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland, on 19 April in Washington, following on technical meetings held among negotiators in recent days. 

ICTSD reporting; “Nafta Chiefs Plan Meeting This Week Amid Push for Deal,” BLOOMBERG, 11 April 2018; “No NAFTA deal in principle to be announced at Lima Summit: Sources,” CNBC, 9 April 2018; “Meeting eyed for NAFTA ministers on Thursday in Washington,” REUTERS, 16 April 2018; “In Lima, Vice President Pence says NAFTA deal possible in several weeks,” REUTERS, 14 April 2018; “U.S. trade chief Lighthizer cancels trip to summit in Peru,” REUTERS, 12 April 2018; “Trump says U.S. will only rejoin Pacific trade pact if terms are improved,” REUTERS, 12 April 2018; “Trump and Japan's Abe agree to intensify trade talks,” REUTERS, 19 April 2018.

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