US President Touts Trade Deal Renegotiation, Rules Enforcement in Annual Address

1 February 2018

US President Donald Trump touted improvements in economic growth and unemployment over the past year and called for continued efforts on trade deal negotiation and enforcement during his first “State of the Union” address on Tuesday 30 January, telling lawmakers and other public officials that “fair” and “reciprocal” trade agreements will remain an important component of his economic agenda. 

The State of the Union address is an annual exercise during which the president outlines their proposed legislative agenda for the year to Congress. The event is attended by lawmakers, as well as Supreme Court justices and cabinet officials, among others. The only year where presidents do not give such an address is the first year of their term, where they instead give an inaugural address after taking the oath of office. 

During his inaugural address just over one year ago, Trump described his hopes for an “America First” agenda that would create more jobs at home, while lambasting an “American carnage” that he claimed had led other economies to thrive while putting US manufacturing at a severe disadvantage. 

That approach, which has led to a series of trade actions in the 12 months since, has drawn scrutiny around the globe, amid concerns that the US may be stepping back from international leadership on trade – or at least taking a significantly different approach from previous administrations. (See Bridges Weekly, 26 January 2017

On Tuesday, the US leader touted figures of a growing economy and falling unemployment, though financial analysts have noted that some of that growth is the result of policies enacted prior to the new administration taking office. Trump highlighted the rise in manufacturing jobs, such as in automobile production, based in the United States – a nod to his earlier pledges to focus more production at home and push against having manufactured goods imported from abroad. 

“This is all news Americans are totally unaccustomed to hearing – for many years, companies and jobs were only leaving us.  But now, they are roaring back, they are coming back, they want to be where the action is. They want to be in the United States of America,” he said. 

Trump has been vocal over his concerns about past trade deals and whether they have been “unfair” to the US, with his administration focusing particularly on whether these accords have led to trade deficits with major partners. Over the past year, his administration has entered into negotiations to modernise the North American Free Trade Agreement (NAFTA) and amend the Korea-US Free Trade Agreement (KORUS FTA), partly to that end. 

“America has also finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs, and our wealth. Our nation has lost its wealth, and we’re getting it back so fast. The era of economic surrender is totally over,” he said on Tuesday evening. 

Trump also reiterated past rhetoric on wanting trade deals that are “fair” and “reciprocal,” terms that have also fuelled debate within the international trading community. Various US trading partners have suggested that focusing primarily on trade deficits can ignore the nuances of trading relationships, and have warned against heated rhetoric and unilateral actions. For example, several countries have openly criticised the safeguard tariffs which the US recently imposed on imported solar cells and modules as well as residential washing machines, and also ongoing national security-focused investigations into imported steel and aluminium. (See Bridges Weekly, 25 January 2018

“We will work to fix bad trade deals and negotiate new ones. And they'll be good ones. And they’ll be fair. And we will protect American workers and American intellectual property, through strong enforcement of our trade rules,” Trump added. 

There was no specific reference to NAFTA or KORUS, though NAFTA negotiators finished their sixth round of talks on Monday and meetings of KORUS officials are also scheduled this week. The NAFTA talks saw officials confirm some headway in their discussions, while still being at odds over the US’ proposed approach to rules of origin and investor-state dispute settlement, among other topics. (For more on NAFTA, see related story, this edition)

On intellectual property, Trump did not go into further detail on what new actions this might entail. The US is undertaking a “Section 301” investigation into alleged forced technology transfers and intellectual property rights violations, with a focus on China. (See Bridges Weekly, 21 September 2017

The remainder of the speech focused little on trade, with Trump touching on topics such as greater infrastructure investment, labour force training, immigration reform, and national defence. He also referred to foreign aid, saying that he wished to see US lawmakers craft legislation “to help ensure American foreign assistance dollars always serve American interests, and only go to friends of America, not enemies of America.” 

Trump referred, in this context, to his decision late last year to recognise Jerusalem as Israel’s capital and begin moving towards relocating the US embassy there, an announcement that drew widespread criticism from various countries. Regarding those countries which criticised the US, he said that “in 2016, American taxpayers generously sent those same countries more than US$20 billion in aid every year.” 

Looking ahead

Coming up on trade, the Office of the US Trade Representative is due to release in March the annual “President’s Trade Policy Agenda,” which will outline in further detail the administration’s goals in this field for the coming year. This is normally followed by congressional hearings on the subject. 

That report may give further clarity on whether the US will aim to resume trade talks with the EU, for example, which have been on hold since late 2016. It may also clarify how Trump will approach his expected request for the renewal of Trade Promotion Authority, the legislation that delegates the authority to negotiate trade deals to the US executive branch, subject to the approval and negotiating objectives set by Congress. 

US Trade Representative Robert Lighthizer issued a statement welcoming Trump’s comments, saying that “the President’s policies are clearly helping to fuel an economic boom that is creating millions of jobs and putting more money in people’s pockets.” 

“His unwavering commitment to promoting America’s interests and insisting on fair and reciprocal trade will deliver even more prosperity to the American people.  As the President has said, America is no longer turning a blind eye to unfair foreign trade practices,” he said. 

ICTSD reporting; “Trump’s first State of the Union address, annotated,” THE WASHINGTON POST, 30 January 2018; “Trump to seek extension of ‘fast track’ trade authority,” REUTERS, 29 January 2018.

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