Trump is going in circles with his shifting stance on TPP, NAFTA
by Barrie McKenna (feat. John Weekes)
The Globe and Mail
April 15, 2018
U.S. President Donald Trump’s chaotic position on trade is like watching a hyperactive five-year-old run amok in a toy store.
One minute, he’s building something with Lego. The next, he’s smashing his creation with a baseball bat. The destruction stops when he hops on a bright red ride-on electric car.
And so it is with Mr. Trump’s wild gyrations on trade, as he lurches from angry rhetoric and threats of tariff wars to happy talk of imminent deals – sometimes, all in a single 24-hour news cycle.
Consider the evolution of Mr. Trump’s feelings about the Trans-Pacific Partnership, a massive Pacific Rim trade deal signed by the Obama administration linking the United States, Japan, Canada and nine other countries. People may recall that Mr. Trump pulled the plug on the TPP in the first week of his presidency, calling it a “disaster” and a “rape of the country.”
Last week, Mr. Trump stunned a group of farm-state lawmakers and governors – and apparently his own officials – by telling them he may want back into the TPP.
It’s a remarkable about-face that rivals actor Linda Blair’s famous head-spinning stunt in the classic horror movie The Exorcist.
South Dakota Senator John Thune told reporters that Mr. Trump is very “bullish” on the idea of rejoining the TPP and has dispatched U.S. trade representative Robert Lighthizer and National Economic Council director Larry Kudlow to explore how to make it happen.
But in typical Trumpian style, the President was already walking back the story a few hours later on Twitter. “Would only join TPP if the deal were substantially better than the deal offered to Pres. Obama,” Mr. Trump tweeted.
No matter that Canada and the so-called TPP 11 moved on without the United States earlier this year, rejigging the agreement and giving it a new name – the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
It’s not clear if Mr. Trump’s unscripted TPP redux is part of a strategic plan to isolate China on trade, a belated acknowledgment that he was wrong, or the product of a random synapse in his brain.
“It is a chaotic change of policy that doesn’t seem to have any consistency, day by day,” pointed out Lawrence Herman, a Toronto trade lawyer.
It’s been a similar story with the renegotiation of the North American free-trade agreement, where the Trump administration’s position has been a moving target for months, Mr. Herman said.
One moment, Mr. Trump is threatening to cancel the NAFTA deal and putting poison-pill demands on the table. Then, he’s backtracking on pivotal issues, such as minimum content rules for cars, while talking optimistically about an imminent deal. Then last week, Mr. Trump acknowledged negotiations could “go on for a long time.”
This chaos would be comical if it wasn’t serious business for Canada and other countries caught up in Mr. Trump’s vortex.
The constantly shifting ground makes negotiations more difficult. And it’s bad for investment in Canada.
Rejoining the TPP, or CPTPP, would not be quick or easy for the United States. The Trump administration would have to set out its objectives and get the U.S. Congress to grant new trade negotiating authority – a process that could take months.
And it’s not a given that all TPP members relish the idea of negotiating with the unpredictable Trump administration, particularly after watching its treatment of Canada and Mexico on NAFTA. Japan and Australia have already suggested U.S. re-entry may affect the deal’s delicate balance.
Likewise for Canada, the prospect of the United States eventually getting back into the TPP would not necessarily be a good thing.
“There would be more benefits for Canada if the U.S. wasn’t in the deal,” explained John Weekes, Canada’s former WTO ambassador and chief NAFTA negotiator.
Canada might also lose the head start it has gained through tariff reductions in the lucrative Asian market for key agricultural exports, such as beef, pork, wheat and canola, according to Mr. Weekes, now an adviser at law firm Bennett Jones in Ottawa. The United States is a major exporter of many of these same products.
The re-entry of the United States could also complicate the NAFTA talks, which cover three of the same countries and many of the same issues, including minimum content rules for vehicles and Canada’s protected dairy and poultry market.
Constant uncertainty has become the only constant on trade in the Trump era.