UPDATED: Trump Signs Order Dumping TPP | Global Trade Magazine
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  January 23rd, 2017 | Written by

UPDATED: Trump Signs Order Dumping TPP

Follows Campaign Promise to Withdraw US From Trade Pact

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  • The coup de grace for the TPP.
  • TPP would have bound 40 percent of the world economy in a rules-based trading regime.
  • TPP never had much of a chance.

President Donald Trump signed an executive order today to withdraw the United States from the Trans-Pacific Partnership negotiating process.

The move is the coup de grace for the beleaguered trade pact.

It shouldn’t come as a big surprise, unless you believed that Trump’s rhetoric on the campaign trail would not lead to action. He repeatedly railed against the TPP calling it a “terrible” and an “unfair” deal.

Some experts gave TPP middling grades from the standpoint of economics but many believed it was an excellent achievement from a foreign policy perspective. The TPP would have bound 40 percent of the world economy in a rules-based trading regime—and right on China’s doorstep. Without the United States in the deal, some of the TPP nations may find themselves compelled to join China’s alternative to the TPP—the Regional Comprehensive Economic Partnership (RCEP), an initiative that includes the ten ASEAN members plus Japan, South Korea, India, Australia, and New Zealand.

The TPP was a centerpiece of former President Obama’s foreign policy pivot to Asia, a move meant to restrain China from unbridled influence in the region. The demise of TPP strengthens China’s hand in Asia. But that doesn’t appear to be of concern to President Trump, as demonstrated by his anti-NATO rhetoric which strengthens Russia’s hand in Europe. Both of these developments weaken the U.S. position as the predominant global power and cede influence to U.S. adversaries.

The truth is that TPP never had much of a chance. Obama would have had to push the pact through a Republican-controlled Congress with Republican support, and—although more Republicans than Democrats supported the TPP in principle—the congressional Republicans were loath to grant Obama the victory. Both Trump and Hillary Clinton spoke against TPP during the presidential campaign, and once Trump won, it was impossible to pass the accord in the lame-duck session of Congress.

Some Trump surrogates—in explaining the president’s attitude toward existing trade pacts—have complained the U.S. trade policy since the end of World War II was based more on foreign policy considerations—in other words, politics—than on economics. That critique has some merit but it is incomplete. U.S. trade policy implicitly included the goal of encouraging economic development worldwide—not only for the sake of peace and political stability but also to provide markets for U.S. manufactured goods.

Now, President Trump is embarking on a protectionist trade policy in order, he says, to protect and being back American manufacturing jobs. But no amount of protectionism is going to being back jobs that rely on low-wage workers or that have been transferred to robots.

The truth is that the manufacturing output of the United States is strong, but the country lacks a sufficient base of highly-skilled manufacturing workers to attract much investment in new advanced manufacturing—and that is where the action is. If President Trump wants to grow manufacturing jobs, his administration should consider investing in training programs to update the skills of workers and former workers of moribund industries to prepare them for the jobs of today and tomorrow. If he does, the U.S. could have manufacturing—and free trade.


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