TPP back on the table as Trump seeks new angle on China

Published on
April 13, 2018

The United States might rejoin the Trans-Pacific Partnership, according to comments made Thursday, 12 April by U.S. President Donald Trump. 

Trump told Republican senators he had asked United States Trade Representative Robert Lighthizer and White House economic adviser Larry Kudlow to re-open negotiations, according to Reuters. The move comes a week after the U.S. and China went tit-for-tat in imposing new tariffs on a wide range of goods.

Reconsidering the TPP would be a drastic change in direction for Trump, who issued an executive order withdrawing the U.S. from the treaty in his first day as president, calling it a “disaster.”  

In the interim, the 11 other nations party to the deal have moved forward with a modified version of the TPP, which was signed in late March.

In a post on Twitter, Trump clarified his position on the trade pact, saying the United States would “only join TPP if the deal were substantially better than the deal offered to Pres. Obama. 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!”

Leaders in the Asia-Pacific region responded to Trump’s pronouncement with and mix of hope and skepticism.

"If it’s true, I would welcome it,” Japanese Finance Minister Taro Aso said. However, Trump " a person who could change temperamentally, so he may say something different the next day,” he added.

The main effect of the US rejoining would be a possible re-instatement of some provisions on government purchasing, intellectual property, and investment that were suspended after the U.S. left the agreement. These are not so much related to seafood, though it is possible that under new investment rules blocking foreign ownership of catch shares would be banned, allowing foreign control of U.S. fishing resources. Lower U.S. tariffs on Indonesian and Malaysian shrimp would be the main effect.

Initial reactions in the popular Chinese press have been largely targeted at the positive response from Tokyo, which has been taken by Beijing to suggest the latest move or suggestion by Trump is negative for China. Leading commentators in China have suggested that Trump is using the specter of American membership of the TPP as a bargaining chip in ongoing trade negotiations with Beijing. 

Luo Zhengxing, head of the U.S. studies department at the China Academy of Social Sciences, said that by signaling an intent to rejoin the TPP, the Trump administration may also seek to create an alternative trade bloc with the power to "change the rules of trade" in a way that will isolate China and force it to comply. However, Luo said, the TPP is an "unknown entity" for American agricultural exports and Japan "will not be able to substitute" for China as a market for U.S. soy. 

Another respected commentator, Zhang Wenzong at the China International Relations Institute, also sees Trump's suggestions on TPP as a bargaining chip in Sino-US trade talks but said that Trump had already signaled his willingness to rejoin an "improved" TPP when he spoke in Davos earlier this year.  

Trump's move on the TPP will be grist to the mill for China's reactionary press, which regularly accuses the U.S. of seeking to encircle China through alliances in Asia in order to prevent the "peaceful rise" of China. China's state-censored press regularly channels nationalist fervor towards Japan, though tensions between the two countries have eased in the past year, while China has sought to draw the region into its orbit through programs like its “One Belt, One Road” initiative to integrate regional economies into China with improved infrastructure. 

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