Column: Trump, trade & TPP

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Published: May 17, 2016 7:25:00 AM

Trump’s criticism of the TPP is reflective of his hard postures on trade and China

Donald Trump says he hates the TPP. He is unable to explain why. Trump’s unhappiness with the TPP, so far, has centered around three major points. The TPP would result in American jobs being outsourced to other countries. The TPP does nothing on currency manipulation. And finally, the deal would allow other countries to ‘dupe’ the US. The latter concern was expanded further by Trump to indicate that the TPP was ‘designed for China to come in, as they always do, through the back door and totally take advantage of everyone’.

In the election season in the US, the TPP is the favourite whipping-boy, one that everybody loves to hate, in addition to immigration. Trump isn’t the only aggrieved voice on the TPP. His Republican opponent Ted Cruz came down hard on the deal too, as did the Democrat contender Bernie Sanders. Hillary Clinton, tipped to be the eventual Democrat nominee for the Oval Office, and the ‘preferred’ choice as the US president for most of the non-American world (if not Americans), has also attacked the TPP. The attack, though, has done her prospects more harm than good given that she was a forceful backer of the deal as the US secretary of state. But notwithstanding what she and other presidential hopefuls have criticised the TPP for, none have had as hard and hollow views as Trump. Indeed, Trump’s astonishing views on the TPP have succeeded in uniting expert opinions within the US, many of whom have issue-based differences on the TPP, to call the bluff on his take.

Trump’s arguments for decrying what he calls a ‘horrible’ deal are uncharacteristically, for a US presidential hopeful, based on flimsy rhetoric. US negotiators tried hard and have largely succeeded in blocking outsourcing of American jobs through the TPP by getting all of its members to agree on common labour standards and minimum wages. Outsourcing of manufacturing, a point often cited by US protectionist lobbies for criticising the NAFTA, is also likely to be much less in the TPP given the latter’s stipulation of higher value addition norms than the NAFTA in the rules of origin (ROOs) required to be satisfied for obtaining preferential tariffs. Trump’s assertions appear little more than emotional ranting vis-à-vis the much suave ‘nationalistic’ defence of the TPP by the Obama administration that labels it a victory for ‘Made in America’. On currency manipulation too, unlike what he laments, the TPP members do have an agreement on the side for mutual commitment on not undertaking unexpected devaluations of national currencies.

None, among Trump’s grudges, is more bizarre than his allegation that the TPP is designed for admitting China through the back door. The allegation is so odd that some journalists took the trouble of checking with Trump whether he was aware that China was not a part of the TPP, to which, Trump clarified yes, he was. None would find Trump’s fears of TPP being a China-promoting vehicle more amusing than China itself. Since the advent of the TPP, China has been wary of the deal as an instrument for limiting its ability to craft global trade rules and, furthermore, of it being an alliance of US military and strategic partners for curbing China’s geo-strategic influence in the Asia-Pacific. President Obama and his administration, while being as diplomatically ‘correct’ on this as possible during the early stages of the TPP talks, did not hesitate to sell the deal on an ‘anti-China’ plank during discussions on the TPP in the US Congress and Senate for picking up the fast-track presidential TPA (Trade Promotion Authority) for clearing trade agreements. Trump’s claim of the TPP being a design to accommodate China therefore does sound like a claim that is vastly unaware of what is reality.

In many respects, Trump’s criticism of the TPP is not TPP-specific, but reflective of his hard postures on trade and China. If Trump is to be believed then he is not only going to scrap (at least renegotiate) the TPP, but also the NAFTA, and call off the TTIP (Trans-Atlantic Trade and Investment Partnership) deal with Europe. He might indeed, in addition to all these radical moves and erecting tariff walls against two countries he loves bullying the most—China and Mexico—take his ‘anti-trade’ tirade higher to pull the US out of the WTO! Unfortunately, even after becoming the world’s most powerful individual, that is the US president, Trump is likely to find his wishes coming up against the formidable walls of American law and legislature that considerably restrain US presidents from acting ‘Trump-wise’.

The anti-trade rabble has produced some gains for Trump so far by getting him the support of sections of US white-collared workers unhappy over loss of jobs to Mexico and Canada. However, it is unlikely to broaden and last till November 8, as the presidential race tightens, and Trump gets pressed harder to clarify his charges against the TPP. More importantly, at a bilateral level in the upcoming presidential debates with his Democrat opponent, Trump would need to indicate what, he might consider as an effective ‘non-trade’ alternative economic agenda for the US for generating more jobs and income. That ‘trump’ would need to emerge fast from under his sleeves for convincing the voters on Trump.

The author is senior research fellow and research lead (trade and economic policy) in the Institute of South Asian Studies, the National University of Singapore.
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