Trump withdraws US from Trans-Pacific Partnership trade deal

(January 22) The Trump administration announced it will withdraw from the 12-nation Trans-Pacific Partnership (TPP) trade deal and is committed to renegotiating the North American Free Trade Agreement (NAFTA).

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The announcement is in keeping with promises Trump made during his campaign for presidency. The announcement said that the withdrawal was meant to protect American jobs and that the U.S. would "crack down on those nations that violate trade agreements and harm American workers in the process". The statement said:

"For too long, Americans have been forced to accept trade deals that put the interests of insiders and the Washington elite over the hard-working men and women of this country. As a result, blue-collar towns and cities have watched their factories close and good-paying jobs move overseas, while Americans face a mounting trade deficit and a devastated manufacturing base..This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers."The TPP was signed in Auckland, New Zealand on February 4 2016 but only Japan has ratified it. Obama supported the TPP but was unable to get it ratified. Hillary Clinton at first praised it but then during the election campaign also opposed it along with Trump.

NAFTA was signed by the United States, Mexico, and Canada in 1994. The statement said that the U.S. would withdraw from NAFTA if the U.S. were not able to renegotiate it so as to give US workers a fair deal. U.S. stock markets have risen considerably since Trump was elected. No doubt corporations are looking for tax cuts, a stimulus program and less regulation. But not following through on the TPP and renegotiating NAFTA may send negative signals to markets.

China, notably absent from the TPP may begin to extend trade agreements with other countries in response and take a leadership role in expanding trading relationships. The TPP had been part of the Obama administration's "pivot" to Asia and meant to counter the influence of China. Damon Hunt, spokesperson for the Australian PM said that Trump could have a change of heart and the trade deal could proceed. Trump has been critical of Chinese trade policy and threatened to impose tariffs on Chinese imports. The Chinese have warned that China would retaliate if Trump begins a trade war.

Opening up NAFTA will result not only in demands for changes by Trump but no doubt by Canada and Mexico as well. According to the Council of Canadians only one in four Canadians even support NAFTA. The Council notes some of the negative features:For example, income inequality has worsened considerably in Canada, Mexico and the United States in the past 20 years. Manufacturing jobs have disappeared across the region, leading to a greater economic dependence in Canada on raw resource exports (and in Mexico on punishingly low wages).NAFTA is forged in the interests of global corporations many headquartered in the U.S. The last thing they want is opening up an agreement that was designed in their interests. It is too risky.