Japan Institute for National Fundamentals

Speaking out

Yujiro Oiwa

【#493】Focus on TPP-11 without Being Bewildered by U.S.

Yujiro Oiwa / 2018.02.01 (Thu)

January 29, 2018

     In an interview with CNBC television on January 25 and his subsequent address at an annual meeting of the World Economic Forum in Davos, Switzerland, on January 26, U.S. President Donald Trump vowed to “consider negotiating” the United States’ return to the Trans-Pacific Partnership free trade agreement, which surprised the world. However, he made no mention of any issue or schedule for negotiations, leaving his real intention uncertain.
     At the same time, Trump said, “the United States is prepared to negotiate mutually beneficial, bilateral trade agreements with all countries. This will include the countries in TPP.” Japan, which has led negotiations on the so-called TPP-11 agreement among 11 TPP members other than the United States, should expend all possible means to have the TPP-11 pact signed by the 11 countries at a ceremony scheduled for March 8 in Chile.

Trump’s confusing trade policy
     Under the banner of “America First”, the Trump administration has turned around a bipartisan U.S. trade policy that had led the expansion of the free economic bloc. However, the administration’s trade policy has been increasingly in disarray as explained below, instead of making major achievements.
     First, by withdrawing from the TPP agreement, the Trump administration lost U.S. leadership in negotiations to set global trade rule launched under the George W. Bush administration, allowing the TPP-11 agreement to be signed excluding the United States.
     Second, renegotiations on the North American Free Trade Agreement have been bogged down.
     Third, investigations into steel imports’ impact on U.S. national security have been protracted, with no report published.
     Fourth, the administration has made light of the Dispute Settlement Body at the World Trade Organization.
     Fifth, the administration has given up on corporate tax border adjustment.
     As a result, Trump’s trade policy has turned out not as tough as worried earlier. However, the Trump administration’s inward-looking attitude invited Chinese President Xi Jinping to criticize anti-globalism and protectionism in his keynote address at last year’s Davos WEF meeting.

Uncertain switch from “America First”
     In another unexpected action on January 22 just before the Davos meeting, the Trump administration announced that a safeguard emergency import restriction under Article 201 of the Trade Act would be implemented on February 7 on solar panels and washing machines mainly from China and South Korea to counter rapid growth in their imports.
     The action meets President Trump’s “America First” trade policy to protect domestic manufacturers. The administration has also been investigating China’s intellectual property abuse with an eye on sanctions under Article 301 of the Trade Act, alleging U.S. companies operating in China have been forced to transfer technologies to China. Trump has offered to describe what to do in this regard in his State of Union address on January 30.
     The TPP had been strategically significant in the first place for the United States for avoiding its exclusion from Asia-Pacific economic integration and for checking China’s hegemonic economic expansion. In this sense, the United States’ possible return to the TPP meets its new tough policy against China but the offer indicates that the administration could make tough demands at the TPP renegotiations, considering unstable political situation in the United States.
     As for Japan, the best course of action at present and in the future would be to materialize the TPP-11 agreement soon and increase the number of participants in the agreement, whether the United States returns to the TPP or not.

Yujiro Oiwa is a JINF Planning Committee Member and Professor at Tokyo International University.