'Get it done, Larry': Can the US rejoin the TPP?

1:26 pm on 16 April 2018

By Stephen Jacobi *

Opinion - The trade world was set all aflutter at the end of last week when it was announced that US President Donald Trump had tasked National Economic Council Director Larry Kudlow and US Trade Representative Robert Lighthizer to consider whether the United States should re-join the Trans Pacific Partnership (TPP).

Later the President tweeted he would only re-join if the deal was substantially better than the one negotiated by his predecessor Barack Obama.

US President Donald Trump

US President Donald Trump Photo: AFP PHOTO / JIM WATSON

This is not the first time Mr Trump has indicated a continuing interest in TPP. He did so at Davos earlier this year. That may have been an attempt to rain on the parade of the eleven remaining TPP members who had just confirmed the new-look CPTPP - the Comprehensive and Progressive Agreement on the Trans Pacific Partnership.

This time he was appearing to respond to the concerns of US farmers - and their Congressional representatives - about the fallout from the tariffs the president is about to impose on China's exports to the US.

The Chinese are threatening to respond by raising tariffs on US agricultural exports to China. Mr Trump also spoke about new farm subsidies, showing, as ever, that the open market rhetoric only goes so far in the land of the free.

Whether joining TPP could somehow make up for the potential loss of access in China is debatable, but possibly it serves to demonstrate that the president is taking the plight of farmers seriously.

The new (CP) TPP and the TPP are not quite the same thing. As well as stripping out the US market access package, the revised version cut 22 other provisions: primarily those things which were key US interests including intellectual property, particularly patents and protections for pharmaceuticals. These provisions are currently "suspended" and the agreement of all the CPTPP members is required before these provisions could take effect in the future.

Herein lies the problem for Larry and Bob.

National Economic Council director Larry Kudlow in Washington DC.

The US's National Economic Council director Larry Kudlow in Washington DC. Photo: AFP

The agreement represents a fine balance of interests on which consensus had been reached. Japan cabinet secretary Yoshihide Suga has called the treaty "glasswork".

The glasswork cracked a little on US withdrawal but has been patched up again. Is it conceivable that the eleven other parties will be persuaded to undo the work they did and start again?

The problem is confounded because even the old TPP was not good enough for the United States. The Obama Administration, after negotiating for the entire length of its two terms, finally delivered a deal which could not satisfy the Congress.

United States Trade Representative Robert Lighthizer

United States Trade Representative Robert Lighthizer Photo: AFP / RON SACHS / CONSOLIDATED / DPA

That's significant because - despite the administration negotiating them - it is the Congress that ratifies treaties.

One of the main sticking points for Congress was intellectual property, which has now been (in part) suspended. How this genie can be put back in the bottle is hard to fathom at this point.

At the very least, it will take time - and as always in the US electoral cycle, the Republican majority in Congress faces mid-term elections in November.

The reactions of the TPP fellowship has been interesting.

New Zealand's Trade Minister David Parker struck a diplomatic tone, noting quite rightly the importance of the US economy. One wonders how this will sit with the government's "new progressive and inclusive trade agenda" which, irony of ironies, was also launched last Friday.

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New Zealand Prime Minister Jacinda Ardern and Trade Minister David Parker at TPP negotiations shortly after the government was elected. Photo: AFP

Australian Trade Minister Ciobo was more direct - "there is very little appetite amongst the TPP-11 for a renegotiation". Singapore was warmer, but even close US ally Japan appeared cautious.

So, can the United States re-join TPP? Trade negotiators never say never, but it seems clear that Larry and Bob have their work cut out for them before they appear on the next edition of The Apprentice.

* Stephen Jacobi, a former trade official and long-time advocate of TPP is executive director of the NZ International Business Forum.

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