By Pulling Out of Pacific Deal, Trump Revamps U.S. Trade Focus

By acting to withdraw from an Asia-Pacific accord that had been promoted by companies including Nike Inc. and Wal-Mart Inc. as well as family farmers and ranchers, with the stroke of a pen, President Donald Trump abruptly ended the decades-old U.S. tilt toward free trade.

“Great thing for the American worker, what we just did,” Trump said after signing a memorandum directing the U.S. Trade Representative to withdraw the U.S. as a signatory to the Trans-Pacific Partnership accord with 11 other nations. While an aide, who spoke on condition of anonymity, said action on that accord is still in the works, he left the North American Free Trade Agreement with Mexico and Canada untouched for now.

“We’ve been talking about this a long time,” Trump said.

The action rattled some Republicans and company executives who’ve built their businesses around decades of U.S. policy geared toward more open trade even though Trump’s action doesn’t come as a surprise — he campaigned against the TPP and other trade deals during his run for the White House.

In the modern economy, goods can travel across more than a dozen borders before making their way to the consumer, there is concern about what more protectionist policies will mean for free trade.

“Never has the president been the one to initiate protectionism or been so vocal about turning inward,” Dan Ikenson, the director of the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies, said. “U.S. trade policy on a bipartisan basis since 1934 has been geared toward liberalization and accommodation and internationalism.”

U.S. tobacco companies, which opposed the deal over a provision that would have prevented them from suing to challenge anti-smoking measures, Democrats such as Ohio Senator Sherrod Brown and and labor groups are supporters of the decision.

Senator John McCain, who warned it would mean abandoning the U.S. strategic position in Asia, where China is ready to step into to any vacuum left by the American withdrawal, farm interests and some members of Trump’s own party were among the ones expressing disappointment with the move.

“Abandoning TPP is the wrong decision,” McCain, an Arizona Republican, said in a statement. “Moving forward, it is imperative that America advances a positive trade agenda in the Asia-Pacific that will keep American workers and companies competitive in one of the most economically vibrant and fastest-growing regions in the world.”

“The fact that our major foreign competitors — China and the European Union — are moving forward with their own trade agreements in the Asia-Pacific will make it even more difficult for the United States to compete,” Tom Linebarger, CEO of Cummins Inc. and chair of the Business Roundtable International Engagement Committee, said in a statement.

“TPP and Nafta have long been convenient political punching bags, but the reality is that foreign trade has been one of the greatest success stories in the long history of the U.S. beef industry,” the National Cattlemen’s Beef Association said in a statement.

For Mark Parker, Nike’s chief executive officer, the death of TPP is an especially bitter pill. Nike would be able to use the savings from the deal to invest in the U.S.  and hence TPP would help it add jobs in the U.S., he said.

“TPP would have been fantastic’’ as the footwear industry pays on average as much as 18 percent of duty for imports to enter the U.S., Bryan Eshelman, chief operating officer of  Aldo Group, a Canadian footwear maker with a third of sales in the U.S., said in an interview before the executive order was signed. “In the short term, we are slightly disappointed that we can’t expect the duty relief that we were hoping for out of Vietnam.’’

(Adapted from Bloomberg)


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