Businesses Push Donald Trump to Salvage Pacific Trade Pact

Thursday 19 January 2017

U.S. business and farm groups say a Pacific trade deal is important commercially and strategically. Shown, the Port of Oakland in California.PHOTO: BEN MARGOT/ASSOCIATED PRESS

WASHINGTON—Business and agricultural groups are lobbying Trump transition officials to salvage a Pacific trade deal that would knit together the U.S. and Asian countries, despite Mr. Trump’s plan to scrap the agreement.

The business groups are arguing that the Trump administration doesn’t have to accept the current Trans-Pacific Partnership, a 12-nation Pacific Rim accord negotiated by the Obama administration. Rather it could look to make changes to the deal, rename it and turn it into a Trump initiative to boost U.S. exports to Asia and write new trade rules for the Asia Pacific region.

TPP supporters say the pact is important commercially and strategically as a way to convince Asian nations that the U.S. wants to remain a leader in the region and won’t cede economic power to China, which isn’t part of the TPP. Beijing has had mixed response to the trade deal, initially viewing it as a U.S. plan to isolate China, but more recently expressing some interest in joining the pact.

Former U.S. Trade Representative Charlene Barshefsky said that other TPP nations may be willing to revamp the deal, even though TPP was completed in 2016, because they want U.S. participation. “They will certainly hear the new administration out and consider carefully the consequences of a ‘no accommodation’ mindset,” she said.

TPP nations include such important U.S. trade partners as Japan, Vietnam, Australia, Mexico and Canada. A main goal of the agreement is to set trading rules in Asia, which TPP partners believe China would eventually follow.

At the World Economic Forum in Davos, Switzerland, on Tuesday, Chinese President Xi Jinping defended international trade and economic integration. “No one will emerge as a winner in a trade war,” he said.

Among those urging the Trump team to take another look at an Asia-Pacific deal are the U.S. Chamber of Commerce, the Business Roundtable, the American Farm Bureau and a number of companies, including FedEx Corp.

“We are encouraging [the Trump administration] to understand the geostrategic benefits of the TPP,” said Myron Brilliant, executive director of the Chamber of Commerce. “We favor a thoughtful discussion of the Asia-Pacific region. We’d discourage them from immediately pushing the dead button” on TPP.

In an interview Friday with The Wall Street Journal, Mr. Trump said he wanted to reset trade with China, though he didn’t specifically address the TPP. “Everything is under negotiation,” Mr. Trump said. “Everything. The biggest problem we have is China is so horribly imbalanced in trade with us. It’s so one-sided that if you brought it down even to fairness, just fairness…it’s a tremendous amount of money.”

Thea Lee, a trade specialist at the AFL-CIO, said that the business groups didn’t appreciate the depth of popular opposition to free-trade pacts. “People are being a little bit delusional about the chance the [Trump] administration will reverse one of its main campaign promises,” she said.

The Business Roundtable, a trade group of CEOs of the U.S.’s largest companies, spent about $6.5 million leading a coalition of business groups that lobbied successfully for so-called fast track trade authority 2015 to ease the TPP through Congress.

David Salmonsen, senior director of congressional relations at the American Farm Bureau, said farmers are “not trying to move [TPP] as is, but just trying to keep it alive.” Agreements negotiated in one administration are often considered by Congress in the next administration, he said. The new administration sometimes makes changes to the original deal.

The business groups are bound to face a tough sell with Mr. Trump. During the presidential campaign, Mr. Trump attacked the TPP as a job killer that would only benefit big companies that do business in Asia.

“The Trans-Pacific Partnership is another disaster done and pushed by special interests who want to rape our country,” Mr. Trump said at a June rally in St. Clairsville, Ohio.

After the election, he pledged that on “day one” of his presidency he would “issue a notification of intent to withdraw” from the pact.

The business groups say their strategy is to separate the TPP from the general goal of increasing U.S. exports to Asia, which could boost job growth. Such an approach, they say, wouldn’t require Mr. Trump to back off his anti-TPP stance. Instead, it would give him the political space to come up with a new deal.

“We are taking a ‘goals’ vs. ‘means’ approach,” explained a business lobbyist involved in the effort. The goals sought by business are the objectives of the TPP—making sure state-owned enterprises operate as commercial firms, strengthening intellectual property protection, cutting tariffs, promoting digital commerce. The “means” can be a new trade pact with a different name. “Call it whatever,” said the lobbyist.

The lobbying is in its early stages. Business officials say they can’t talk directly to cabinet nominees until they are confirmed by Congress. But the business groups say they are conferring with Trump transition aides with trade experience.

They also believe they have natural allies among Mr. Trump’s picks, including Vice President-elect Mike Pence, who has met with Chamber of Commerce officials, and former Exxon Mobil Corp. CEO Rex Tillerson, Mr. Trump’s pick for secretary of state. Chamber officials didn’t say whether they discussed a TPP replacement with Mr. Pence.

Mr. Tillerson is an at-large member of the Business Roundtable Executive Committee. Exxon has also been active member of the Chamber of Commerce.

At his confirmation hearing, Mr. Tillerson said “I do not oppose TPP,” though he said that he shared Mr. Trump’s concerns about “whether the agreement that was negotiated serves all of America’s interests best.”

But the Chamber has had rocky relations with Mr. Trump. During the campaign, the Chamber tweeted that Mr. Trump’s trade plans would result in “higher prices, fewer jobs and a weaker economy.” For his part, Mr. Trump told a rally in Bangor, Maine, that the chamber was “controlled totally by various groups of people that don’t care about you whatsoever.”

The near-term hopes of passing the TPP vanished when Donald Trump won the November election and the Obama administration conceded that passage wouldn’t be possible in the current political environment, with most Democratic lawmakers and many Republicans skeptical about the benefits of trade agreements.

But Obama officials continue to argue that the trade deal should be approved. Michael Froman, the outgoing U.S. trade representative, recently said that withdrawing from the deal would a “huge gift to China,” imitating Mr. Trump’s pronunciation of “huge.”


This article was originally published in The Wall Street Journal here, and was written by Bob David and William Mauldin.