Have you wondered how the economy is affected by international trade? Are you questioning how the Trump administration will change trade policy? Find out on this AmCham “How Business Really Works” podcast. Our guest Nate Olson (Washington D.C.) discusses hard-hitting issues involving trade in the 21st century, trade under Trump, and changes to the TPP with host Duff Watkins (Sydney, Australia).
An unexpected, at least by me, turn of events in the trade policy landscape is the Trump administration’s announced preference for bilateral rather than plurilateral (TPP) or multilateral (WTO) negotiations. While it is encouraging to learn that they are in favor of negotiating — there was some doubt about that after statements made during the campaign — there are four reasons why they have seized on the wrong strategy.
First, bilaterals are inefficient. These days, with the low hanging fruit of tariff reductions already largely picked, our negotiations are mostly about rules. Indeed, our anticipated gains in TPP related primarily to improvements in IP protection, rules for digital trade, and disciplines on state owned enterprises. Those are all disciplines that an economy of innovation like ours needs to defend itself. By promoting them collectively in a plurilateral framework we not only establish rule of law but rule of our laws which will stand us in good stead competitively. Proceeding bilaterally means, in the case of TPP, having five negotiations rather than one (there are five TPP members with whom we do not already have an FTA), and, potentially, five different sets of rules which may not be compatible with others — a nightmare for business compliance and government enforcement.
Second, a plurilateral negotiation means a bigger pie to share. Given our relatively open economy, we may not have much to offer a bilateral partner in return for what we are asking, but in a larger framework countries can calculate gains from more than one source. In addition, we have learned from experience that countries might be prepared to concede things in a larger group that they are not prepared to concede directly to the Americans. We are not the only country with domestic politics, and for many countries standing up to the Americans is good politics, whereas being the outlier in a group effort that includes regional friends is not.
Third, the premise that we get our pockets picked in plurilateral negotiations is simply wrong. If you talk to current and former negotiators you will learn that the process does not consist of the U.S. lurching from party to party making separate concessions. While some issues may be negotiated bilaterally because they are of specific concern to only two countries, most reflect a collective effort in which countries calibrate their offers to what they can get from all the members of the group rather than a single member.
Fourth, leverage with sovereign countries is not the same as leverage with other real estate developers. The argument for a bilateral negotiation is, apparently, that because we are big and the other guy is small, we can push him around and get our way. Of course, the other guy is not always small — witness China, Japan, India, and Brazil — so the premise is flawed from the beginning. Even if our partner is small, however, we should have learned from past negotiations that sovereign nations dance to their own tune, even to the point of making decisions that might not be in their long term interest but which are unquestionably in their short term political interest. If the administration continues its predilection for offending world leaders, it will find that not having any friends makes a difference in trade negotiations as well as other aspects of diplomacy.
Finally, if you want to see both irony and hypocrisy at work, pay attention to the looming NAFTA negotiations. The administration has recently started talking about upgrading NAFTA by addressing issue like digital trade and state-owned enterprises that were not covered in the original agreement. Good idea. The business community has been urging that for months. But where will the language for those “new” provisions come from? In all probability, from TPP, where the topics were thoroughly addressed. So, it appears we are going to take a “terrible” agreement — NAFTA — and fix it by adding language from an even worse agreement — TPP. This would actually be a smart thing to do, but it will be interesting to watch our negotiators explain it with a straight face.
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
By BOB DAVIS and WILLIAM MAULDIN, The Wall Street Journal
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.”
Article originally published here.
Australian export confidence increases for the U.S. and support for Free Trade Agreements grows, as exporters see positive effects on business. But what does this mean for AmCham and it members?
This article was written by Jenny Leonard, Associate Editor at Inside U.S. Trade. It originally appeared here.
The American Chamber of Commerce in Australia is beginning a final push for a lame-duck vote on the Trans-Pacific Partnership, with global CEOs attempting to convince U.S. lawmakers of the agreement’s overall benefits despite individual provisions that might have left some members “disappointed” — and warning that the window for passage of the deal is closing rapidly. Continue reading
US Ambassador John Berry is about to conclude his time in Australia so let’s remember 5 cool things about him:
1. He headed the modernisation of US National Zoo.
2. He led a workforce of 2 million people as Director of the US Office of Personnel Management
3. He’s the former CFO and COO of Dept. of Interior
4. He managed 40% of US federal law enforcement officers while at the US Treasury Dept.
5. He has the best piece of management advice you’ll ever hear (see below).
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This update on the Trans-Pacific Partnership (TPP) comes from the Asia Pacific Council of American Chambers of Commerce (APCAC’s) Washington DC-based lobbyists at BGR.
While most of the dialogue on Capitol Hill and the campaign trail continues to strike a pessimistic tone towards consideration of the Trans-Pacific Partnership (TPP) this year during the lame duck session of Congress, there is still a distinct possibility the administration will introduce implementing legislation to get the process started. Continue reading