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TPP extremely precarious as “Hillary follows Trump” in criticizing the trade pact

The tidal wave set off by the United Kingdom’s departure from the European Union (EU) has reached the Pacific Ocean. Republican presidential candidate Donald Trump, who is putting forward protectionist policies in his campaign, has announced that he will pull America from the Trans-Pacific Partnership (TPP) trade pact. As opposition to the TPP mounts [in the U.S.], Democratic presidential candidate and former U.S. Secretary of State Hillary Clinton has no choice but to follow suit although she is pejoratively called a “closet supporter” [of the TPP].

 

With an eye to making the TPP his “greatest legacy,” President Barack Obama intends to have Congress discuss the trade pact after the presidential elections in November, but there are extremely high hurdles that he must clear. If the trade pact is not adopted, the five and a half years of negotiations will have been in vain. The shocking surprise of Brexit gives the sense, though, that “the age of the unexpected” has dawned.

 

“With that vote, the United Kingdom took back its economy, its government, and its borders,” declared Trump at the end of June, praising the UK’s departure from the EU. He said the United States, too, will aim for a new independence. Here he is criticizing free trade. He spoke of renegotiating the North American Free Trade Agreement (NAFTA) with Canada and Mexico, and announced “the United States will leave the TPP” because the trade pact “will be a blow to our manufacturing sector.”

 

Similar to the case of the referendum in the UK, “the move to reject the formation of economic blocs” has also come to the fore in the U.S. presidential race. Even Clinton, who promoted the TPP as secretary of state until 2013, has sensed the change in the times and has shifted to being critical of free trade. “We will say no to a low-standard TPP!” is her new line.

 

There is something about her criticism of the TPP, though, that has the air of a “disguise.” She said, “We will renegotiate agreements that do not serve the United States (like NAFTA),” but she stays clear of saying that the U.S. will “renegotiate” or “exit” the TPP, which is still not finished. Trump unloaded a barrage of criticism on Clinton, saying, “If the liar is elected president, she will adopt the TPP.” Which candidate will be more critical of the TPP? To the degree that being critical of the TPP is directly linked to winning the election, Clinton will sooner or later become more critical of the trade pact. To come into force, the TPP must be passed by the U.S. Congress because that nation has the largest market. With the two candidates battling to see who can be more critical, there is zero visibility regarding the future of the TPP.

 

The Obama administration is doing everything it can to tear down those opposed to the TPP. “Delaying the launch of TPP by even a year would represent a $94 billion permanent loss to the U.S. economy,” the administration has said. Difficult discussions of economics are ill-suited for an election, though. Before the U.K. referendum, the HM Treasury among others used macroeconomic analysis to warn of the “serious economic impact on the UK of leaving the EU.” The average person, though, did not heed this high-level argument. The “Trump cyclone” is raging, and the increasingly inward-looking United States is in the same situation. Members of Congress are looking at “jobs now” more than at “GDP tomorrow” and cannot actively support the TPP.

 

If approval of the TPP is carried over to the next U.S. administration, the situation will grow even more difficult. Many say, “If Trump becomes president, there is no hope for the TPP. If Clinton becomes president, it will take time for her to change course from being opposed to being in favor of the trade pact.” The Abe administration declares, “Japan will take the lead and heighten momentum to bring the TPP into force.” It is starting to be leaked, though, that some in the LDP are saying that “there is no need to rush” if the U.S. is not moving forward.

 

The TPP is in an extremely precarious position now. Former U.S. Trade Representative Carla Hills sounded the alarm regarding protectionism, saying, “If the TPP falls through, trade retaliation will become rampant.” Protectionism was on the rise in the 1930s and caused the world economy to stagnate, triggering World War II. It seems that “the age of the unexpected,” where things that everyone thought impossible actually occur, is drawing near.

 

 

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