Will this become a key shift in policy? At the annual session of the World Economic Forum (Davos meeting), U.S. President Donald Trump announced in his address delivered there that the U.S. will consider returning to the Trans-Pacific Partnership free trade pact.
It was only a year ago, soon after he came to office, that he signed an executive order of permanently withdrawing from the TPP.
If this represents a shift from the adamant policy of not acknowledging the TPP at all, this would be a welcome sign to the 11 participating countries, as they have long looked to the U.S. to return to the pact.
What we must size up is the true intention of President Trump, who hinted at a possible return to the TPP out of the blue.
President Trump says a prerequisite for a return is that the TPP “should serve the interests of all member states.” But in his remarks to the U.S. media, he also noted that “the U.S. would do TPP if it makes a substantially better deal to us.”
He may expect renegotiation of the deal. But if his idea is to twist the deal to the convenience of his country, this can’t be easily accepted.
What significance will the U.S. see in the TPP? What changes will it seek? The questions are whether the U.S. can present specific ideas and whether these will win the understanding of the 11 TPP countries.
In his address, President Trump said that the U.S. is ready to engage in multilateral trade agreements, which he has been rejecting by claiming such deals put the U.S. at a disadvantage. He noted that his “America First” policy is not isolationism.
Renegotiation of the North American Free Trade Agreement (NAFTA) are not moving in the direction the U.S. wants. On the other hand, the TPP will be signed by the remaining 11 members in March. Is he trying to modify his dogmatic trade strategy in the face of these realities at first hand?
What we should not overlook is that the U.S. government has been stepping up its protectionist moves of late.
The U.S. government decided for the first time in about 16 years to invoke safeguards against the import of solar panels and other goods based on Section 201 of the U.S. Trade Act. There is no change in President Trump’s way of thinking that trade deficits that the U.S. has with its trading partners are caused by unfair trade. He still describes the current TPP as “terrible.”
Japan should continue to make the enforcement of the TPP 11 a top priority. The framework of the TPP was originally decided by the 12 nations, including the U.S. It makes sense that Foreign Minister Taro Kono said “we have no particular plan to change [the TPP].” Japan should explain to the U.S. the importance of keeping the content of the deal intact.
The return of the U.S. to the TPP would create an economic boon to all 12 nations. With China broadening its presence, it will become strategically important to establish an economic order that is free and fair. Japan should assume the role of reminding President Trump about this.