13 Apr 2018

Trump to take another look at TPP 'disaster'

12:36 pm on 13 April 2018

US President Donald Trump has agreed to reconsider the Trans Pacific Partnership (TPP), a free trade pact with primarily Asia-Pacific countries that he backed out of last year.

Donald Trump

Donald Trump Photo: AFP

Mr Trump made the commitment while meeting politicians from farming states, who are among those concerned about a trade war, senators say.

The president has previously slammed the deal as a potential "disaster".

But his trade strategy is under fire as a conflict escalates with China.

Politicians, including some from his own party, are worried that he is leading the US into a damaging economic battle with China, after levying tariffs on steel and aluminium and threatening taxes on billions more in Chinese goods.

They have said the administration should be working with other countries to pressure China, instead of wielding tariffs that invite retaliation on industries such as agriculture.

"The best thing the United States can do to push back against Chinese cheating now is to lead the other 11 Pacific nations that believe in free trade and the rule of law. It is good news that today the President directed Larry Kudlow and Ambassador Lighthizer to negotiate US entry into TPP," said Republican Senator Ben Sasse.

Former New Zealand trade negotiator Charles Finney said the United States would be the one having to make compromises in any new TPP negotiations.

"It will be just so much more difficult for any new party to demand major changes."

"If there were to be major changes there would have to be quite a good price to be a paid for that."

China had been very clever in its proposed tariff increases, putting pressure on US states that support Donald Trump, he said.

Mr Finney said New Zealand and other member countries would be in a strong position if the US was serious about joining the revised TPP trade deal. But even if a new deal was struck, it would have to be ratified by US lawmakers, which had proven very difficult in the past.

Todd McClay, a former trade minister, said New Zealand should warmly welcome renewed US interest in the revised TPP - but cautioned striking a deal would be very difficult.

He said Mr Trump would want a lot more than was in the original TPP, and that would be hard for New Zealand to accept.

"[In] the renegotiated deal, the strategy was to hold back things that America really wanted but keep the market access there so that US exporters were missing out.

"If Mr Trump now is saying he's interested in re-engaging in a TPP, it tells me the strategy New Zealand put in place is working but it would always be a very difficult negotiation."

TPP, a trade deal that was to involve 12 countries including the US, was conceived under former President Barack Obama as a way to counter China's surging power in the region.

Labour unions and others had criticised it as too favourable to business. Mr Trump's Democratic rival in the 2016 election, Hillary Clinton, also came out against the agreement during the campaign.

Withdrawing from the deal was one of Mr Trump's first acts as president, delivering one of his core campaign promises.

After he withdrew, the remaining 11 countries continued to negotiate over the pact, signing the deal in March.

Exporters, such as farmers, have said they are now concerned that the US will be at a disadvantage to competitors in the region.

Mr Trump ordered his staff to consider rejoining "on our terms", according to accounts from the meeting.


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