Shock End to TPP from Trump


January 25, 2017

Mr. Trump don’t antagonise the rest of us with new unilateral tariffs and thuggish threats

by Philip Bowring

http://www.asiasentinel.com/econ-business/shock-end-tpp-donald-trump/

Image result for xi and hun sen

HE Prime Minister Hun Sen and HE President Xi of China–Partnership for Peace and Development

Buy Korea, buy Japanese, buy Taiwanese, buy Australian, buy Singaporean, buy Thai, buy Vietnamese, even buy Chinese. Forget about Apple, McDonalds, Goldman Sachs, Citibank, Ford, Boeing – there’s always an alternative.

That is the message that President Donald Trump has sent around the world and most of all to America’s supposed allies in Asia. The withdrawal from the Trans-Pacific Partnership, the 12-nation omnibus trade pact under development for the past seven years, was expected but the manner in which it was done in Trump’s first full day in office was salt on the wounds for the countries that had done so much themselves to push the idea of this extension of trans-Pacific cooperation.

It was accompanied by more generalised threats of new unilateral tariffs and thuggish threats against US companies which invest abroad for export to the US, with Mexico first in the firing line. Quite how much of this 180-degree reversal of bipartisan US trade and foreign policies will become reality remains a matter for conjecture.

Meanwhile, conspicuous by its absence is a roar of outrage from the US business community in Asia which for years has been pressing for more open trade and always quick to condemn Asian governments for backsliding on trading and investment commitments.

AMCHAMS: explain your silence. Are your business leaders so dominated by Republican loyalists that you now treat as dispensable the values you have been preaching for decades? For the US to have gripes against specific countries or products is one thing. They can be addressed on a case by case basis. But Trump is waving a sword which cuts indiscriminately.

Image result for Trump and TPP

It may be true that the US originally gave China too easy a ride into its markets and the WTO and got inadequate access in return under the illusion that economic success would make China more liberal and democratic, as well as more open to US products. But that was then. Now crude anti-China measures simply endanger the very global trading system that the US has, mostly to its benefit, wrought over the past 60 years. If the US can treat its TPP friends in that way he has done, one shudders at what he may want to do with China.

Image result for Australia's incumbent Trade Minister on TPP

Retaliation is premature but at least must be considered for the not so distant future. Australia, perhaps surprisingly, has made a good start by urging that TPP go ahead anyway without the US. The key now must be to prevent US protectionism from becoming generic. That does not mean no retaliation but that any retaliation is specific. Meanwhile individuals can have their own trade policies, starting with any business named after Trump or which supplied any of the leading figures in his administration.

The US could start by getting away from the fantasy that its economic problems are the fault of its trade deficit. Once the US-owned brand and intellectual property costs, and returns on its investment in overseas manufacture, are factored into the overall trade picture, the deficit shrinks. The official current account deficit is only about 2% of GDP, very much less than countries such as Australia and the UK have been exceeding for decades. Include all the profits of thousands of US-owned companies, held in offshore tax havens and there may well no current account deficit at all.

The delusions about trade are even more marked in the case of China. The domestic value added in China’s exports to the US averages only about 65 percent compared with 85 percent in exports from Japan. In cases of items such as electronics the Chinese component is significantly less due to high value components from Japan and elsewhere. The US would be crazy to assume that labour-intensive, low value products like toys and sneakers, where the China valued-added percentage is highest, have a place in the US goal of reviving manufacturing employment.

Image result for Trump and TPP

But now that the US electoral system has brought to power someone as detached from reality as Trump, craziness seems set to triumph, at least for a while.

 

7 thoughts on “Shock End to TPP from Trump

  1. Americans have voted into office a dude named Donald Trump.This dude is a big time cheat,bigot,groper in chief and child rapist.His buddy rapist,Epstein,was sent to prison for statutory rape.But,Trump is freer than a bird,because of his connections to politicians and prosecutors.He lies all the time,getting caught over and over again.Yet,he lies everyday,the trades of a born habitual liar.And,his children are like father like sons.All born liars and cheats.

    Gloria Allred just filed a case of behalf of four ladies,accusing the groper in chief of groping and unwanted kissing.

    America is not as strong economically as before.Protectionism and trade wars will send the country to it’s knees.Stocks,bonds and the USD will all sink like the Titanic.With Donald Trump against the whole world,it is a wonder if he can keep his zippers in check.

  2. Trump and his neo-fascism should not be under-estimated.
    Fascist economic policies can work – and increase political support from the white masses at the same time too. Scapegoat minorities will be blamed and victimised.

    What are some limits on Trumpism ? One would be the T-bonds
    bought and held by China. Another would be the separation of powers and the federalism of the US political system.

  3. It shouldn’t come as any surprise that Trump would sign the executive order to withdraw from the TPP. This is a no-brainer. He knew the collapse of the flawed TPP was inevitable, that the Republican Congress would not let it pass.

    The TPP was a crude cover for the US China containment policy disguised as a trade pact, just like the containment policy against the Soviet Union during the Cold War to stop the Soviets from treating central Europe as their own backyard or sphere of influence. The Soviets were containable because they and their satellite states operated on an economic system separated from the capitalist world. But it is futile to use a flawed trade pact to try to stop a rising China from treating the Pacific as a natural extension of its influence. Unlike the Soviet Union, China has grafted its economic growth onto world trade and the global economy.

    Malcolm Turnbull, prime minister of Australia, vowed to keep TPP alive without US, and said he was open to China joining the pact. Even if it could be salvaged, it would be hard to sustain TPP in its current form. I expect big players such as China and Japan are likely to engage in intensive diplomacy as they try to shape a new regional deal, be it TPP or RCEP.

  4. I think Trump thinks the China of today is the China of the early ’80s, and the America of today is the America of the mid ’70s.

  5. If the US carries through what the President has just signed on the TPP it will be the beginning of a long overdue realisation that most such “free trade” deals are neither free nor about trade.

    He should tear up NAFTA next and put his country on the good old-fashioned tariff system… the US survived on Tariffs for more than a hundred years…it can do so again…so can the rest of the world… bilateralism is one answer…there are many examples…Australia is just one…

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