President Donald Trump is making an about-face on the Trans-Pacific Partnership.
Just months after his decision to withdraw the United States from the sweeping trade agreement — a move he made in 2017 during his first week in office — Trump this week directed his top trade and economic advisers to take another look at TPP.
“He said he’s going to deputize [National Economic Council Chairman] Larry Kudlow and [U.S. Trade Representative] Robert Lighthizer to look at re-entering the TPP negotiations,” Republican Sen. Ben Sasse of Nebraska told reporters Thursday after meeting with Trump at the White House.
While the news should be music to the ears of trade organizations such as the Footwear Distributors & Retailers of America and the American Apparel & Footwear Association — which both made an aggressive push for the U.S. to remain in the agreement last year — FDRA president and CEO Matt Priest said he’s holding off on a full-on celebration.
“We’ve seen this before with gun control and other initiatives — where [the president] totally flips his script with a group of senators but didn’t follow up and do anything with it. We’re here to advocate for the industry — that’s No. 1 — but we also are here to sift through some of the rhetoric and line that up with the reality,” Priest said. “We’ve just been trying to stabilize ourselves with every tweet and headline [from/about the president].”
On the heels of Sasse’s statements, Trump has since tweeted to lend credence to the news that he’s reconsidering TPP — but he also suggested some apprehension.
“Would only join TPP if the deal were substantially better than the deal offered to Pres. Obama,” he wrote Thursday. “We already have BILATERAL deals with six of the eleven nations in TPP, and are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years!”
(Following a year of negotiation, in March, 11 countries — including Vietnam, Australia, Japan and Mexico — signed a new, renegotiated version of TPP, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.)
Priest said the new version excludes several critical provisions that would have benefited the U.S. had it not withdrawn from the agreement last year.
“When the U.S. walked away, they dropped a lot our intellectual property provisions and labor provisions that made the agreement really important,” he said. “Will they be able to negotiate those back in?”
And then there’s the other trillion-dollar question: “How receptive will the other 11 nations be to welcoming the U.S. back?” Priest asked. (The new CPTPP deal is said to cut tariffs in the 11 countries, led largely by Japan and Canada, by as much as $10 trillion.)
While it will take some time for an ultimate decision to come down from the White House on TPP, Priest said the renewed interest is a positive sign for the shoe industry.
“As I’ve been saying for a decade now: The way to economically box out China in a competitive way is to enter into free trade agreements with its neighbors, and that’s what TPP would have done,” he said. “Now we have an opportunity to re-engage on TPP, which is not a bad thing.”
When Trump nixed TPP last year, Priest and other proponents of the deal viewed it as the end of an unprecedented means to not only lower production expenses but also slash end costs to consumers and create more American jobs — something that Trump also campaigned on.
The FDRA and AAFA also suggested that the demise of the deal last year signaled a new opportunity for China to strengthen its influence.