Politics

Trump to Face GOP Leaders Still Reluctant to Abandon TPP

Brady, Hatch signal continued push for trade pact, experts say the duo's efforts likely futile

President-Elect Donald Trump’s victory last month might have been expected to drive a final stake through the heart of the Trans-Pacific Partnership, but some free trade Republicans continue to think they can resurrect the 12-nation trade bloc.

Rep. Kevin Brady, a Texas Republican who chairs the tax-writing House Ways and Means Committee, told a panel of The Wall Street Journal CEO Council shortly after the election that Trump should make the deal better.

“Trump invested a huge amount of political capital into trashing the TPP … That would be a huge reversal. I don’t think he’s in the mood for a reversal.”

“Don’t withdraw; renegotiate,” he said. “There is plenty that levels the playing field. Renegotiate. Fix the problems that exist today. Let’s find a way to move forward.”

Sen. Orrin Hatch, a Republican from Utah whose states’s pharmaceutical industry stands to benefit from provisions in the deal, also expressed hope that Trump would change his mind.

“While I understand the president-elect’s desire to hold our trading partners accountable, there are definitely better ways to do that than some of the ideas that have been put forward so far,” he said after the election, according to the Associated Press.

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But experts on both sides of the trade divide said the prospects seem remote.

“I think it’s wishful thinking,” said Gary Hufbauer, a senior fellow at the pro-trade Peterson Institute for International Economics. “Trump invested a huge amount of political capital into trashing the TPP … That would be a huge reversal. I don’t think he’s in the mood for a reversal.”

Robert Scott, director of trade and manufacturing research at the left-leaning Economic Policy Institute, agreed.

“There’s going to be business types that self-promote a deal,” he said. “But I don’t see anything happening remotely resembling its current form.”

Alan Tonelson, an economic policy analyst who writes a blog called RealityChek, said the TPP is unlikely to return. But he cautioned that globalist forces will keep trying.

“It sounds like a lot of noise to me,” he said, before adding, “One should never underestimate the power and wealth and ruthlessness that long has characterized the offshoring lobby and its hired guns, like Sen. Hatch.”

But Tonelson said pushing an unpopular trade deal would be a heavy lift for even the most powerful lobby. He noted that the ground has shifted under Republican members of Congress, with rank-and-file Republicans growing increasingly wary of multi-nation trade deals. Even Speaker Paul Ryan (R-Wis.), a longtime free trade proponent, felt compelled to shift his position on the Trans-Pacific Partnership in the waning days of his primary campaign.

“How much influence on the grassroots, how much influence on voter power, does the offshoring, Establishment-friendly lobby really have?” Tonelson said. “My answer is — not much.”

Japan is not letting uncertainty in the United States halt its drive for the trade deal. Japanese lawmakers ratified the deal this month. Hufbauer said it is likely that at least some of the TPP countries will move forward in hopes that the United States and its massive market eventually will join.

“It might be their way of saying, ‘The table is set. Why don’t you come and join it?'” he said.

Another possibility suggested by Hatch is for Trump to negotiate a bilateral trade deal with Japan. Trump said during the campaign that he favored one-on-one agreements to big multi-nation constructs.

“I hope he won’t fall into that trap,” said Tonelson, adding that the biggest impediments to opening markets in countries like Japan are “non-tariff barriers that are excruciatingly difficult to identify, much less negotiate over.”

Scott, of the Economic Policy Institute, said some people may believe that bilateral trade deals would give the United States more leverage to reduce trade imbalances.

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“They are sadly mistaken. Trade deals don’t cause trade imbalances,” he said. “It doesn’t go to the root of trade imbalances.”

Scott said currency imbalances cause trade deficits. The problem with trade deals, he said, is that they redistribute income to the wealthiest people. “The purpose of trade deals is to redistribute income,” he said.

Hufbauer acknowledged that the top 1 percent benefits disproportionately from trade, but he argued that opponents exaggerate the effect. He said Trump probably will not pursue bilateral trade pacts in his first year while he concentrates on higher priorities, like tax reform and repealing the Affordable Care Act.

Trade deals are possible in 2018, Hufbauer said, but he argued that Trump likely would have to alter his perception of what a trade deal would include. He summarized Trump’s view as “other nations should unilaterally reduce barriers to U.S. goods.”

“That’s not how trade negotiations have worked,” he said.

Despite Trump’s success in the primaries and the general election, the congressional Republican caucus remains filled with ardent free traders. Might they simply wait out the Trump presidency?

“They have four or eight years to wait,” Scott quipped.

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