President Donald Trump revived the U.S. agriculture industry’s hopes of participating in the trade deal now known as CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) on Thursday, but until there’s concrete action showing he’s serious, U.S. farmers and CPTPP member countries, including Canada, should not get too excited.
The president is well aware that his supporters in the farm community are on edge regarding his trade policies — including the early withdrawal from the CPTPP (or TPP as it was known then) and re-opening of NAFTA — but concerns have reached a new level in recent weeks with China threatening to impose retaliatory tariffs on American soybeans, pork and steel.
Speaking to lawmakers from farm states on Thursday, Trump indicated he had directed his National Economic Council Director Larry Kudlow and U.S. Trade Representative Robert Lighthizer to look into what it would take to negotiate U.S. re-entry into the CPTPP.
Until now, the president has generally been opposed to multilateral trade deals, in favour of bilateral relationships. Perhaps now that the remaining 11 TPP members have signed on, the president views it as a bilateral negotiation between the U.S. and the CPTPP group. That’s not how the deal is set up, but that might be how he sees it.
Given the state of U.S.-China relations, there’s also a chance Trump has come around to seeing membership in the CPTPP as a way for the U.S. to keep power out of the hands of China. Kudlow has referred to building a “trade coalition of the willing” to challenge China on its trade policies.
“All I’m saying is my ‘trade coalition of the willing’ will put the whole world behind the United States’ actions against China and this is going to have a big effect on China. China does not want to lose face, but China does not want to be regarded as the enemy in trade for the entire world,” Kudlow told Fox News last weekend. Rejoining the 11 other Pacific Rim countries in CPTPP would go a long way to recruiting that team of countries.
From a Canadian perspective, there’s research showing a CPTPP deal without the U.S. is more beneficial for Canada’s GDP than a deal that includes the Americans, but in the long run, Canada’s economy depends on the strength of the American economy. If the CPTPP is really about building a trading bloc that can keep China in check, Canada should welcome the U.S. back into the CPTPP with open arms.
Any way you look at it, re-opening the door on CPTPP is a positive development for U.S. agriculture, which relies on exports and competitive market access.
But Trump’s comments about rejoining the deal need to be taken with a grain of salt.
The president knows his administration’s recent actions regarding China — not to mention the disagreements over renewable fuel policies — are ruffling feathers in agriculture. That’s why he directed Ag Secretary Sonny Perdue to work on putting together a compensation package for farmers in the event China follows through with its threats.
Directing Kudlow and Lighthizer to look at re-entering CPTPP also buys him some goodwill in a crowd that was starting to turn on him. Farm groups that were furious about the tariff threats versus China were quick to welcome and endorse the president’s CPTPP comments.
But as we’ve seen in other cases, one of Trump’s strengths (like most politicians) is talking a big game, convincing people that he’s on their side. However, he runs into problems when he’s expected to follow through and commit — when he’s forced to actually take a side. That’s when we see him back off on his tone and emphasize the conditions for following through, as he did on Twitter on Thursday night, saying the U.S. would only re-join CPTPP “if the deal were substantially better than the deal offered to Pres. Obama.”
Would only join TPP if the deal were substantially better than the deal offered to Pres. Obama. 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!
— Donald J. Trump (@realDonaldTrump) April 13, 2018
Seeing as Japan, Canada and other CPTPP countries aren’t interested in major changes, Trump’s tweet raises the question: what would define a “substantially better” deal? If you use the KORUS trade agreement with South Korea as an example, the president might not need huge changes to the CPTPP text to declare victory.
“This is a guy that can catch a minnow and claim he’s caught Moby Dick,” noted Carlo Dade of the Canada West Foundation, referring to the U.S.-Korea deal on RealAg Radio this week.
For agriculture, Trump’s CPTPP comments are certainly welcomed. But it’s hard to say they’re worth much, because at this point, they haven’t cost him anything. Talk is cheap. And as the related adage goes, you get what you pay for.