New Trade Policies Generate Some Whiplash
As promised, on the first working day of his presidency, Donald J. Trump fulfilled his campaign promise to withdraw from the Trans-Pacific Partnership (TPP), and gave notice to Mexico and Canada that the United States intends to renegotiate some parts of the North American Free Trade Agreement (NAFTA).
For decades, U.S. presidents of both parties have been largely consistent in their views on trade agreements. The TPP vision began under President George W. Bush, and was almost fulfilled under President Barack Obama — two presidents who agreed on few other policy areas. They both believed that opening borders to (mostly) free flow of trade in goods and services would benefit its TPP partners in the Asia-Pacific region and, in turn, U.S. industries.
As producers of high quality wheat classes, U.S. wheat farmers are oriented towards international markets. Through decades of experience, the industry also recognizes that free trade agreements like TPP and NAFTA are good for our customers looking to expand their milling and wheat foods enterprises in part with U.S. wheat quality and value. For exporters and importers, these agreements also offer rules to ensure that the resulting “free trade” is also “fair trade” or close to it.
It is clear that the Trump Administration does see some value in the existing trade agreements. Its next action on trade was to request a panel at the World Trade Organization (WTO) dispute settlement body in the U.S. trade enforcement case about excessive Chinese subsidies. This request, made on January 25, starts the official litigation process under WTO rules.
One could be forgiven for experiencing a bit of trade policy “whiplash.” On Day 1, President Trump withdrew from TPP alleging it is not strong enough for American workers; on Day 3 his Administration used WTO rules to act on behalf of American farmers. The new trade enforcement rules under TPP would have been much stronger than WTO rules in most respects. Now that TPP is gone, the United States must work within rather cumbersome WTO rules across most of the Asia-Pacific, at least until new trade deals are negotiated.
The statement directing the Office of the U.S. Trade Representative to withdraw from TPP also directed it “to begin pursuing, wherever possible, bilateral trade negotiations to promote American industry, protect American workers, and raise American wages.” USW continues to support new agreements that expand free, rules-based trade, as TPP would have done, and encourage that agricultural interests be able to continue to provide input into those negotiations.