U.S. President Donald Trump signed an executive order yesterday that officially withdraws the United States from the Trans Pacific Partnership (TPP), a multi-lateral trade agreement between the U.S. and 11 other Pacific Rim countries that lowers trade tariffs among other things and was supported by former President Obama and many other American businesses but faced strong resistance from a variety of U.S. politicians, including Democratic presidential candidate Hillary Clinton and Vermont Senator Bernie Sanders.
“Great thing for the American worker, what we just did” Trump exclained after he signed the executive order yesterday to officially withdraw the U.S. from the multi-lateral trade partnership.
Kishore Mahbubani, Dean of the Lee Kuan Yew School of Public Policy expressed concern last Friday at the Annual World Economic Forum in Davos, Switzerland about Trump’s decision to abandon the TPP.
“Trump’s decision to walk away from the TPP is amazing, because he is shooting America in the foot. He talks about putting America first, and he shoots himself in the foot. We have to prepare for a world where America goes from being the biggest cheerleader on trade to one of the biggest obstacles” Mahbubani said.
Last week, ministers of the G20 countries warned against the type of protectionism that President Trump is now espousing and voiced their support for inclusive growth which ensures that economic growth is distributed more evenly across society and creates opportunity for all segments of the population.
Wolfgang Schäuble, Federal Minister of Finance of Germany, spoke on January 19th during The World Economic Forum in Davos, Switzerland about how free trade and inclusive growth are intertwined.
“If you want to get more inclusive growth, you need more free trade,” Schäuble said.
Christine Lagarde, Managing Director of the International Monetary Fund (IMF) reported last week at the Annual World Economic Forum that she expects global growth to pick up in 2017 to 3.4 percent from 3.1 percent in 2016.
However, it remains unclear whether Trump’s protectionist trade policy decisions with the world’s largest economy will dampen growth, lead to fewer markets for U.S. exports, or even worse, result in a trade war with another country such as China which stands to benefit from Trump’s decision to pull the U.S. out of TPP with 11 other Pacific countries.
The Associated Press is reporting that Australian Prime Minister Malcolm Turnbull told reporters on Tuesday that Trump’s recent decision to pull the U.S. out of the TPP is a “massive bow” but suggested that other countries such as China may help to fill the void left by the U.S.
During his first official briefing yesterday, White House Spokesman Sean Spicer spoke more favorably about bilateral trade agreements between two trading partners because they are easier to renegotiate or exit versus a larger multi-lateral trade agreement such as the 12 member TPP trade agreement which is more complicated to revise.
“The beautiful thing about a bilateral agreement is that if any one of the true parties in the agreement decides at any time they want to get out of the agreement, or they’re not being treated fairly, they can renegotiate much easier” said White House Spokesman Sean Spicer
“In a multinational agreement, that’s not the case. In many cases, all of the other countries have to agree to an action or to let somebody out. That’s not putting the U.S. interest’s first” Spicer added.