One of Donald Trump’s first actions as President was to pull out of the TPP, the Trans-Pacific Partnership.
Mr. Trump could end the U.S. participation with 11 other Pacific Rim nations with the stroke of a pen because Congress had not ratified the ambitious accord despite strong support from business groups and President Obama. Nevertheless, the withdrawal put Capitol Hill and foreign governments on notice that the president would demand better deals on a one-on-one basis.
After signing the document, Mr. Trump declared that it was a “great thing for the American worker.”
While the name of that trade deal, Trans-Pacific Partnership, would suggest it only involved countries in Asia, that was not the case. The TPP also involved Mexico and Canada:
Donald Trump wants to rewrite NAFTA, but someone else already did. Here’s how it went down.
This isn’t just speculation. This is well-documented history. Because the Obama administration already renegotiated NAFTA.
There was never a formal announcement of “NAFTA Modernization Talks.” There were no presidential tweets mocking the original agreement. But behind the scenes, President Barack Obama’s negotiators spent more than three years haggling and battling to update and upgrade the 1994 deal, and they eventually got a lot of what they wanted. Canada reluctantly agreed to give American farmers modest but unprecedented access to its tightly protected dairy industry; Mexico grudgingly agreed to labor reforms with more bite than NAFTA’s toothless union protections. The new deal opened up service sectors like insurance, accounting and express delivery where the United States tends to excel, along with e-commerce and other digital industries that didn’t exist when NAFTA was born. The United States also secured new restrictions on government-owned businesses, new protections for intellectual property and new safeguards for the environment.
But none of those hard-won concessions are going into effect. That’s because the Obama team negotiated all of them as part of the Trans-Pacific Partnership, the 5,500-page Asia-oriented trade agreement among the three NAFTA nations and nine other Pacific Rim countries. TPP was at the heart of Obama’s strategic “pivot to Asia.” But Trump saw it as another fleecing of America, and with great fanfare he yanked the United States out of TPP during his first week in office, before Congress could even vote on whether the deal should take effect. That means its upgrades to NAFTA—regarding dairy, labor and everything else Mexico and Canada agreed to—are probably moot.
President Obama had already re-negotiated NAFTA as part of the TPP. He had won concessions from Canada with regards to dairy exports, and concessions from Mexico with regards to labor and wage requirements. If those concessions that were negotiated by Obama sound familiar, it is because they are basically the same concessions Trump just announced with his new Mexico – Canada trade deal:
“The deal includes a small reduction in protectionism for Canada’s dairy farmers,” Bank of America Merrill Lynch global economist Ethan Harris said in a note to clients Tuesday. “Under the new USMCA, American dairy producers will have access to 3.59% of Canada’s dairy market — slightly higher than the 3.25% they would have gotten had the US signed the Trans Pacific Partnership [TPP].
What’s more, some of the more significant changes — relating to issues such as labor standards, environmental protections and e-commerce — appear to be cribbed from another trade deal that Trump has demonized: the Trans-Pacific Partnership.
Now Trump seems to have realized his mistake. Despite how he characterizes his “historic transaction,” the USMCA is mostly just a smooshing together of two trade deals that he derided as the worst trade deals ever made, as Dartmouth Tuck School of Business professor Emily Blanchard points out.
In other words, Trump has wrought a lot of destruction in service of landing us in roughly the same position we would have been in had we simply stayed in TPP and pursued more amicable negotiations with Mexico and Canada on other outstanding issues.
Because it was Obama who had negotiated largely these same terms with Mexico and Canada, Trump threw them in the trash in January of 2017, only to agree to basically the same terms 20 months later. In the meantime, industries that could have been helped by these terms 20 months ago were caused unnecessary suffering as Mexico and Canada not only did not start applying those new concessions, but instead went the opposite route and initiated retaliation measures:
As the Wall Street Journal reports Thursday, Mexico and China have decided to target up to $986 million worth of American dairy exports with tariffs as retaliation for the Trump administration’s protectionist moves. Mexico is increasing its duty on cheese, while China is hitting cheese and whey. With their growing middle-class populations, both countries have become important markets in recent years for the U.S. dairy industry, which has found itself struggling with overproduction in the face of declining domestic milk consumption. Milk futures for July are down since Mexico announced its tariffs earlier this year—the last time the country imposed similar tariffs on U.S. cheese, shipments fell by 26 percent—and companies are already fretting. The president of Wisconsin’s BelGioioso Cheese called the situation “a nightmare.”
What’s even worse is that the Trump administration told the dairy industry to just sit back and take it while the Trump administration spent 20 months negotiating terms that had largely already been negotiated by Obama:
The Trump administration has argued that businesses should accept this sort of “short-term pain” while it tries to rewire the entire global trading system to its advantage.
And it wasn’t just the dairy industry that was needlessly hurt. Other industries were also affected by trade retaliation from Canada and Mexico while Trump negotiated with these countries to come to largely the same terms that had already been agreed to with Obama:
Canada hit back by imposing tariffs on more than 100 US products, from ketchup to toilet paper, insecticide and washing machines. Mexico is targeting more than a dozen agricultural products, including pork and cheese.
Because of all this unnecessary harm brought about for Midwestern farmers because of Trump’s idiotic actions, he then decided to spend $12 billion (with a “b”, to quote Trump) of taxpayer money to give to farmers who have been hurt.
The Trump administration announced on Tuesday that it would provide up to $12 billion in emergency relief for farmers hurt by the president’s trade war, moving to blunt the financial damage to American agriculture and the political fallout for Republicans as the consequences of President Trump’s protectionist policies roll through the economy.
Trump’s ridiculous ego and vendetta against Barack Obama has caused untold damage for Midwestern farmers and industries, and caused a multi-billion dollar taxpayer bailout, all so he could proclaim himself as a deal-maker for negotiating basically the same exact thing Obama negotiated two years ago.