Business / Economy

Trump woos Davos with TPP trade deal shift, says U.S. is 'open for business'

Reuters, AFP-JIJI, Kyodo, JIJI

U.S. President Donald Trump took his “America first” message to the world’s elite on Friday, telling a summit of business and political leaders that the United States would “no longer turn a blind eye” to what he described as unfair trade practices.

Trump became the first sitting U.S. president to address the annual conclave of the rich and powerful at the Swiss ski resort of Davos in 18 years, closing the summit with a mostly upbeat speech that declared the United States “open for business.”

“Now is the best time to bring your money, your jobs, your businesses to America,” he said, singling out tax cuts and curbs on regulation as boosting the investment climate. “The world is witnessing the resurgence of a strong and prosperous America.”

Trump also reiterated a possible U.S. return to the Trans-Pacific Partnership — the cross-Pacific trade deal he rejected last year, just days into his presidency — on condition that Washington renegotiate it with better terms.

The real estate tycoon made the suggestion only days after the 11 other countries in the deal agreed to move ahead with the blockbuster accord minus the U.S.

The signal, although vague, was well received by the free market-loving audience of the world’s economic and political elite.

Trump said he would always promote “America first,” as he expected other world leaders to do for their own countries, but added: “‘America first’ does not mean America alone. When the United States grows, so does the world.”

Still, he swiftly turned to a theme of demanding tougher enforcement of trade rules, accusing unidentified countries of unfair practices including stealing intellectual property and providing state aid to industry.

“We will enforce our trade laws and restore integrity to the trading system. Only by insisting on fair and reciprocal trade can we create a system that works not just for the United States but for all nations,” Trump said.

“The United States will no longer turn a blind eye to unfair trade practices,” he said. “We cannot have free and open trade if some countries exploit the system at the expense of others.”

His speech was mostly met by polite applause, although he drew some jeers and whistles during a question-and-answer session when he attacked the news media: “It wasn’t until I became a politician that I realized how nasty, how mean, how vicious and how fake the press can be,” he said.

While he has a record of opposing trade agreements involving multiple countries, he said the United States would seek bilateral deals with individual states. That could include TPP members, adding he would consider negotiating with them collectively if it was in the U.S. interest.

Trump said the U.S. would consider negotiating trade deals with its onetime TPP partners “either individually, or perhaps as a group” — but only “if it is in the interests of all.”

Dumping the TPP was one of Trump’s first decisions after entering the White House, under the belief the accord would punish U.S. workers by allowing companies to hire cheaper labor abroad.

The TPP was initially a U.S.-led project that would have accounted for 40 percent of global GDP, deliberately excluding Washington’s regional rival, China.

Trump’s predecessor, President Barack Obama, believed the deal would set a higher standard for trade, including on health and the environment, and eventually entice China to play by the same rules.

Audience members warmed to the comments, hoping they may mark a small but significant pivot from Trump’s “America first” protectionist mantra.

Asked whether Trump’s change on the TPP, which he first indicated to CNBC in Davos, would be followed up with real proposals, a senior U.S. official said, “There will be follow-through.”

Trump “sent a very important signal about TPP. … That’s a big deal for the region,” Singapore’s former diplomat to the U.N., Kishore Mahbubani, said after the speech.

Trump’s pullout “was a disaster because it would have helped anchor the American president in the region,” he added.

EU Commission Vice President Jyrki Katainen, the most senior official from Brussels to attend the speech, said it was “always positive if the U.S. wants to be part of the free trade agreements,” though “I don’t really know what he means — renegotiate or have a new agreement.”

Trump’s visit in Davos was preceded by the appearance earlier in the week of Canadian Prime Minister Justin Trudeau, who celebrated the announcement of the rejuvenated Asia-Pacific trade agreement.

The 11 members are expected in March to finalize the deal, which was revived after a big push by New Zealand and Japan.

Japanese officials welcomed Trump’s interest in rejoining the TPP but expressed hope that Washington will do so under the original terms.

“I welcome his recognition of the significance of the TPP,” Economic Revitalization Minister Toshimitsu Motegi, who is in charge of TPP negotiations, stressed at a news conference after a Cabinet meeting.

Prime Minister Shinzo Abe mentioned Trump’s remark just as the Cabinet meeting was starting, Motegi said.

“I want to know what he meant when he made the comment,” trade minister Hiroshige Seko said.

Added Foreign Minister Taro Kono, “The TPP’s content has already been fixed,” indicating there would be little room for renegotiation.

“Our top priority is to put ‘TPP 11’ into effect,” Motegi emphasized.

The original deal included removing a slew of nontariff restrictions and required members to comply with a high level of regulatory standards in areas such as labor law, environmental protection, intellectual property and government procurement.

Without the United States, TPP-11 only represents 13.5 percent of the global economy.

Before his trip to Davos, Trump imposed tariffs of 30 percent on imported solar panels, among the first unilateral trade restrictions made by the administration as part of a broader protectionist agenda.

The Trump administration’s debut at Davos also caused a storm because of comments by Treasury Secretary Steven Mnuchin, who said earlier in the week the United States benefits from a lower dollar, which makes its exports cheaper.

Those remarks sent the U.S. currency tumbling and drew sharp rebukes from the European Central Bank chief and other figures, who view countries talking down their own currencies as a violation of unwritten rules to keep trade balanced.

Mnuchin told CNBC television on Friday that he was “absolutely not trying to talk down the dollar” and that his remarks had been taken out of context: “What I said was actually very even-handed and consistent with what I said before.”

On Thursday, Trump said he ultimately wanted the dollar to be strong. U.S. officials said there was no disagreement between Trump and Mnuchin, and the treasury secretary had been making a factual observation about the impact of a lower dollar, not announcing a policy preference to drive it down.

Despite Trump’s tough trade talk, those in the audience mostly noted the upbeat tone of his speech.

“I think he came here to make not just American but global business comfortable about where America is now,” said IHS Markit’s chief economist, Nariman Behravesh. “He wasn’t trying to convert people to his own views, but saying, ‘We are a great economy — come and invest in the U.S.'”

Andrei Guryev, chief executive of the Russian fertilizer giant Phosagro, said Trump had spoken “how big-business people should be speaking at important road shows of their own companies.”

That did not please everyone. Winnie Byanyima, director of Oxfam International, said, “Trump’s boastful sales pitch was a victory lap for the trillions of tax cuts that the wealthy elites and corporations have clamored for.”

Still, the reception was more polite than might have been expected, given the open anxiety with which the prospect of a Trump presidency was met at Davos a year ago.

Trump’s questioning of trade, withdrawal from the Paris climate treaty and nationalist rhetoric sit uneasily at the quintessentially globalist event. Throughout the week, European leaders spoke with worry about the rise of populism.

Without mentioning Trump by name, German Chancellor Angela Merkel evoked the build-up to the two world wars.

Trump hosted a dinner with business leaders on Thursday night. Two European executives said they stayed away because they did not want to shake his hand. One said he consulted his wife and children before deciding not to go.