WASHINGTON – U.S. President Donald Trump has managed to achieve what was only recently deemed improbable — a trade deal with Mexico and Canada. If the new trilateral agreement is ratified, the substance of NAFTA will have been saved, in a manner that all three countries can live with.
Now, deals in Europe and potentially the Pacific beckon. They are the most probable places. Indeed, he already has negotiations underway with both areas.
If Trump ends up cementing trade deals with Europe and with the Pacific, he will go down in history as one of the great trade statesmen of the last 100 years. That would be an extraordinary turn of events, after two years in which the media consensus has been that he is out to destroy the international trading system and the entire world order.
It would also go far toward securing his re-election, as it would underpin the U.S. economic boom, after the boost from the massive tax cuts begins wearing off.
On the other hand, if Trump fails to redeem and complete the work on the Atlantic and Pacific trade deals, he will go down in history as mainly a destroyer of trade. It would do major damage to the U.S. economy and to his electoral prospects.
The choice is his. For now, the momentum of his efforts is going in the right direction.
Trump and the EU began trade talks at a July 25 summit, where he and EU chief Jean-Claude Juncker celebrated a rare case of brotherhood and, on the strength of their personal relationship moment, initiated negotiations for free trade in all industrial goods except autos.
Trump is already invested in the eventual success of these talks, given that he is touting these talks at his rallies as evidence of the success of his efforts.
For these talks, Trump chose the banner-headline approach, calling it a “free trade” area with “zero tariffs, zero non-tariff barriers, and zero subsidies,” instead of the detail-based, standards-harmonization approach used in the slow-moving talks under Obama on a Trans-Atlantic Trade and Investment Partnership.
Plenty of details are still needed, to be sure. Wilbur Ross noted that the current talks have the advantage that they don’t have to start from scratch, since they will build on what was already worked out for the TTIP.
Trump is also negotiating with Japan. He has even spoken several times of rejoining the TPP. It is doable, although not as easy as shaping a deal from the inside would have been.
The other 11 countries have gone ahead with the TPP, while carefully holding the door open for America to rejoin. Their main motivation in readmitting the United States to the deal is to strengthen their hand vis-a-vis China, which has no qualms to act unabashedly as the region’s domineering economic juggernaut.
Can Trump save the TPP by revising and reviving it, as he did with the North American Free Trade Agreement? The new North American agreement makes it in fact easier to rejoin the TPP, and at the same time to revise it and give it a different name.
Importantly, the spirit of Trump’s alterations to NAFTA can be applied. Trump gave assurances in a clear form where they were most needed: To American workers, on wages, by the minimum wage provision for the Mexican auto industry.
In a TPP agreement including the U.S., a different reassurance is needed: That China is not going to be brought into the TPP. The foolhardy policy of previous U.S. administrations — to let China into the World Trade Organization, to focus on giving reassurances about the TPP to China, instead of to American workers — is not to be repeated.
Indeed, contrary to that earlier talk, and to Chinese requests, China’s joining of the TPP is a totally unrealistic idea for the present era, if only because it would require ratification by every TPP country, a sufficient number of which would surely veto it.
This would also heal fragile American souls. The reassurance that most Americans need is that China is not going to be part of the TPP.
Mind you: Not this China. Not a China controlled and directed by the Chinese Communist Party. Not a China that controls its people in Orwellian fashion. And not a China that cunningly uses pseudo-market mechanisms to bolster its economic might, while cutting out foreign partners from enjoying anywhere near the same economic access inside China.
Finally, not a China whose leaders demand commercial kowtowing as an imperial right around the globe. That means no China in the TPP is imaginable in this era.
Trump is the most convincing person around for delivering this message. Were he to get this written into the introductory areas of the text of the TPP, it would be the main change needed before re-signing and ratifying.
This is a much dicier situation. The talks are semi-underway, but going badly. China’s mercantilist policies, and its massive as well as systematic use of deception, cheating and theft of intellectual property and security secrets, make it hard to reach a sound deal.
Trade deals simply work better among allies. Deals with adversaries such as China are needed too, but must not be rushed carelessly.
A globalist nationalist?
The scenario mapped out above points to a duality that has always been present in Trump’s nationalism. Effective international leaders often begin by winning their nationalist spurs.
However, when they want to shape world events, more is needed. Trump has given hints in that direction.
Back when Trump was deciding to renegotiate NAFTA instead of canceling it — the latter being the approach that Steve Bannon wanted — Trump said he was both a “nationalist” and a “globalist” and would make the necessary decisions between them.
He may be able to pull that off, to the Democrats’ ever-lasting dismay. For as much as they paid lip service to protecting U.S. workers, the effect of the policies they pursued — and the outcome of their dealings with China — was the opposite. Just ask Bernie Sanders, Elizabeth Warren, the AFL-CIO and the anti-trade U.S. NGOs, like Lori Wallach of Public Citizen’s Trade Watch.
If Trump does pull it off, the international trading order will not only be upgraded commercially, but rendered more sustainable politically than it has been in decades.
Ira Straus is the chair of the Center for War/Peace Studies and U.S. coordinator of the Committee on Eastern Europe and Russia in NATO.