TWN Info Service on WTO and Trade Issues (Jan17/06)
25 January 2017
Third World Network
US President to pursue bilateral trade deals
Published in SUNS #8387 dated 25 January 2017
Geneva, 24 Jan (D. Ravi Kanth) - The new US administration of President Donald
Trump signalled on Monday (23 January) that it would aggressively pursue
bilateral trade agreements instead of multilateral trade deals based on the
lowest common denominator framework, White House Spokesperson Sean Spicer said.
President Trump, who signed an executive order for leaving the 12-country
Trans-Pacific Partnership (TPP) agreement during his first day in office, made
it unmistakably clear that the US intends to purse bilateral trade agreements
to secure maximum gains for the American companies and workers.
Further, it is easy to enforce the bilateral trade agreements under which
Washington can give a 30-day notice to an erring-trade partner for withdrawing
from the deal, President Trump said. Therefore, trade deals secured through
"one-on-one" negotiations will be better for the US economy and its
workers, the President maintained.
"We've been talking about this for a long time," the President said
after signing the executive order. "This is a great thing for the American
worker, what we just did."
He threatened the US company executives and business tycoons that he would
"punish" those companies which shut down factories in the United
States and moved jobs by imposing a "very major" border tax.
The President's decisions, according to his spokesperson, "ushers in a new
era in US trade policy" based on bilateral deals that would take
precedence over multilateral agreements.
Multilateral deals are not beneficial for the US interests because they end up
serving the "lowest common denominator" - which was the case with the
12-member TPP that unfairly put small countries on the same footing as the
Bilateral deals offer stronger bargaining position to the world's largest
economy and can be more easily updated or renegotiated, Spicer said.
In short, the decisions coming from the White House on day one are a wake-up
call to members at the World Trade Organization that it would be foolish and
naive on their part to negotiate with the US, which can go back on its previous
commitments despite securing the maximum gains like in the Trade Facilitation
Agreement, said a trade envoy, who asked not to be quoted.
The New York Times in its editorial "Opening Salvos in President Trump's
Trade War" on 23 January, cautioned that his intention to punish companies
that closed down factories in the US and moved jobs abroad by slapping a
"very major" border tax, and his withdrawal from the TPP, could lead
to a trade war.
[The NYT editorial pointed out that such a border tax would be illegal under US
law, apart from violating US treaties with other countries. A post at the IELP
blog has also made the same point. Singling out any individual enterprise for
punitive action would also be violative of the US constitution and its
prohibition of 'bills of attainder', other legal experts have underscored.
But the WTO's director-general Roberto Azevedo doesn't want to acknowledge the
imminence of a trade war. He voiced concern that "talks of a trade war
between the US and China could become self-fulfilling," according to an AP
news report. "I think we should try not to talk ourselves into a trade war,
and I think we're seeing a lot of that," Azevedo told AP news agency last
Thursday (19 January).
Meanwhile, in a separate development, "Australia has called for the
Trans-Pacific Partnership to go ahead without the US after president Donald
Trump's withdrawal from the 12-country free-trade deal forced Asian capitals to
rethink a decade of international economic policy," according to a report
on the Financial Times website.
"Malcolm Turnbull, prime minister of Australia, vowed to keep TPP alive
and said he was open to China joining the pact instead of the US - a sign of
how withdrawal could damage American interests in the region, even with its
closest allies," the FT report suggested.
"But trade negotiators from several countries said it would be hard to
sustain TPP in its current form. Instead, big players such as China and Japan
are likely to engage in intensive diplomacy as they try to shape a new regional
"Losing the United States from the TPP is a big loss, there is no question
about that," said Mr Turnbull. "But we are not about to walk away
from our commitment to Australian jobs."
"Certainly there is the potential for China to join the TPP," he
added. "There is also the opportunity for the TPP to proceed without the
United States and I've had active discussions with other leaders as recently as
last night with Prime Minister [Shinzo] Abe about that."