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 United States.

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. SUNS]

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 deal.

"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."