Trump weighs rejoining Trans-Pacific Partnership amid trade dispute with China

By Erica Werner, Damian Paletta and Seung Min Kim

President Trump ordered top administration officials Thursday to look at rejoining the Trans-Pacific Partnership, the sprawling trade pact he rejected three days after taking office.
The move would mark a stunning reversal for Trump, who sharply criticized the pact as a “disaster” and made opposition to global trade deals a centerpiece of his economic agenda as a candidate.
The Obama administration had signed the trade agreement, known as TPP, with 11 other countries, including Japan, Vietnam, Singapore and Australia, to lower tariffs and counter China’s influence in the Pacific. 

An embrace of the TPP would give Trump more leverage in his escalating trade feud with Beijing. 

It also would give U.S. farms, retailers and other businesses better access to foreign markets if China makes good on its recent threats of new tariffs on U.S. goods.
Thursday’s order comes as Trump pushes forward on a chaotic revamp of the United States’ approach to global trade, seemingly veering from trade wars one day to multinational pacts the next. 

He has gone from assailing Canada and Mexico to saying he’s within striking distance of renegotiating the North American Free Trade Agreement. 

He has both pilloried China and praised its dictator, Xi Jinping.
But no reversal has been more extreme than his new flirtation with the TPP. 

His comments were so unexpected that White House officials, lawmakers, business groups and others weren’t sure whether Trump had made a calculated overture or if it was another whimsical idea that he would cool on soon.
Reentering the TPP would not be easy. 

The 11 other countries reached their own trade deal this year, and it is unclear what conditions they would set before they restarted the entire process with the United States. 

The deal would be much stronger with U.S. participation, since it is the world’s largest economy. 

But several countries in the deal have cast a wary eye toward Trump’s swings on trade.
On Jan. 26, President Trump said he was open to a “mutually beneficial” trade agreement with the countries in the Trans Pacific Partnership trade agreement. (The Washington Post)
Canada and Mexico are part of the TPP talks, for example, and Trump has blasted leaders from both countries for what he describes as ripping off U.S. workers. 

Japan is also part of the TPP, and Trump has so far refused to exempt Japan from new tariffs on steel and aluminum imports into the United States.

'On our terms'
Trump gave the new orders to U.S. Trade Representative Robert E. Lighthizer and National Economic Council Director Larry Kudlow during a White House meeting with lawmakers and governors, according to several GOP senators in attendance.
Trump then told Lighthizer and Kudlow to “take a look at getting us back into that agreement, on our terms, of course,” said Sen. John Thune (R-S.D.). 

“He was very, I would say, bullish about that.”
Sen. Ben Sasse (R-Neb.) also witnessed and applauded Trump’s surprise move.
“We should be leading TPP,” Sasse said. 

“China is a bunch of cheaters and the best way to push back on their cheating would be to be leading all these other rule-of-law nations in the Pacific that would rather be aligned with the U.S. than with China.”
But some free-trade supporters viewed Trump’s remarks with skepticism.
“If it holds until this afternoon, that’s a good move,” said Sen. Jeff Flake (R-Ariz.), a free-trade advocate and frequent Trump critic who was not at the White House meeting.
A senior administration official, speaking on the condition of anonymity to describe the White House’s internal approach, said Trump has not set any goals or deadlines for Kudlow and Lighthizer for when a new agreement should be reached.
Instead, the White House is approaching potential new talks as a way to signal that Trump is receptive to free-market proposals if he feels they can be reached in a way that advances U.S. interests, the official said.
Trump walked back a little on his proposal in a Twitter message late Thursday.
“Would only join TPP if the deal were substantially better than the deal offered to Pres. Obama,” he wrote. 

“We already have BILATERAL deals with six of the eleven nations in TPP, and are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years!”
Trump — and a number of Democrats and labor unions — had railed against the trade deal during the presidential campaign, saying such pacts allow foreign companies to lure away U.S. jobs and erode the U.S. manufacturing base. 

In June 2016, Trump called the TPP “another disaster done and pushed by special interests who want to rape our country.”
The president’s protectionist impulses since taking office have caused heartburn for many GOP lawmakers who continue to embrace the Republican Party’s traditional support for free trade. 

If the president does move forward with rejoining the TPP, business groups and many Republican lawmakers would be sure to applaud the move, even though it would be a striking example of Trump reversing a campaign-trail promise.

Unions worried
At least some labor groups were alarmed at Trump’s willingness to restart the TPP process.
“TPP was killed because it failed America’s workers and it should remain dead,” Richard Trumka, president of the AFL-CIO, tweeted Thursday. 

“There is no conceivable way to revive it without totally betraying working people.”
Trump administration officials are also working to renegotiate NAFTA, and the president told senators Thursday his team was making progress.
“The president said it could be two weeks, it could be two months, it could be six months,” said Sen. Deb Fischer (R-Neb.). 

“He’s keeping his options open. That’s important.”
Engaging in talks to reenter the TPP would be part of a broader White House strategy to respond to an escalating trade flap between Trump and Beijing. 

But Trump has been having a hard time rallying other countries to backstop his push to impose new tariffs on Chinese goods.
The president is also running into strong pushback from Republican lawmakers, particularly those representing agricultural regions where China’s threatened retaliation against U.S. exports would hit hard.
The president first raised the prospect of reentering the trade deal at the World Economic Forum in late January. 

He said then that he would rethink his opposition if the United States secured “substantially better terms,” without offering specifics.
There has been no indication since then that the administration was making any genuine effort to rejoin the agreement.
“This is another encouraging signal from the administration, following what the president said at Davos,” said Wendy Cutler, who was among the TPP negotiators. 

“I always thought that with time the administration would value the TPP more and more.”
One question is which TPP Trump wants to rejoin: the original 12-nation deal that the Obama administration negotiated, or the 11-nation agreement that is moving toward implementation by the remaining countries.
When the president last year announced he was quitting the deal, the other TPP countries suspended 20 provisions in the original accord and announced a new deal, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). 

The provisions, including key intellectual property protections such as those involving biological drugs, were measures the United States had demanded in return for granting access to its market.
U.S. negotiating partners might expect the United States to “pay for” restoring those provisions at this point, Cutler said.
“They do want us back in. But the question is: At what price?” Cutler said.
Trump was not the only one to oppose the TPP during the 2016 presidential campaign. 

His Democratic rival, Hillary Clinton, came out against the deal as she faced pressure during her primary campaign against Sen. Bernie Sanders (I-Vt.), who was outspoken against the TPP. 

Clinton had played a role in its formation during her time as Barack Obama’s secretary of state.
Even before Trump’s election, the Trans-Pacific Partnership began to founder and stall in Congress as it got caught up in political crosscurrents, losing support from some Republicans and progressive Democrats.
In May 2016, as domestic political backing for the TPP was starting to erode, Obama wrote an op-ed in The Washington Post aiming to rally support.
“Increasing trade in this area of the world would be a boon to American businesses and American workers, and it would give us a leg up on our economic competitors, including one we hear a lot about on the campaign trail these days: China,” he wrote.
The TPP is becoming one of the White House’s few remaining options as Trump searches for ways to exert pressure on China to back down from its threat of new tariffs on U.S. exports. 

U.S. farm groups have said they fear getting caught in the middle of the trade spat that Trump and Beijing have recently escalated, and they want assurances that they will not lose access to foreign markets.
The White House had been looking at using a Depression-era program known as the Commodity Credit Corp. that could be used to extend subsidies to farmers, but Republican lawmakers pushed back hard on that idea during Thursday’s meeting.
“Farmers don’t want a handout. They want access to markets,” Sen. Steve Daines (R-Mont.) said. “The president was surprised by that. He’s like, ‘really?’ He said, ‘Oh, really? Okay, so we won’t do that.’ ”

Vietnam, in a Bind, Tries to Chart a Path Between U.S. and China

By HANNAH BEECH

Xi Jinping arriving in Danang, Vietnam, on Friday for the Asia-Pacific Economic Cooperation meeting. Washington’s withdrawal from the Trans-Pacific Partnership has left some countries wondering if they should opt for Chinese-backed trade pacts. 

HANOI, Vietnam — Vietnam’s full-on war with the United States lasted a decade. 

Its tensions with its northern neighbor, China, have persisted for thousands of years — from a millennium of direct Chinese rule and a bloody border war in 1979 to more recent confrontations in the South China Sea.
If geography is destiny, then the fate of Vietnam is to be an expert in bargaining with Beijing and balancing between superpowers.
So with the rest of the world struggling to reckon with China’s assertive moves in the Pacific, the Vietnamese, hosts of this year’s Asia-Pacific Economic Cooperation forum, are offering guidance.
“I would like to give advice to the whole world, and especially to the United States, that you must be careful with China,” said Maj. Gen. Le Van Cuong, the retired director of the Institute of Strategic Studies at the Vietnamese Ministry of Public Security.
Like any good Communist soldier, General Cuong pays attention to the details of leaders’ abstruse speeches, and he noted that Xi Jinping had referred to his homeland’s status as a “great” or “strong power” 26 times in a lengthy address last month.

“Xi Jinping’s ambitions are dangerous for the whole world,” General Cuong said. 

“China uses its money to buy off many leaders, but none of the countries that are its close allies, like North Korea, Pakistan or Cambodia, have done well. Countries that are close to America have done much better. We must ask: Why is this?”
As with other Southeast Asian nations acutely aware that they are positioned in China’s backyard, Vietnam is worried about American inattention.
In the name of halting Communism, the United States once sent troops to Indochina and propped up dictators elsewhere in Asia. 

But the American-devised security landscape also created a stable environment in which regional economies expanded.

A furniture factory in Saigon. “As Vietnamese, we are always trying to find a way to balance China’s power,” said Nguyen Ngoc Anh, a professor at the Foreign Trade University in Hanoi.

Now, Trump’s decision to take the United States out of the Trans-Pacific Partnership trade pact, which would have given 11 other economies an alternative to a Chinese-led economic order, has left the Vietnamese feeling vulnerable.
“As Vietnamese, we are always trying to find a way to balance China’s power,” said Nguyen Ngoc Anh, a professor at the Foreign Trade University in Hanoi. 

“For us, TPP isn’t just an economic issue. It’s also about geopolitics and social issues.”
Ms. Anh noted that local liberals had cheered the trade pact because it would have forced Vietnam to adhere to international labor and government accountability standards that Hanoi might otherwise not meet.
With the 11 other members of the pact agreeing to proceed without the United States, Washington’s withdrawal — not to mention Trump’s “America First” speech at the APEC meeting on Friday — leaves some nations wondering if their best option may be Chinese-backed trade pacts and financing deals that have fewer guarantees for workers and less official transparency.
“We are both Communist countries, but people like me in Vietnam don’t want to develop the same way that China has,” said Ms. Anh, who studied economics in Soviet-era Czechoslovakia. 

“We want to follow the Western-oriented way.”
While the United States is the largest market for Vietnamese exports, Vietnam’s biggest trading partner is China. 

Yet Vietnam runs a significant trade deficit with its populous neighbor, and Vietnamese economists worry that China doesn’t play fairly.
“China is one of the few countries in the world that doesn’t observe international law in many areas,” said Le Dang Doanh, an influential economist who has advised members of the Vietnamese Politburo on trade.
The Vietnamese watched in alarm last year when Beijing reacted to an international tribunal’s dismissal of China’s expansive claims over the South China Sea by ignoring — and even mocking — the judgment. 

Vietnam and four other governments have claims of their own on the resource-rich waterway that conflict with China’s.

A Chinese frigate in the South China Sea. Vietnam and four other governments have claims on the resource-rich waterway that conflict with China’s territorial demands. 

It is hard to overstate the level of Vietnamese antipathy toward China. 

In a country where public protest is rare and risky, some of the few large-scale demonstrations in Vietnam in recent years have been against the Chinese.
But this national aversion puts Vietnam’s leadership in a bind. 

It cannot ignore China’s growing economic magnetism. 

For many members of APEC, China now ranks as their No. 1 trading partner.
In return for investment and project financing — roads, railways, dams, airports and colossal government buildings — leaders of regional economies are increasingly doing Beijing’s bidding.
Cambodia and Laos have given crucial support for Beijing’s South China Sea claims. 

Thailand has complied with Beijing’s demand that it return Chinese dissidents who once counted on it as a haven.
Even the Philippines has appeared to yield, despite the fact it lodged the successful South China Sea suit at The Hague. 

Days before Mr. Trump’s visit to Manila this Sunday, it disclosed that Rodrigo Duterte had ordered construction halted on a disputed sandbar in the South China Sea, a move widely regarded as intended to placate Beijing.
Since taking office last year, Duterte has deemed the era of American military and economic pre-eminence over, and has called China his country’s best and faithful friend. 

He has been rewarded with billions of dollars in infrastructure investment from Beijing.
“The U.S. has been playing catch-up to China’s charm offensive since the turn of the new century,” said Tang Siew Mun, who heads the Southeast Asia center at the Iseas-Yusof Ishak Institute, a think tank in Singapore.
Vietnam, more than any other country, has grown practiced at divining when not to challenge the two Pacific powers — both of which it fought within the last half-century.

People exchanging Vietnamese dong and Chinese renminbi near Vietnam’s border with China. While the United States is the largest market for Vietnamese exports, Vietnam’s biggest trading partner is China.

In the 1970s and 1980s, China seized spits of land in the South China Sea that Vietnam had controlled or that were unoccupied but claimed by Hanoi.
Yet perhaps sensing an American reluctance to confront China in the South China Sea, Vietnam has declined to take China to international court, as the Philippines did, even as the Chinese have turned disputed reefs and sandbars into militarized islands.
Chinese pressure continues, despite the United States’ supplying the Vietnamese Coast Guard with a cutter and new patrol boats.
This year, a Spanish company with prospecting rights from Vietnam suspended drilling in an oil block off the coast of Vietnam. 

Beijing claims part of the waters as its own.
In 2014, the Chinese parked a state-owned oil rig off Danang, where Trump attended the APEC summit meeting on Friday, in a forceful incursion into what Hanoi considers its territorial waters.
“Living next to China, which has ambitions to become the most powerful country in the world, is not easy,” said Vo Van Tao, a popular political blogger. 

“To lower the heat, Vietnam needs to withdraw from areas that belong to Vietnam.”
Grand strategy is beyond the worldview of Vietnamese like Do Van Duc. 

In 1979, he was stationed on the border with China, as part of an antiaircraft artillery unit, when hundreds of thousands of People’s Liberation Army soldiers from China flooded south.
The Vietnamese, while outmanned, put up an unexpectedly robust defense. 

Within a month, the Chinese, professing that they had taught the Vietnamese a lesson for interfering in regional geopolitics, withdrew.
During the war with China, Mr. Duc was only 17 years old, but he came to understand one thing then that today, as a security guard living in Hanoi, he said he still clings to.
“We cannot trust the Chinese,” he said. 

“They are our ancient enemy, and that will not change.”

Bannon exit a reminder of China’s success in ‘containing Trump’

By Tom Mitchell in Beijing

Steve Bannon, who has been fired as White House chief strategist

Shortly after Donald Trump met Xi Jinping for the first time at his Florida resort, a senior Chinese government official wondered aloud if the US president’s most important domestic political adviser really saw Beijing as an enemy, let alone the enemy. 
“But Steve Bannon spent years [working] at Goldman Sachs,” the official protested in a conversation with the Financial Times.
“He also reads widely and understands history. I don’t think he will be that radical.” 
Last week the ruling Chinese Communist party had its answer.
In what turned out to be his swansong interview just before he was fired, Mr Bannon said the US was engaged in a winner-take-all “economic war” with China.
He added that he fought “every day” with another Goldman Sachs alumnus, White House economic adviser Gary Cohn, and other administration figures who sought a more moderate approach towards dealing with America’s principal geopolitical rival. 
Mr Bannon’s abrupt departure is a reminder that Beijing’s strategy for “containing Trump” has so far been a successful one.
But it is also a strategy that has benefited greatly from that most precious of commodities — luck.  As it stands, Chinese officials cannot believe their luck, beginning with Mr Trump’s decision to abandon the Trans-Pacific Partnership trade agreement on his first full day in office. 
The TPP would have locked the US and China’s largest Asian trading partners in a formidable economic block from which Beijing was initially excluded.
In the likely event that the Chinese government later applied for TPP entry, Washington would have had its best opportunity to pry open the China market since Beijing asked to join the World Trade Organisation in the late 1990s. 
As one disappointed US diplomat told the FT earlier this year: “We threw away our best leverage over China on day one.” 
A People’s Liberation Army general was as gleeful as the diplomat was deflated.
In a video of an internal talk that leaked online, Jin Yi’nan called the TPP decision a “grand gift, although [Trump] does not know it”.
In the months that followed Mr Trump’s TPP decision, Chinese officials breathed easier and easier as one threat after another melted away.  
Trump did not discard the long-standing “One China” as suggested by his unprecedented December phone call with Taiwan’s president, Tsai Ing-wen. 
He did not declare, as promised on the campaign trail, China a “currency manipulator”. 
And the deadline for a “100-day” trade and investment negotiation begun in Florida passed last month without a meaningful agreement. 
While Trump’s administration has just launched a probe into alleged Chinese theft of intellectual property, it will probably drag on for at least one year.
As a result Beijing has achieved its first objective vis-à-vis Trump: to avoid any economic disruptions with its most important trading partner ahead of a Communist party congress this autumn that will mark the start of Xi’s second term in office. 
Trump has, in other words, thus thrown out his second best piece of leverage over Beijing.  
China must still navigate difficult trade and investment negotiations with a US commerce secretary, Wilbur Ross, and a US trade representative who both understand that the Chinese Communist party’s unique brand of “state capitalism” poses challenges that the WTO is not equipped to handle. 
In his confirmation hearing in June, USTR Robert Lighthizer demonstrated that he understood the perils of Chinese state capitalism as well as Hillary Clinton did.
Mrs Clinton sounded her own alarm on the subject in a series of detailed speeches while secretary of state, and would probably have been laser-focused on the issue had she defeated Trump in last year’s presidential election. 
But Beijing’s showdown with Mr Ross and Mr Lighthizer will run for a year at least.
Xi can live with that, especially when pitted against an American president whose competence and authority waste further away with each passing week.

In Trump Win, China Hopes for U.S. Retreat

Election results mean economic threat, geopolitical opportunity for Beijing.
By ANDREW BROWNE

A woman follows the U.S. election results at an event organized by the American consulate in Shanghai on Wednesday. 

SHANGHAI—The gray, conservative men who run China have no love for Hillary Clinton,but at least she was a known entity. 

In an erratic Donald Trump they now face both an economic threat and geopolitical opportunity if, as seems likely, a distracted America pulls back from Asia.
Beijing may believe that Mr. Trump is bluffing when he threatens sweeping tariffs on Chinese imports; the official media have portrayed him as more of a clown than a menace.
But it had better brace for the consequences of a populist revolt that swept him to victory, fueled by anger at the perception among working-class whites that China has stolen American jobs. 

Mr. Trump’s ascendancy to the White House delivers the sharpest blow yet to the forces of globalization that propelled China’s rise. 

The world’s most consequential bilateral relationship now faces an extended period of uncertainty and tension.
The damage to U.S. democracy from an ugly election campaign underscores the Communist Party’s propaganda message to the masses that it alone stands between order and chaos. 

While American politics are in convulsion, the Chinese leadership projects stability. 

Beijing wants a bigger say in how the world is run. 

Turmoil in Washington serves that purpose well.
Mr. Trump has promised to rip up America’s trade agreements; a video documentary by one of his chief advisers on China, the economist Peter Navarro, opened with a Chinese dagger plunging into America’s heart. 

China is a villain, along with Mexico, responsible for emptying out U.S. manufacturing cities.
It doesn’t matter that manufacturing jobs are now fleeing China for lower-cost countries like Bangladesh and Vietnam, Mr. Trump has promised to bring them home.
If he carries out his threat to slap an across-the-board 45% tariff on Chinese imports, expect retaliation against American investors that will slice into the profits of companies doing well in China, including General Electric, Boeing and Apple.
Note, too, that trade has long held together the U.S.-China relationship that is fraying in so many other areas—from how to deal with the North Korean nuclear threat to China’s aggression in the South China Sea.
On the geopolitical front, Beijing has reason to cheer the election result: Mr. Trump has less regard than Mrs. Clinton for America’s military alliances, which have underpinned U.S. dominance in China’s neighborhood since World War II—a primacy that Beijing is determined to upend.
His election may well kill off Barack Obama’s signature foreign-policy initiative, the “pivot” to Asia, which Beijing views as military containment, an invitation to China to assert more control over what it calls its “near seas.” 

Mr. Trump rejects the Trans-Pacific Partnership, a massive free-trade deal at the heart of Obama’s plans for a greater U.S. regional engagement.
Yet it is the American security guarantee that has kept the peace in East Asia and allowed the world’s most dynamic region to focus on growth.
If U.S. allies like Japan and South Korea, who Mr. Trump portrays as free riders, start doubting U.S. defense commitments, a regional arms race could ramp up. 

China’s nightmare is a Japan that loses faith in the U.S. nuclear umbrella and decides to build its own weapons.
Already, right-wing politicians in South Korea are advocating an independent nuclear deterrent as Pyongyang accelerates its nuclear and missile testing.
Pax Americana—the U.S.-led global order—is already looking shaky in East Asia, precisely because countries worry about the staying power of country capable of producing this kind of political shock. China’s authoritarianism is at least predictable. 

Philippine President Rodrigo Duterte has canceled military exercises with the U.S. and is shopping for weapons in China, as is Malaysia’s leader, Najib Razak, who recently announced the purchase of at least four Chinese navy ships.
Mrs. Clinton’s blunt diplomatic style grated on Chinese leaders. 

As first lady, she berated them over human rights, and as secretary of state she irritated them again with her lectures on freedom of navigation in the South China Sea.
Mr. Trump has focused almost exclusively on trade in his hectoring comments on China. 

Still, he prides himself on his deal-making ability. 

China may hold out hope it can outwit him in negotiation—businessmen generally abandon their combativeness and turn meek when they come to Beijing—and that a commercial focus on both sides can produce pragmatic outcomes.
Expect China to watch Mr. Trump very carefully before reaching any conclusions about his intentions.
Beijing has learned to tune out the hostile rhetoric of U.S. presidential candidates. 

Bill Clinton railed against the “Butchers of Beijing,” a reference to the 1989 Tiananmen Square massacre, before taking office and ushering China into the World Trade Organization, which supercharged its growth. 

George W. Bush called China a “strategic competitor” before embracing the country as an ally in his war on terror.