Trump’s Withdrawal from the Trans-Pacific Partnership: Domestic Boost or Disaster?

Jenny Elkin

Vol.  38 Associate Editor

Upon election to the highest office in the United States, President Donald Trump launched a spree of executive orders. One of these orders was the swift abandonment of the Trans-Pacific Partnership (TPP), a trade deal that his predecessor, Barack Obama, had worked for years to implement.[1] The TPP was a plan to unite twelve nations of the Pacific Rim and the United States, a partnership accounting for forty percent of the world’s GDP, in a pact of free trade.[2] The plan would cut tariffs and decimate other potential obstacles to trade, such as investment restrictions and blocked data transfers.[3] The TPP would have been especially beneficial for the American services industry, including business, finance, and information, a slice of the global economy in which the United States still maintains a semblance of supremacy.[4] The deal would have opened doors for sectors such as finance, software, and legal services by reducing domestic red tape in the partner nations.[5] The debate surrounding the TPP created unlikely bedfellows, as Senator Bernie Sanders aligned with President Trump on the need to abandon the deal, while even prominent Republicans such as Senator John McCain have vocally opposed the President’s order.[6] The competing ideologies of protectionism and globalization have met head on in the responses to the pact. President Trump cited the protection of American jobs as his reason for nixing the TPP, focusing specifically on manufacturing jobs that have been outsourced to many Asian countries to cut costs.[7] Proponents of the plan have argued that the United States will be shooting itself in the foot by withdrawing from the TPP, a viewpoint espoused by a significant number of American corporations.[8] They argue that it is too late for globalization to be turned back, and the United States must embrace and take advantage of its role as a leader in the global economy to maintain its position of power. The Trans-Pacific Partnership had not yet taken effect when President Trump withdrew from it, so it is difficult to measure the bearing that the departure will have on America’s place in the global economy. Several sectors of the United States economy will continue to be limited in growth, though they had been counting on the TPP. Farmers will still not be able to export goods such as poultry, pharmaceutical companies will not see competition from Asian generic drugs decreased, and technological companies will not experience a decrease in regulation or get access to previously restricted markets. [9] Perhaps the most significant effect of the United States’ withdrawal from the TPP is the lost opportunity to slow China’s aggressive growth in Asia.[10] The partnership had not included China, and would have created a trade alliance in the region to mitigate China’s influence.[11] China is now free to move into the gap left by the United States. The Chinese government has taken steps to fill the void, including negotiating an alternative to the TPP called the Regional Comprehensive Economic Partnership (RCEP).[12] The RCEP has lower standards for labor, environmental, and intellectual property protections, which may leave United States companies at a “competitive disadvantage”, because they would still have to comply with domestic regulation.[13] During the 2016 election, the Trans-Pacific Partnership was reduced to “a bad deal for American jobs” by Trump, appealing to parts of the country that have experienced economic decline since the shift to outsourced manufacturing.[14] Vast swaths of the United States feel left behind by a rapidly changing world, and the administration should find ways to improve areas like the Rust Belt. However, domestic improvement should not come at the cost of hurting American businesses globally. While the goal of lowering American unemployment is admirable, the implementation of protectionist policies to do so will only serve to lower the country’s standing in the global economy. Manufacturing is no longer the pillar of the United States, and escaping into a nostalgic reverie of the United States as an industrial heavyweight ignores the fact that it is the services industry which steers the American economy.[15] President Trump’s withdrawal from the Trans-Pacific Partnership will strain U.S. relations with Asia, allow China to exert almost unchecked influence on the Pacific Rim, and take business opportunities away from the very sectors of the economy that maintain America’s position as a global superpower. [16] To view globalization as a threat that must be mitigated is to place the United States at a disadvantage in a world that has become inextricably interconnected.

[1] Peter Baker, Trump Abandons Trans-Pacific Partnership, Obama’s Signature Trade Deal, N.Y. TIMES (Jan. 23, 2017), https://www.nytimes.com/2017/01/23/us/politics/tpp-trump-trade-nafta.html?_r=0. [2] Kevin Granville, What is TTP? Behind the Trade Deal That Died, N.Y. TIMES, (Jan. 23, 2017), https://www.nytimes.com/interactive/2016/business/tpp-explained-what-is-trans-pacific-partnership.html. [3] Id. [4] Id. [5] Id. [6] Baker, supra note 1. [7] Al Jazeera, Trump Withdraws US from Trans-Pacific Partnership Deal, (Jan. 23, 2017), http://www.aljazeera.com/news/2017/01/trump-withdraws-trans-pacific-partnership-tpp-deal-170123170334145.html. [8] Ylan Q. Mui, President Trump Signs Order to Withdraw from Trans-Pacific Partnership, The Washington Post, (Jan. 23, 2017), https://www.washingtonpost.com/news/wonk/wp/2017/01/23/president-trump-signs-order-to-withdraw-from-transpacific-partnership/?utm_term=.d839d0c048b6. [9] Eric Bradner, Trump’s TPP Withdrawal: 5 Things to Know, CNN, (Jan. 23, 2017), http://www.cnn.com/2017/01/23/politics/trump-tpp-things-to-know/. [10] Id. [11] John Brinkley, Trump Hands China a Gift In Dumping Trans-Pacific Partnership, Forbes, (Jan. 24, 2017), https://www.forbes.com/sites/johnbrinkley/2017/01/24/trump-dumps-trans-pacific-partnership-sad/#6f26160275dc. [12] Jennifer Amur, 4 Things to Watch Now that the U.S. has Withdrawn from the TPP Trade Deal, The Washington Post , (Jan. 23, 2017), https://www.washingtonpost.com/news/worldviews/wp/2017/01/23/4-things-to-watch-now-that-the-u-s-has-withdrawn-from-tpp-trade-deal/?utm_term=.e05e2d778b9f. [13] Id. [14] Kevin Kearns, Full TPP Text Reveals a Very Bad Deal for America, Breitbart, (Nov. 5, 2015), http://www.breitbart.com/big-government/2015/11/05/full-tpp-text-reveals-a-very-bad-deal-for-america/. [15] Granville, supra note 2. [16] Id.