“Great thing for the America worker, what we just did,” said President Trump after signing a memorandum which marked the withdrawal of the US from an Asia-Pacific accord, a free trade goal which had been worked hard towards for decades (Baker, 2017). The President’s action, however, did not come as a surprise as he had campaigned against the partnership during his first run. The action was not taken well even by some Republicans and the executives of the companies built around the policy geared towards more open trade. The worst fear was however about China filling the gap that America left in Asia and becoming a stronger competitor. Indeed, China is always ready to step into any vacuum that America leaves (Campbell, 2016). Besides eliminating China, TPP, as estimated by PIIE models, would make China’s economy smaller. TPP’S rules limited SOE’s and protectionism hence would have made China adopt substantial free-market reforms.
Abandoning the TPP was a wrong decision. It is worth mentioning that America advances a positive trade agenda in the Asian countries. This keeps American companies and workers competitive in the regions that have been registering economic vibrancy and the ones experiencing fastest growth and development. Therefore, pursuing trade agreements in Asia gives the US a competitive advantage. Major competitors such as the European Union and China have continued signing agreements with the Asia-Pacific while President Trump decided to pull out America from where everyone’s focus is. This makes it more difficult for the US to stay ahead while the President seeks to please his voters (Blake, 2017). The critics of the TPP claim that the agreement lowers job opportunities for Americans ignoring the fact that it expands opportunities as Americans can trade with fast developing regions in the Pacific-Asia. The free trade also lowers prices for consumers and makes available a wide variety of goods. The argument of TPP resulting in foreigners taking Americans’ jobs has been ruled out by research. The USITC established that only 0.2 percent of American workers are capable of being displaced by the TPP deal, a disadvantage which is not comparable to the advantages the deal brings for America. The deal will, however, increase jobs for everyone in a few years. More competitive sectors would also mean increased wages for workers which is exactly what TPP would bring to the table.
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Although the Whitehouse claimed that they would pursue bilateral trade agreements, it will take a long time where else the one that President Obama had already won could be pushing the country forward. The abandonment of this pact eliminates the advantage of saving on import tariffs (Olorunnipa et al., 2017). Indeed, the savings that businesses make in open trade are in return invested in the country boosting the economy even more. Thus, the withdrawal sends a troubling signal from America to Asia-Pacific which is exactly what America does not need at the moment. America needs to establish a good and strong relationship with Asia-Pacific which is a region of great potential.
References
Baker, P. (2017). Trump Abandons Trans-Pacific Partnership, Obama’s Signature Trade Deal. The New York Times. Retrieved From https://www.nytimes.com/2017/01/23/us/politics/tpp-trump-trade-nafta.html
Blake, A. (2017). The Fix Why Donald Trump’s move to end the Trans-Pacific Partnership is so hugely symbolic. The Washington Post . Retrieved From https://www.washingtonpost.com/news/the-fix/wp/2017/01/23/why-donald-trumps-move-to-end-the-trans-pacific-partnership-is-so-hugely-symbolic/?utm_term=.7ec2d86cb3f5
Campbell, C. (2016). Donald Trump’s Pledge To Withdraw U.S From TPP Opens the Doors for China. Retrieved From http://time.com/4579580/china-donald-trump-tpp-obama-asia-rcep-business-trade/
Olorunnipa, T. Pettypiece, S., Townsend, M. (2017). Trump Revamps US Trade Focus by Pulling Out of Pacific Deal. Retrieved From https://www.bloomberg.com/news/articles/2017-01-23/trump-said-to-sign-executive-order-on-trans-pacific-pact-monday
