Free Trade Is Not Dead Under Donald Trump

December 15, 2016, 7:38 PM UTC
Donald Trump, Mike Pence
Workers take photos of President-elect Donald Trump and Vice President-elect Mike Pence during a visit to a Carrier Corp. factory, Thursday, Dec. 1, 2016, in Indianapolis, Ind. (AP Photo/Evan Vucci)
Evan Vucci — AP

Even though anti-trade rhetoric marked the U.S. presidential race, 2016 is still a year where the world saw landmark trade deals move forward involving multiple countries. The World Trade Organization’s Trade Facilitation Agreement brought together more than 100 countries to make trade between them easier and more than 50 countries agreed to expand the Information Technology Agreement to eliminate duties on $1.3 billion worth of goods. And while it’s uncertain if America will participate in the Trans-Pacific Partnership, 11 other nations agreed with it to a deal that would involve 40% of the world’s economy.

Whether further progress can be made going forward on a broad front with multi-party agreements is uncertain. There is no word from President-elect Donald Trump’s transition team signaling this as a possibility. Indeed, we’re seeing the opposite: Trump has announced that he plans to kill the TPP once he takes office in January and instead favor entering into bilateral agreements. His announcement may sound definitive, but that may not be the last word.

The leading Congressional voices on international trade, such as House Ways and Means Committee Chair Kevin Brady and Senate Finance Committee Chair Orrin Hatch has urged lawmakers to fix the trade deal instead of a abandoning it altogether. This comes as other multi-party agreements have been in progress, such as the Trade in Services Agreement that improves international services trade among 23 countries, including the U.S. These could be picked up as well and brought across the finish line.

Sure there is room for bilateral agreements. Updating the North American Free Trade Agreement (NAFTA), which covers the U.S., Canada and Mexico, makes sense, given that this agreement with the countries to America’s northern and southern borders is 20 years old. The U.S. has common interests with these two countries that are regional and these have evolved in a world where digital commerce has changed the nature of trade and deeper economic integration can be attempted. But while working with U.S. neighbors makes sense, over 92% of the world’s customers are outside the borders of North America. Upgrading NAFTA is not enough of an American trade agreements program. Nor are there a lot of good choices for bilateral deals – Europe will be tied up for years with plans for the UK to leave the European Union, What’s more, as a number of state elections loom, the EU is not positioned to negotiate any free trade agreements any time soon. And Japan’s legislature just approved TPP. The Japanese government would rather not see the deal scrapped.

Regrettably it is unrealistic to do a trade deal with all of the world’s countries at once. That has been tried repeatedly in the WTO over the last two decades and the possibilities for the time being appear to be exhausted. But countries could start by making smaller deals with fewer than all 164 WTO member parties and build from there. The new Administration should not discard TPP but work to make it real with sensible changes needed to gain support from both the Trump administration and Congress. Other countries clearly want to join, and that would amount to half the world’s economic activity – no small deal.

Trump says that he likes to come out on top in negotiations, and that his administration would cut smarter deals. Here is a prime opportunity. Show China and the rest of the world what can be accomplished with new American leadership. Set a high standard for trade across the Pacific in a Trump Administration deal and make it the new model for the conduct of world trade.

Alan Wm. Wolff serves as senior counsel at Dentons LLP and is chairman of the National Foreign Trade Council. He has served as a lead trade negotiator with the U.S. Trade Representative in both Republican and Democratic administrations.

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