Bilateral trade deals with individual countries have emerged as a new source of hope for American CEOs concerned they’ve already lost a competitive edge in the first few days of Donald Trump’s presidency.
Trump wasted very little time honoring his promise to pull the U.S. out of the proposed 12-nation Trans-Pacific Partnership with countries including Japan, Vietnam, Australia and Chile. By the end of Monday, his first full day in office, he had literally signed America’s involvement away.
The country’s main CEO peer group, Business Roundtable, reacted diplomatically by acknowledging a need to forge “strong and enforceable trade rules” that protected American interests, though it also expressed concern over Trump’s decision.
“The fact that our major foreign competitors—China and the European Union—are moving forward with their own trade agreements in the Asia-Pacific will make it even more difficult for the United States to compete,” said Cummins CEO Tom Linebarger, who is head of Business Rountable’s international engagement committee.
China, which wasn’t part of the TPP, is pursuing a multi-lateral trade deal of its own, called the Regional Comprehensive Economic Partnership. Australia, meanwhile, indicated this morning that the TPP isn’t necessarily dead just because the U.S. is no longer involved.
“Losing the United States from the TPP is a big loss—there is no question about that—but we are not about to walk away from our commitment to Australian jobs,” Prime Minister Malcolm Turnbull told reporters in Sydney. Turnbull said he had discussed the matter on Monday night with Japanese Prime Minister Shinzo Abe and the leaders of New Zealand and Singapore.
American CEOs are now hoping the administration will pursue deals with sole countries, though these could take years to negotiate, and it remains unclear if or when talks will take place. Trump has said in the past that bilateral deals would give America more leverage to pursue its preferred terms. He has also signaled that he soon will renegotiate the North American Free Trade Agreement with Canada and Mexico (NAFTA).
“We are encouraged by the administration’s commitment to pursue trade agreements,” Linebarger said, while noting that the Asia-Pacific region is one of the world’s most dynamic markets. “Not only is there great potential to support U.S. growth and jobs through trade in this region, but also, [there is an] opportunity to set enforceable rules needed to level the playing field for our country.”