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[Chicago Tribune] Trump’s trade phobia hurts the Midwest

By Korea Herald

Published : Nov. 19, 2017 - 17:42

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President Donald Trump went to Asia for nearly two weeks, an unusually long time away from Washington for an American leader. Was it worth the effort and aviation fuel? No, especially for us in the Midwest. He returns to the White House with the United States in weaker economic and diplomatic positions in the Pacific because of his blind spot on trade.

One of Trump’s first actions as president was to quit the TPP, the Trans-Pacific Partnership, a broad trade agreement with 11 other nations. Trump is a trade skeptic. Actually, he’s phobic, believing the United States usually gets the bad end of these major deals, which is quantifiably not true.

In the case of the TPP, his hang-up did nothing to dissuade America’s economic partners from continuing to pursue the agreement without the US. So during his visit to Vietnam for the Asia-Pacific Economic Cooperation forum, Trump hung loose while the rest of the TPP gang made progress on their negotiations. The pact will create an integrated marketplace among Japan, Canada, Australia, Mexico, Malaysia, Singapore, Chile, Peru, New Zealand, Vietnam and Brunei. The US would have been the 12th member.

Being left out is bad news for agricultural and industrial states such as Illinois -- heavy exporters that sell corn, soybeans, pork, machinery and plenty of other products around the world. The point of the TPP is the same as other agreements, such as NAFTA: to break down trade barriers and encourage interdependence in ways that help all sides, buyers and sellers. The TPP would have slashed high taxes on US exports to member countries and helped small and midsized American businesses by reducing paperwork burdens. With the US on the outside looking in, those other countries are more likely to trade among themselves.

Beyond the specifics of who sells corn, pork or industrial refrigerators to whom, there is a crucial geopolitical component to the TPP and other trade deals: Either countries bind themselves together for mutual benefit or they drift about, looking for friends. The TPP would have been a key point of US collaboration with a group of countries on both sides of the Pacific at a time when China is sharpening its elbows in the region.

China, noticeably, isn’t part of the TPP. What happens now? The US misses an easy chance to strengthen its ties to Japan, an important defense ally, and Vietnam, a growing economy, among other benefits. Meanwhile, China gets an extra opportunity to ingratiate itself with Pacific neighbors through its own arrangements. That’s fine as far as trade goes -- every country has the right to do as it sees fit -- but corn and machinery exports are only part of the picture.

The bigger issue is Chinese political influence and power projection in the Pacific, where the US role is to maintain peace and security. China looks for every opportunity to expand its orbit. When Trump walked away from the TPP, he made China’s task easier. The US withdrawal from the TPP creates “a large vacuum in its economic diplomacy,” one expert in Singapore told CNNMoney.com.

Trump says he will replace the TPP with individual trade agreements with other countries because he believes such pacts are fairer to US interests and protect more jobs. It’s not clear other countries will prioritize more negotiations solely with the US, just as it’s uncertain Trump would get unique concessions. The Trump administration already has reopened talks with Mexico and Canada on a revision of the North American Free Trade Agreement.

Trade isn’t free money. Both sides get something, and there are individual winners and losers along the way. In large deals, however, all sides get more because reducing barriers leads to increased economic activity. We won’t know for some time the impact of bowing out of the TPP. We do know the US is missing out -- the Midwest is missing out -- on an important opportunity because of the president’s phobia.


Editorial by the Chicago Tribune


(Tribune Content Agency)