US President Donald Trump has signed an executive order pulling America out of the Trans–Pacific Partnership trade deal.
He promised a protectionist agenda during the election campaign, and just three days in to his reign he has been true to his word.
The decree effectively ends American participation in a sweeping free trade agreement negotiated over seven years and sealed by former president Barack Obama.
The deal, signed by 12 countries including Australia in February 2015, covered 40 per cent of the world’s economy and was seen as a Pacific Rim version of the EU trading bloc.
“Everyone knows what that means, right?” Mr Trump said at the signing ceremony.
“We’ve been talking about this for a long time. It’s a great thing for the American worker.”
Members had hoped to foster a closer relationship on economic policies and regulation.
It is unclear if the deal can still go ahead without the backing of the world’s biggest economy.
Prime Minister Malcolm Turnbull refused to be disappointed by Mr Trump’s decision. He cited the Republican congress and Mr Trump’s Secretary of State Rex Tillerson’s support for the TPP.
“It is possible that US policy could change over time on this, as it has done on other trade deals,” Mr Turnbull said. “There is also the opportunity for the TPP to proceed without the United States. I’ve had active discussions with other leaders as recently as last night.
“If you believe in Australian jobs and you want more Australian businesses to succeed, if you want more Australian workers to have well-paid jobs with businesses that are exporting to the biggest markets in the world then you’ve got to support trade,” he said.
However Mr Turnbull did send the message that he would not be retreating from trade like Mr Trump had.
“I was talking with [Japanese PM] Shinzo Abe about this in Sydney 10 days ago. I was talking with him last night, over the weekend. I had discussions with the New Zealand Prime Minister, the Singapore Prime Minister.
“All of us are working to see how we can ensure we maintain this momentum towards open markets and free trade. Believe me, protectionism is not a ladder to get you out of the low growth trap.”
Australian trade minister Steve Ciobo told ABC Radio on Monday morning that the TPP nations wanted to salvage the deal.
“There’s quite a lot of countries that have an interest in looking to see if we could make a TPP 12 minus one work,” Mr Ciobo told ABC radio on Tuesday.
The minister conceded the original deal can’t go forward unless the US changes its mind. But he has already had discussions with Canada, Mexico, Japan, New Zealand, Singapore and Malaysia about working towards an alternative.
“It’s a moving space, but it’s an important space, one that we must continue to pursue to give Aussie exporters the best chance to get preferential, global access for Australian exports,” he said.
— Winemakers Australia (@winefed) January 22, 2017
Mr Ciobo said he had been speaking at length with his TPP counterparts on ways to lock in the benefits from the TPP, without the United States.
He was at the World Economic Forum last week where he met with Japan, Canada, Mexico, Singapore, New Zealand and Malaysia to discuss alternatives.
“The shape this takes will be the subject of discussion over coming months. A number of options are available to us and there is a strong desire to ensure the benefits of the TPP are not lost,” he said.
Trump building a trade wall
President Trump’s actions came just hours after Japan’s Prime Minister Shinzo Abe pledged to keep pitching the agreement to the US, saying he believed Mr Trump understands the value of free trade.
But the Trump administration is adamant that the deal would have cost American manufacturing jobs, and acted quickly to ditch it.
Republican Senator John McCain released a statement saying the move was “a serious mistake that will have lasting consequences for America’s economy and our strategic position in the Asia–Pacific region.”
— Andrea Gatto (@AndreaGatto90) January 23, 2017
“This decision will forfeit the opportunity to promote American exports, reduce trade barriers, open new markets, and protect American invention and innovation. It will create an opening for China to rewrite the economic rules of the road at the expense of American workers. And it will send a troubling signal of American disengagement in the Asia-Pacific region at a time we can least afford it,” he said.
On the same day President Trump has warned business leaders that he would impose a “substantial border tax” on companies that move their manufacturing out of the United States, while promising unspecified advantages to companies that manufacture domestically.
“All you have to do is stay,” he said during a morning meeting in the White House’s Roosevelt Room.
Mr Trump has also made it clear today that he is committed to re-negotiating NAFTA, the long–standing trade deal with Mexico and Canada.
Mexico says if the US slaps penalties on companies importing its products it will respond in kind.
– with agencies