[CTC] Hatch suggests TPP with Japan alone could garner Trump's support

[Arthur Stamoulis]

INSIDE US TRADE
 
Hatch suggests TPP with Japan alone could garner Trump's support
November 16, 2016

Senate Finance Committee Chairman Orrin Hatch (R-UT) this week suggested that limiting the Trans-Pacific Partnership to a bilateral U.S.-Japan free trade agreement could be a way to get President-elect Donald Trump on board.

Acknowledging that Trump “says he's against” TPP, which Japanese Prime Minister Shinzo Abe is pushing through the Diet, Hatch offered an alternative solution.

“Well, there's a difference between doing a whole TPP for the 12 countries that we were doing it for and doing it with Japan, which has always been difficult to work with in these areas, and where Abe has really effectively led them to at least an international breakthrough,” Hatch told Inside U.S. Trade on Nov. 16.

“The president-elect has said he's not gonna support TPP, so I'm saying well maybe the alternative is for us to enter into that agreement with Japan,” he added. “And since they're open to it then we ought to do that. I hope the president will take that into consideration.”

Hatch did not offer details on whether or under what conditions the other TPP countries might be able to join the agreement later on.

Asked whether he has had a chance to lay out his plan to President-elect Trump or his transition team, Hatch said “not really, but I will, don't worry.”

Trump this week is slated to meet with Abe, who has pledged to “seize every opportunity to urge the United States and other countries to complete domestic [TPP] procedures promptly.”

While Trump was an ardent opponent of TPP during the campaign, he has repeatedly said he is in favor of bilateral deals on terms amenable to the U.S. Following the UK's decision to leave the European Union earlier this year, which President Obama claimed would put the country at the “back of the queue” for trade negotiations with the U.S., Trump said Brexit would not affect a bilateral trade deal with the UK because he will “treat everybody fairly.”

Asked how the Republican party will work with the new administration on trade given Trump's strong opposition to TPP and other trade deals, Hatch said “well, we have some work to do there; I seem to be in the middle of all the uneasy things we have to do” – stressing that he is “a strong supporter of trade policy and TPP in particular.”

However, multiple sources told Inside U.S. Trade that a Japan-only deal would not be feasible because it would require a wholesale change of negotiating terms given the shift in economic balance.

One source said a deal that does not include all 12 TPP parties would mean that everything would have to be renegotiated given the change in outcomes for specific sectors and products.

Another source noted that one of the rationales behind TPP was to compel Asia-Pacific countries like Vietnam and Malaysia to live up to standards set by the U.S. and Japan, and said a deal between just the U.S. and Japan would fail to meet that goal. That same source said that absent TPP, the China-led Regional Comprehensive Economic Partnership would set the standards for trade agreements in the region – which many, including the Obama administration, have charged are far less ambitious than those set out in TPP.

Other sources stressed the need for TPP for countries like Vietnam in particular; Vietnam is undergoing social and economic reforms to comply with the provisions of the agreement.

But another source called Hatch's plan “feasible and consistent with Trump's bilateral deal idea,” suggesting that Abe could propose it to Trump during their meeting in New York this week. And another said Hatch's idea is “smart” and could persuade Trump to consider the deal if it gave him the chance to prove “how he made it better.”

Given Trump's dissatisfaction with the current agreement, one source speculated that for a “better” deal he would need to secure enforceable language on currency manipulation – potentially through a side letter – and stricter rules of origin for autos because “he has to get something for the people in Michigan.” – Jenny Leonard
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