President Donald Trump wasted little time Monday in signing official notice that the United States is pulling out of the proposed Trans-Pacific Partnership trade deal.
Trump called the move “a great thing for the American workers.”
But at least one Canadian trade expert said it heralds more trouble on trade, including the North American Free Trade Agreement between the U.S., Canada and Mexico – another deal that Trump has in his sights.
“It reflects a disdain for open markets and liberalized trading arrangements and the manifestation of Mr. Trump’s ‘America First’ policy,” Toronto trade lawyer Lawrence Herman said of the decision.
“It signals storm clouds ahead for the NAFTA. Canada needs to be prepared if the U.S. decides to pull the plug on that deal.”
It remains unclear if Trump would seek individual deals with the 11 other countries in the TPP, a group that includes Canada and represents roughly 13.5 per cent of the global economy, according to World Bank figures.
There was no immediate comment from Calgary, where Prime Minister Justin Trudeau is taking part in a two-day cabinet retreat with his ministers – a meeting where how best to deal with the Trump team is the main preoccupation.
Trump has blamed past trade deals such as the North American Free Trade Agreement and China’s entrance into the World Trade Organization for a decline in U.S. factory jobs.
Senator John McCain slammed Trump for withdrawing from the agreement Monday, calling the move a “serious mistake” in a press release.
“This decision will forfeit the opportunity to promote American exports, reduce trade barriers, open new markets, and protect American invention and innovation,” McCain said.
“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 trouble signal of American disengagement in the Asia-Pacific region at a time we can least afford it.”
Withdrawing from TPP should come as no surprise, Trump vowed to withdraw from the 12-nation deal on his first day in office, calling it “a potential disaster for our country.”
Even the new White House website makes mention of the administration’s plans of dumping TPP.
“This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers,” the website reads.
The TPP, which aims to cut trade barriers in some of Asia’s fastest-growing economies and stretch from Canada to Vietnam, can’t take effect without the United States. It requires the ratification of at least six countries accounting for 85 percent of the combined gross domestic product of the member nations.
Japanese Prime Minister Shinzo Abe said “the TPP would be meaningless without the United States,” even as parliament continued debating ratification and his government vowed to lobby other members to approve it.
However, other members of the 12-nation grouping could conceivably work around a U.S. withdrawal. Australian Trade Minister Steven Ciobo has said countries could push ahead with the TPP without the United States by amending the agreement and possibly adding new members.
Canada had been taking a wait-and-see approach to the TPP, with the Liberal government launching a sweeping consultation that appeared designed to postpone a decision until the U.S. resolved the question of whether or not to take part.
Canada’s trade department said in a study last year that the TPP would generate more than $4 billion in long-term GDP gains for the Canadian economy but would lead to the loss of $5 billion if it did not join the deal.
Canada’s participation in the TPP was cemented by the previous Conservative government two weeks before they lost power in the October 2015 federal election.
The president also signed memorandums freezing most federal government hiring, though he noted an exception for the military, and reinstating a ban on providing federal money to international groups that perform abortions or provide information on the option on Monday. The regulation, known as the “Mexico City Policy,” has been a political volleyball, instituted by Republican administrations and rescinded by Democratic ones since 1984.
Trump ran for office pledging to overhaul U.S. trade policy, arguing that massive free-trade agreements have disadvantaged American workers. Since winning the White House, he’s aggressively called out companies that have moved factories overseas, vowing to slap taxes on products they then try to sell in the U.S.
“Some people say that’s not free trade, but we don’t have free trade now,” Trump said Monday.
Trump also announced that he’s set up meetings with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto.
“We’re going to start some negotiations having to do with NAFTA,” he said of his meeting with Pena Nieto. Mexico is part of the free trade agreement with the U.S. and Canada. Trump said he also will discuss immigration and security at the border.