President Donald Trump kept one of his major campaign promises on Monday when he withdrew the United States from the Trans-Pacific Partnership. The ramifications of Trump’s decision are worrisome and, whether or not the withdrawal helps American workers, it would be helpful to U.S. standing in the region if he communicated better, and to a larger audience, exactly what he’s trying to do. I have lived and worked in Asia for 25 years. Feelings of uncertainty about the United States right now are palpable. People want to know what’s going on.
Trump was seated at his desk in the Oval Office on his first weekday as president. Behind him were Vice President Mike Pence and an entourage of advisors including Steve Bannon, Reince Priebus and Peter Navarro. Navarro’s presence seemed incongruous for a University of California economist whose fame comes from warning Americans about the menace China’s government poses to the United States’ well-being. The TPP’s standards on intellectual property protection, the environment and labor conditions effectively excluded China from joining the treaty because it would have made Chinese manufacturers spend what TPP members spend, something Beijing – always welcome to join – doesn’t want to see happen. Trump surely knows that with the United States out, the treaty might die – and with it this leveling of the playing field – a gift for Beijing.
Priebus, a leather folio in hand, stepped forward. “OK, we’re going to sign three memorandums right now. The first one is the withdrawal of the United States from the Trans- Pacific Partnership.”
Trump reached for his pen as Priebus handed him the portfolio. He gave it the Chief Executive once-over, cocked his head, looked at the reporters in front of him, and jutted his jaw toward them slightly. “Everyone knows what that means, right? We’ve been talking about this for a long time, thank you.” He signed it. “Okay.” He held it up for the cameras – I’d hold it up too if I had a fabulous signature like his – and concluded, “Great thing for the American worker, what we just did.”
That was it.
Problem is, nobody really does know what that means. Besides calling it “the death blow for American manufacturing” he hasn’t said much about what he else has in store now that the United States is out. And while there’s a lot of merit in the president’s seeming willingness to let Beijing do a little guesswork for a change, there’s not much merit in letting the other eleven countries in the TPP do the same. Some of the United States’ closest allies – Australia, Canada, Japan and New Zealand – are in the TPP, and all the others are friends.
Even if one agrees with Trump’s decision to withdraw the United States from the TPP, there’s a lot of work to be done between now and the “great thing” arriving. Economists and the media have been insisting that jobs sent abroad aren’t coming home and, even if they did, robots would be doing most of them. There’s some truth in this. But I’d never bet against American business. As a retired private equity friend said to me recently, after complaining about his industry brethren who buy domestic businesses to send abroad to cash in on cheap labor, “We have to make stuff here.” He didn’t mean everything and he didn’t mean all of it, but the hollowing out of the U.S. manufacturing base so the private equity guys and their banker friends can get rich was never a good thing for the country.
China might be able to make the world’s steel at the lowest cost, for example, but what government would cede this strategic industry to Beijing? If the right policies emerge from Washington as the Trump team fleshes out its trade and related policies – which can’t be simply increasing tariffs to keep the competition less competitive – expect American business to rise to the challenge. But they need to know what those policies are – uncertainty freezes business – and American allies and friends around the world do, too.
Here’s what Trump should have said or, better, read from the written statement that wasn’t on his desk, because his audience isn’t hostile reporters, it’s the rest of the world.
“Before I sign this, I’d like to say a few words. We recognize that our allies and close friends, with whom the last administration worked on the pact, are disappointed by our withdrawal from the TPP. International treaties like the TPP require ratification by our government, and we are not moving forward in no small part because the American people don’t like the TPP, and we can’t – I can’t – go ahead. It’s worth noting that my opponent was also against the TPP.
“We are not abandoning the Pacific region. From Japan to Australia, to Chile, to Canada, and stops in between, we value our relations with all the TPP countries and will continue to expand our trade with them all. Making America great again does not, in any way, come at the expense of our friends and does not, in any way, mean backing away from our long-term commitments and friendships. The TPP doesn’t exist now, so trade tomorrow will be the same as trade today.
“As I said many times, we like trade and are happy to trade, even with China. We just want the trade to be fair. Since Richard Nixon extended a hand of friendship to China and the economic help from trade that came with it, our position has always been one of fair play and mutual gain. No Chinese government has reciprocated. It’s time to change. Beijing doesn’t play by the rules that have helped its rich accumulate vast personal wealth at the expense of others, both inside and outside of China. We’re done being part of that. This is a regime that taxes our exports to them, bars some of our companies from entering, keeps entire sectors off limits to foreigners, and is making it increasingly difficult for foreigners who are there to do business. They want to buy our successful companies, especially in the technology sector and, recently, Hollywood, yet won’t allow foreigners to wholly own or even control companies in many industries and restrict or prohibit outright investment in dozens of other industries.
“The United States and our allies and friends have led the postwar world in trade and establishing international institutions that have benefited billions of people globally. The United States has no intention of ceding that role or impeding global trade. We are studying all aspects of our trade and look forward to increased, mutually beneficial trade and security with all our allies and friends.”
That’s not a tweet, but it’s the message America’s allies and friends would like to hear directly from Trump. He hasn’t actually done anything that’s bad for global trade yet, except create a lot of uncertainty. Better communication from him can serve everyone well, and the sooner, the better.
(Robert Boxwell is director of Opera Advisors, a management consulting firm based in Kuala Lumpur. – Reuters)