On Jan 23, a Presidential Memorandum directed U.S. Trade Representative (Robert Lighthizer, nominated but not yet confirmed) to “withdraw the United States as a signatory to TPP.” The Memorandum also directed USTR to “begin pursuing … bilateral trade negotiations to promote American industry, protect American workers, and raise American wages.”
While the Jan 23 Memorandum was the final blow to the TPP, all three leading presidential candidates opposed the TPP during the primaries and election campaign, and a majority of Congressional Democrats, labor unions, and many civil society organizations also opposed TPP.
Former Senate Majority Leader Harry Reid (D-NV) had refused to allow Trade Promotion Authority to be considered when it was proposed in January 2014, delaying progress on TPP negotiations for more than a year.
After the Republicans won control of the Senate in the November 2014 elections, the new Senate leadership introduced the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (“Trade Promotion Authority”) in April 2015. Democrats in both the Senate and House opposed it, and after nearly three months of intense legislative activity, with unusual close cooperation between the White House and the Republican Congressional leadership, it passed narrowly in the House with 218 in favor, and 208 opposed. Only 28 Demcrats voted for the TPA.
TPP was not finalized until October 2015, and was not signed until Feb 4, 2016, by which time TPP was a major issue in the primaries and election. It was too late, and impossible politically, to complete the steps required for approval by the U.S. Congress.
What now …?
Bilateral Free Trade Agreement
The Presidential Memorandum also directed USTR to “ … begin pursuing, wherever possible, bilateral trade negotiations to promote American industry, protect American workers, and raise American wages.”
Clearly an updated NAFTA, with Canada and Mexico, is first on the agenda, followed by an agreement with Japan. Vietnam could be next in line, as the Wall Street Journal has pointed out that U.S.-Vietnam bilateral trade ranks fourth within TPP. It will exceed $50 billion this year, and may exceed $80 billion by 2020.
AmCham Governor Sesto Vecchi has proposed in an Op-Ed in The Hill, “The debate in America has concerned TPP as a whole, but, given President-elect Trump’s preference for bilateral free trade agreements over ‘mega-deals,’ perhaps we should focus on an agreement between the U.S. and Vietnam that already contains the bulk of tariff reductions and protections embodied in the already negotiated TPP.”
This approach has also been suggested by Senate Finance Committee Chairman Orrin Hatch, House Ways and Means Committee Chairman Kevin Brady, as well as Fred Smith, FedEx CEO, and other political and business leaders. Senator Hatch frequently has said that “ … the administration must work to reach country-specific plans identifying the changes that our trading partners must and will make to their laws, regulations, and practices in order to meet their … obligations.”
WTO Trade Facilitation Agreement Implementation
In addition, Prime Minister’s Decision No. 1969/QĐ-TTg , Oct 13, 2016 “Preparation and Action Plan to Implement the WTO Trade Facilitation Agreement” provides the framework to implement the TFA and TPP Chapter 5, Customs Administration and Trade Facilitation.
According to WTO Director-General Roberto Azevêdo, who met Vietnam’s government and business leaders on Apr 15, 2016 in Hanoi, “For Viet Nam, the Trade Facilitation Agreement could reduce trade costs by as much as 20%. Cutting a fifth off the cost of trading would make a huge difference. It will help to boost trade flows in Viet Nam. It will support SMEs to start exporting. And, in a time when production chains have been globalised, it will help the economy to connect to cross-border production networks.”
Vietnam ratified the TFA in Dec 2015; 108 countries have now ratified the TFA, which will enter into effect once two more countries ratify, to meet the requirement of 110 countries, two-thirds of the WTO membership.
“After the Trans-Pacific Partnership: a Perspective from Vietnam,” Sesto Vecchi, The Hill, Nov 18, 2016
Reid deals body blow to Obama on trade, NY Times, Jan 29, 2014