Donald Trump’s trade pivot stuns TPP partners

Trade Minister Steve Ciobo met US trade officials overnight following Donald Trump’s stunning pivot on the TPP.

Trade Minister Steve Ciobo. Picture: AFP

Trade Minister Steve Ciobo met US officials overnight following Donald Trump’s stunning pivot on the Trans-Pacific Partnership revealing he would be prepared to consider rejoining the 11-nation trade pact which was agreed this week after years of negotiation but only if the US secured a better deal.

The US President, who made a first-order election issue of his pledge to withdraw from the trade treaty, took other world leaders by surprise when he said he would be prepared to reconsider his position.

It is understood that the US business lobby had begun to apply pressure on the White House to reconsider the Pacific Rim partnership, which defence analysts have also argued presented the US with a significant strategic opportunity to inject more economic influence into the Asia-Pacific region as a counter to China.

“I would do TPP, if we made a much better deal than we had,” Mr Trump said yesterday at the World Economic Forum in Davos, Switzerland.

“I would do TPP if we were able to make a substantially better deal. The deal was terrible. The way it was structured was terrible. If we did a substantially better deal, I would be open to TPP.”

Malcolm Turnbull, however, was playing down Mr Trump’s remarks yesterday, with the Prime Minister claiming he did not expect the US to follow through.

“I don’t expect the United States to join the TPP any time soon. We’re certainly not counting on it,” he said.

“It would be great if they did. It is a real engine for jobs, for investment. There are thousands of jobs that will be created by the TPP.”

Mr Turnbull said it would be a bigger deal if the US was part of it, and would become bigger when other countries joined. The resurrected TPP11, which was signed this week following intense lobbying from Australia and Japan to return Canada to the table, will represent markets with close to $14 trillion.

“Indonesia has expressed strong interest,” he said. “So has Thailand, South Korea. Even the UK has expressed interest in talking about it,” he said.

The deal has been structured to allow the possibility of the US joining it in the future, but Mr Trump’s latest comments suggest that substantial renegotiation of the deal would be required to win US ­participation.

Japan has responded cautiously to Mr Trump’s remarks, claiming that the new TPP11, rebadged as the Comprehensive Progressive Agreement on the Trans-Pacific Partnership, was not designed to be renegotiated. The CPTPP will reduce 98 per cent of all tariffs between the member countries of Japan, Australia, Canada, Mexico, Singapore, Malaysia, Vietnam, Chile, Peru, New Zealand and Brunei.

While Mr Trump has consistently argued that the TPP was a “bad deal” for US jobs and manufacturers, being sidelined from the TPP will see US producers dis­advantaged in some markets such as Japan where Australian beef exports will now have a more favourable deal than US beef.

Mr Ciobo, who admitted surprise at the softening of Mr Trump’s language, said he would be sounding out US officials on their position overnight when he was due to meet his US counterpart Robert Lighthizer.

The original TPP12 — which included the US under the Obama administration — would have ­represented almost 40 per cent of global trade.

Mr Ciobo said Mr Trump’s comments were an encouraging signal considering the ferocity with which he was opposed to the original deal.

“I welcome President Trump’s comments that the US could rejoin the CPTPP,” Mr Ciobo said.

Foreign Minister Julie Bishop yesterday raised the issue of US trade isolationism in a speech delivered to a G’Day Australia function in Los Angeles. Although concerned about protectionism, she said, “I welcome this (free-trade) debate as an opportunity to build greater understanding of the international rules-based order and the consequential economic benefits from open economies and trade liberalisation”.