No Deal For Bad Deal – 11 Nations Panic As Dealmaker Trump Kills Obama’s TPP

United States’ new commander-in-chief Donald Trump has started throwing former President Barack Obama’s past deals out the window. On his first day in Oval Office as the 45th President of the United States of America, Trump signed an executive order pushing his administration to dismantle the Affordable Care Act – otherwise known as the “Obamacare”.

 

Due to the complexity of Obama’s signature health care law, it couldn’t be thrown away entirely with a stroke of a pen. Therefore, the president’s order was to do everything “to the maximum extent permitted by law” to waive and delay Obamacare fees and regulation. The Department of Health and Human Services is now granted a license to kill it – slowly but surely.

But Obamacare isn’t the only Obama’s pet project on Trump’s list to be scrapped, as the billionaire-turn-president has consistently trumpeted. The dealmaker-in-chief has thrown another project – Trans-Pacific Partnership (TPP) – supposedly former president Barack Hussein Obama’s signature trade deal, into trash can.

 

Essentially, Trump administration is pulling away from Asia on a deal which the TV-reality star “The Apprentice” says is a very bad deal for American workers. With the withdrawal, the TPP, a trade agreement between the United States and 11 other nations along the Pacific Rim – including Canada, Mexico, Japan, Vietnam, Malaysia and Australia – is kaput.

On the surface, TPP was supposed to lower tariffs while setting rules for resolving trade disputes, setting patents and protecting intellectual property. The agreement would have created a free-trade zone for about 40% of the world’s GDP. In reality, the TPP was to counter-balance China’s growing economic influence, and to a certain extent the AIIB (Asian Infrastructure Investment Bank).

 

But how do we know that TPP was a bad deal to the U.S.? Simple – in case you hadn’t realized, Hillary Clinton, who had helped push TPP while she was the Secretary of State and even called it the “gold standard” of trade deals, was forced to admit that the deal would benefit wealthy corporations at the expense of workers.

Actually, TPP was already DOA (dead on arrival) before it even began. The deal had not been approved by Congress. And Mr. Obama never submitted the deal for approval. Obama knew that it would be more embarrassing to present his pet project in Congress only to get rejected, than leaving the deal in the closet. President Trump just did Obama a favour by certifying TPP’s death.

 

Trump defeated Clinton – easily – in industrial states such as Michigan and Wisconsin that had traditionally supported Democratic. Neither Obama nor Clinton could twist and argue the fact that TPP would cost jobs and shift wealth and power to large corporations. TPP gave multinationals the ability to sue elected governments in secret courts for policies that threaten their profits.

The remaining 11 nations are now running around like a headless chicken, scrambling to salvage whatever is left of the TPP deal. The wishful thinking of Canada, Australia and Japan is that they could manage on their own – without the United States’ participation. Frustrated, they argued that Trump’s mistake would benefit China’s growing dominance.

 

Really? Can China take over the empty slot left by the United States? For a start, China isn’t even part of TPP, therefore, to argue that Beijing could assume Washington’s role in TPP is laughable. Even if the rest of the 11 nations that were left high and dry by the U.S. have a new plan to appoint China as the U.S. replacement and rebrand the group with a fancy name, it would still not work.

Filling a void is easy. What isn’t easy is for the 11 nations to make money out of China. In general, all of them, including China, depend on exports to the U.S. for their respective countries’ growth. Even China, despite being the world’s second largest economy, isn’t big enough that they can survive on their own by selling things among themselves.

 

United States could take cheap exports dumped by the 11 countries, including China. Is China, whose domestic demand hasn’t reached the level like that of U.S., ready for a reverse role and happily registers trade deficit every year just to become the new leader of those countries? Billionaire Donald Trump knew China isn’t ready to replace the U.S., at least not yet.

Sure, Chinese President Xi Jinping has pitched how China would drive trade liberalization at the World Economic Forum in Switzerland last week. Until China is ready to import goods and products from the 11 countries, of which the Chinese is already producing at a fraction of the price, we can only take the president’s offer with a pinch of salt – an empty political rhetoric.

 

Wait a minute, what else could the 11 countries sell to China that they are not already selling now? Can China work with its long-time enemy Japan? Can corporations sue the Chinese government who has no respect for intellectual property? Everybody loves cheaper goods, of course, but if TPP is the best invention since sliced bread, why were negotiations were carried out in great secrecy to begin with?

 

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from FinanceTwitter http://www.financetwitter.com/2017/01/no-deal-for-bad-deal-eleven-nations-panic-as-dealmaker-trump-kills-obamas-tpp.html