Trump Pulls Out of TPP, in First Official Act Against Free Trade

By Casey C. Sullivan, Esq. on January 24, 2017 | Last updated on March 21, 2019

Ever sense the Bretton Woods Conference in 1944, Western governments have been moving toward free trade and open markets. For generations, reducing barriers to trade has been almost universally approved by the dominant political class, leading to institutions like the IMF, GATT, NAFTA, and the WTO -- an entire alphabet of neoliberalism.

But the same day that the global elites were leaving Davos, having spent nearly a week singing the praises of open markets, Donald Trump was inaugurated as President of the United States, his victory fueled in part by skepticism towards international trade. And the president put that skepticism into action on Monday, issuing an executive order abandoning the Trans-Pacific Partnership, a free trade agreement long supported by the Obama administration.

Out of TPP

The Trans-Pacific Partnership, or TPP, was the most ambitious free trade pact in well over a decade. Under the TPP, 12 Pacific Rim nations, covering 800 million people, 40 percent of global GDP, and a third of all world trade, would have agreed to standard rules on tariffs and trade. But, the TPP was more expansive than prior free trade pacts as well, covering intellectual property, labor and environmental standards, and trade dispute resolutions.

If the TPP had been finalized, it would have significantly reshaped trade in the U.S. and Asia, sending plenty of lawyers scrambling to make sense of its provisions. But it wasn't finalized, and now it won't be. U.S. participation in the TPP was negotiated under President Obama but never approved by Congress.

Indeed, the agreement had faced widespread opposition. Even Hillary Clinton, who had praised the deal as Secretary of State, eventually came out against the deal.

Since the TPP was not yet in place, nothing officially changes as a result of President Trump's actions. But, with the government now formally pulling out, the remaining 11 nations could move forward on their own. Or, they could seek a new agreement, perhaps with a different regional power at the helm.

Emphasizing Bilateral Deals, Going After NAFTA

During his inauguration, Trump pledged to "protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs" and the TPP isn't the only free trade deal in Trump's sights.

The president criticized NAFTA on the campaign trail and said that he would renegotiate its terms, shaking up an agreement that's governed cross-border trade with America's neighbors for the past two decades.

Trump seems to be working toward fulfilling that campaign promise as well. He has scheduled meetings with leaders in Canada and Mexico, in part to discuss the agreement.

In the place of large, multi-national consensus, the president is focusing on bilateral negotiations. He's looking to make one-on-one deals with nations, Reuters reports, and will seek to terminate any agreement within 30 days "if someone misbehaves."

Trump's new approach represents a long simmering undercurrent of American opinion to international trade, but one that has been largely on the margins during past U.S. administrations. Now, with Trump in power, the so-called "Davos Consensus" may be facing its most serious test in decades.

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