November 3, 2017 10:58AM

TPP Withdrawal Likely to Haunt Trump’s Asia Trip

President Trump's arrival in Japan on November 5th will mark the start of a nine-day visit to Asia where trade and other economic issues, along with security concerns regarding North Korea, stand to figure prominently. Those hoping for the unveiling of any new bold trade initiatives, however, will almost surely find themselves disappointed. More probable is that the trip will serve as a bitter reminder of Trump's ill-advised move only days after taking office to withdraw from the Trans-Pacific Partnership (TPP)—a decision whose reverberations are likely to be felt during many of his stops. The following is a closer look at some of the issues the president will likely encounter:

Japan: Had Trump used his political capital as a newly-elected president to push the TPP through a Republican-held Congress, his visit to Tokyo could have been an occasion to celebrate the agreement's ratification in both countries (Japan has already done so). Instead, his trade discussions with Prime Minister Abe are likely to mirror those held between Vice President Pence and Deputy Prime Minister Aso last month, where Pence is said to have expressed "strong interest" in a U.S.-Japan bilateral trade deal while senior Japanese officials grumbled over U.S. withdrawal from the TPP. Given this disparity in views, it was no surprise when the two sides settled for a list of deliverables whose highlights included an agreement to lift U.S. restrictions on the import of Japanese persimmons and for Japan to allow imports of Idaho potatoes.

Like Pence, Trump may once again push for Japan to start negotiations on a bilateral free trade agreement. If so, it is doubtful he will receive the commitment he's looking for, with Japan likely to prefer focusing on other aspects of a busy trade agenda which includes the finalizing of agreements with the TPP's eleven remaining members and the European Union. Rather, any trade deliverables reached are likely to focus on more minor issues such as Japan's decision in August to raise tariffs on imports of frozen beef from the United States and other countries from 38.5% to 50% as part of a “safeguard” mechanism to protect domestic farmers.

South Korea: Under a TPP passage scenario, Trump's stop in Seoul could have been an opportunity to discuss South Korea's accession to the agreement. Indeed, the country had previously made clear its interest in becoming the thirteenth TPP member, and the addition of the world's eleventh-largest economy certainly would have increased the TPP's benefits to its members. Instead, trade discussions between U.S. and South Korean officials are sure to center around a renegotiation of the U.S.-South Korea Free Trade Agreement (KORUS) demanded by President Trump which remains in its early stages. Indeed, just this week the renegotiation's stakes were raised when South Korea's trade minister is reported to have requested authority to terminate KORUS if he determines that the renegotiation's result harm national interests.

It is worth pointing out that had Trump secured TPP ratification, South Korea's accession could have served as a de facto renegotiation, thus eliminating what has become a noted sore point in bilateral ties. 

China: The atmospherics around Trump's visit to Beijing appear inauspicious, with recent days featuring talk from the U.S. side about "predatory" trade practices by China—an apparent reference to long-standing irritants such as alleged forced technology transfers and intellectual property theft—and Chinese anger over the U.S. refusal this week to classify China as a market economy for anti-dumping purposes. Chinese officials will also no doubt take an interest in developments regarding the section 232 investigation into foreign steel imports initiated by the Trump administration and its section 301 investigation specifically directed at China.

While there is much the two sides have to talk about, it is unclear how the "significant outcomes on the economic and trade fronts" recently promised by China's U.S. ambassador will be achieved. Given Trump's comments this week about the "horrible" bilateral trade deficit with China, as well as other remarks by China's ambassador that the country "do[es] not want a trade surplus" which "in the long run, will not help China's economy," a statement including vague promises to bring the trade relationship more into balance seems a likely outcome. Regardless, we are certainly a long way from the waning days of the Obama administration when the conclusion of a bilateral investment treaty appeared to be within sight

Vietnam/APEC: Stopping in Da Nang, Vietnam for the Asia-Pacific Economic Cooperation (APEC) Economic Leaders' Meeting, President Trump will deliver a speech at the gathering's CEO Summit. Had the United States passed the TPP this stop could have effectively been a victory lap for the president, and a chance to receive accolades for his leadership and ability to deliver on such a key trade initiative. Indeed, APEC would have been an ideal venue to begin discussions around the agreement's enlargement or even to serve as the basis of a Free Trade Area of the Asia-Pacific.

Based on a State Department briefing this week, we are instead likely to be treated to cliché and self-contradictory calls for "free and fair trade" and a misguided insistence on balanced trade which can only be managed through significant government intervention—all the while insisting that openness and market principles serve as guiding principles for APEC members. The ghost of TPP is once again sure to lurk in the background, with any talk regarding open economies and free trade surely undermined by the action of Trump's withdrawal from the Asia-Pacific trade deal. Sadly, the leader of a country typically known for its free trade leadership will arrive at APEC will little moral authority on the subject.

We will find out what happens soon enough. Initial signs, however, provide little reason for encouragement.