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Home / Business

Fran O'Sullivan: Cooler heads can keep Trump's US out of isolation

Fran O'Sullivan
By Fran O'Sullivan
Head of Business·NZ Herald·
23 Dec, 2016 04:00 PM5 mins to read

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Trump has said he will instead "negotiate fair bilateral trade deals" that bring jobs and industry onto American shores. Photo / AP

Trump has said he will instead "negotiate fair bilateral trade deals" that bring jobs and industry onto American shores. Photo / AP

Fran O'Sullivan
Opinion by Fran O'Sullivan
Head of Business, NZME
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It would be short-sighted, and naive, to use the "H" word when looking at the composition of Donald Trump's intended Cabinet.

But what to make of an American president who declares himself implacably opposed to the Trans-Pacific Partnership Agreement (TPP) , yet plans to bring into his most senior roles many declared TPP supporters?

Does that make him a hypocrite? But before applying the "H" word, let's be optimistic. Maybe Trump intends to achieve a higher standard for trade in the Asia-Pacific than was achieved with the TPP agreement.

Or maybe not.

The conundrum is exercising Washington watchers. It is also exercising the minds of New Zealand diplomats and trade negotiators. They are unlikely to read the list of Trump nominees as presaging a presidential change of mind on TPP.

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There is no expectation that Trump will turn around and press Congress for the ratification of this trade agreement linking 12 Asia-Pacific nations including New Zealand, which between them comprise 40 per cent of the global economy.

The Obama Administration found it markedly difficult building support for TPP within Congress. Trump's position is (currently) too entrenched.

But the calibre of the nominated appointees suggests an opportunity for cooler heads to play a role in ensuring the US does not retreat to an isolationist stance on trade.

Trump campaigned on his opposition to the Trans-Pacific Partnership (among other platforms such as "Making America Great Again").

Trump was categorical: TPP posed the "greatest danger yet to American jobs and prosperity" and would "lead to the rape of our country". It was an even bigger threat than the North American Free Trade Agreement (Nafta) which he also damned as the "worst trade deal" in the history of the US.

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Trump has said he will instead "negotiate fair bilateral trade deals" that bring jobs and industry onto American shores.

Yet the two most powerful Cabinet roles in the Trump Administration - Secretary of State and Secretary of Defense - are designated to be filled by men who have previously voiced strong support for TPP.

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Exxon CEO Rex Tillerson (State) has argued the US "must embrace the free flow of energy, capital, and human talent across oceans and borders".

Exxon CEO Rex Tillerson is US President-elect Donald Trump's Secretary of State. Photo / AP
Exxon CEO Rex Tillerson is US President-elect Donald Trump's Secretary of State. Photo / AP

Retired general James Mattis (Defence) signed a letter to Congress, along with other military luminaries, warning if the US failed to move forward with TPP, Asian economies will almost certainly develop along a China-centric model.

In fact, China is already pursuing an alternative regional free trade initiative.

The letter went on to argue there would be harmful strategic consequences if the US failed to secure such agreements, "our allies and partners would question our commitments, doubt our resolve, and inevitably look to other partners".

Other Trump nominees such as Gary Cohn, the Goldman Sachs president and chief operating officer who has been appointed to chair the National Economic Council, Ryan Zinke (Interior Secretary) and Terry Branstad (Ambassador to China) have spoken in favour of TPP.

While powerful committee chairs such as Republican Senator Orrin Hatch opposed elements of TPP, wanting greater IP protection for biologics, they remain free traders.

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A Trump transition team spokesman is reported as saying all nominees "understand that trade deals must first create an advantage for American workers and American companies".

Semantics aside, that is exactly what consecutive US Trade Representatives (USTRs) and their teams have endeavoured to secure on behalf of the US people.

USTRs occupy a powerful position in trade negotiations. They effectively carry the pen for the president.

When they adopt a position there is an expectation that it is supported.

Trump had yet to nominate the next USTR at the time this column was filed. But transition officials have confirmed a former Small Business Administration executive Jovita Carranza is a candidate.

The Obama Administration found it markedly difficult building support for TPP within Congress. And Trump's position is (currently) too entrenched.

Carranza, is the founder and CEO of the JCR Group, and former vice president at UPS.

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Others who have been tipped include former Nucor boss Dan DiMicco, who was a trade adviser to the Trump campaign and wants a tougher approach on trade with China; Robert Lighthizer, a former deputy trade representative who has acted in anti-dumping cases against China; Wayne Berman, a senior executive at the Blackstone Group and David McCormick, president of Bridgewater Associates.

The nomination of Wilbur Ross for Commerce Secretary has led to speculation the trade negotiating team might be wrapped into his department.

Trump has also established a National Trade Council under the leadership of Peter Navarro who will be an assistant to the president and and director of trade and industrial policy.

The council's mission is to advise the president on innovative strategies in trade negotiations, co-ordinate with other agencies to assess US manufacturing capabilities and the defence industrial base, and help match unemployed American workers with new opportunities in the skilled manufacturing sector.

It will also lead the Buy America, Hire America programme to ensure the president-elect's promise is fulfilled in government procurement and projects ranging from infrastructure to national defence.

As for TPP, it did include measures to make US companies competitive in the Asia Pacific: Stronger labour rights and minimum wages among them and better safeguards for intellectual property.

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Somewhere that old saying, "don't throw the baby out with the bath water" is worth repeating.

I doubt it is far from the lips of the Trump nominees.

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