New Administration Brings New Changes and Unanswered Questions

Kyle Beam, GHPB

Pomp and circumstance descended on Washington D.C., on January 20, 2017, as the United States inaugurated its 45th president, Donald J. Trump. The continued tradition of the peaceful transition of power signaled the end of one era and the beginning of another, with President Barack Obama departing political life and President Trump almost immediately taking charge and making changes that could greatly affect many U.S. policies for years to come.
The most significant change affecting mariners is the Executive Order signed by President Trump, on January 23, 2017, pulling the U.S. out of the Trans-Pacific Partnership (TPP), fulfilling a promise he had long touted in his campaign. But, how did America reach this step?
What is the TPP?
The TPP was a 12-nation trade agreement involving Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. The TPP is intended to be an expansion of the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4) signed by Brunei, Chile, New Zealand and Singapore in 2005. Beginning in 2008, Australia, Canada, Japan, Malaysia, Mexico, Peru, the United States and Vietnam joined the discussion for a broader agreement.
The countries in the agreement all border the Pacific Ocean and represent roughly 40 percent of the world’s economic output. The goal of the agreement was to deepen and grow the economic ties between each country, reduce tariffs and foster trade to boost economic growth.
After over seven years of negotiations, a consensus on the terms of the agreement was reached on October 5, 2015, and made public on November 5, 2015. At the time, many began calling the deal the largest proposed free trade deal in history.
The ratification process began on February 4, 2016, when all 12 countries offered the initial signature of the TPP agreeing upon the terms, thus taking the agreement back to their respective legislative bodies for ultimate approval. In the United States, that meant it had to be approved by both the House and the Senate. But since the agreement fell in the hotly contested 2016 election year, the vote was delayed by Senate Majority Leader Mitch McConnell until a new president could set the platform. The platform of Donald Trump has now been set and it does not include the TPP.
How did we get here?
For the last 20-30 years, multi-national trade agreements have become the norm across the world. They have been viewed by many as beneficial for strengthening the world’s economy and growing relationships between countries. But the year 2016 reset the status quo for many things in governments around the world.
Nationalism has risen around the world. Many countries are taking more of an isolationistic approach to governing and setting economic policies. The United States was not spared this from either side of the aisle, and TPP was no exception.
Progressiveism and nationalistic movements reemerged in 2016, with the presidential campaigns of Bernie Sanders and Donald Trump. For different reasons, each attacked TPP and said as president they would pull the U.S. out of the agreement. Sanders because he felt it was detrimental to the economic interests of the people and Trump because he felt it was not the “America First” standard and would take jobs out of the country.
Each approach went against decades long traditions in Washington, especially the approach of Trump. Republicans were the leading proponents of free trade agreements, and, now President Trump rallying against them furiously during the campaign, and finally leaving the agreement has changed the way trade policy is shaped for years to come.

Where do we go from here?
Now that the U.S. is no longer a part of TPP, much uncertainty about trade lies ahead. What happens with TPP going forward? Some analysts think China could step in and lead the agreement to their benefit. Others believe without the involvement of the U.S., the agreement will just die. This belief is backed up by Japan’s Prime Minister Shinzo Abe saying without the U.S. the agreement would be “meaningless.”
Along with the uncertain future of TPP, other trade agreements the United States are negotiating, or are already members of, have an unclear future.
The TTIP (Transatlantic Trade and Investment Partnership) is similar to TTP in cutting tariffs and regulatory barriers, but with the European Union members. President Trump has yet to mention the TTIP before but due to his position on trade deals the questions on the stability of the European Union, an agreement is unlikely.
What is more certain is NAFTA (North American Free Trade Agreement), the trade deal between the U.S., Canada and Mexico will be changing. President Trump promised throughout his entire campaign to either renegotiate or do away with NAFTA. As recently as February 2, Trump said he was looking at “re-doing” the agreement and it has been a “catastrophe for our country.” What a restructured NAFTA might look like is nebulous. President Trump has offered few details on what he would like changed, but it is easy to conclude that it will be a much different document than the one negotiated by the administration of President George H.W. Bush and signed by President Bill Clinton. As for new trade agreements – and their impact on the shipping industry – the scanty information coming out of Washington makes solid forecasting a risky gamble.

  • Date March 14, 2017
  • Tags March 2017