On Friday April 13th, however, President Trump repeated his previous stipulation that the United States would “only join {the TPP} if the deal were substantially better than the deal offered to {President} Obama.” He explained that, “{the United States} already {has} BILATERAL deals with six of the eleven nations” in the TPP, and we “are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years!”

On Friday officials from Japan, New Zealand, and Australia reacted to President Trump’s remarks, stating that while they support the U.S. rejoining the agreement, intense negotiations and American concessions would be required. Japan’s Chief Cabinet Secretary, Yoshihide Suga, stated that while “Japan would like to listen to the U.S.’s view”, the current agreement is a “well-balanced pact” that judiciously addresses the needs of the current 11 member nations. Secretary Suga noted that that it would be “difficult to bring part of the pact and renegotiate it.”

New Zealand Prime Minister Jacinda Arden did not reject the idea of the U.S. rejoining the TPP, but also expressed concerns regarding the process of re-negotiation. She indicated that “{i}f the United States genuinely wished to reenter, that would trigger another process of engagement and negotiation. It’s not simply a matter of slotting into an existing deal.”

Australia’s Trade Minister, Steven Ciobo, echoed that sentiment, remarking that adding the U.S. to the TPP would “be a step in the right direction” but that “we’ve got a deal . . . I can’t see that all being thrown open to appease the United States.”

The final version of the TPP was signed on March 8, 2018 and its 11 member countries are currently in the process of ratifying the agreement.

New Zealand Trade Minister David Parker, in a February 21, 2018 news conference, stressed the importance of the deal “because of the growing threats to the effective operation of the World Trade Organization rules.” Steven Ciobo, Australia’s Minister for Trade, also praised the deal telling Reuters that, “the TPP-11 will help create new Australian jobs across all sectors - agriculture, manufacturing, mining, services - as it creates new opportunities in a free trade area that spans the Americas and Asia.”

The United States was a member state of the predecessor to the CPTPP - the Trans Pacific Partnership (“TPP”) - which was negotiated under former President Barack Obama, but was never ratified by Congress. The U.S., however, withdrew from the TPP on January 23, 2017 pursuant to an executive order signed by President Trump. If the United States had participated in the agreement, the economies of the member states would have represented 40% of total global GDP. In January, while at the World Economic Forum in Switzerland, President Trump stated it was possible that the U.S. may return to the agreement - if it obtained a better deal. On Tuesday, at an event sponsored by the U.S. Chamber of Commerce, the U.S. Treasury Secretary Steven Mnuchin said the United States had “begun to have very high-level conversations” about rejoining the agreement and that renegotiating was “on the table.”

The final text of the CPTPP reflects changes in more than 20 provisions of the original agreement. These changes include the suspension of provisions concerning intellectual property rights protections - specifically pharmaceuticals - that were originally included at the request of the United States. Minister Parker stated that he expects the deal to come into force at the end of 2018 or the beginning of 2019.

Experts, however, are cautiously optimistic about the news and what it could mean for 2018. Last year, significant uncertainties about critical aspects of the global economy made it difficult to predict the track of trade growth. The WTO cited unpredictability with respect to government action on monetary, fiscal, and trade policy, and whether trade would be restricted in favor of attempts to address domestic wage stagnation and unemployment. Moreover, the process of establishing global value chains – spreading production processes around the world – is stabilizing. That process had been a key driver in boosting global trade flows out of economic crisis, but is naturally beginning to slow.

In the United States, political and economic analysts struggled early in 2017 to estimate the impact of President Trump’s decision to withdraw from the Trans-Pacific Partnership (TPP) negotiations and to renegotiate NAFTA. On one hand, those trade policy “shocks” have been countered by trade-promoting policies in other regions, including the recently finalized Comprehensive and Progressive Agreement for Trans-Pacific Partnership among the 11 remaining parties to the original TPP. Trade among the NAFTA countries continues to dominate regional trade arrangements in the world, second only to intra-European Union trade flows. And President Trump has started this year with strong messaging on the importance of international trade – downplaying the fear of trade wars and signaling an interest in rejoining the TPP. On the other hand, the world is watching as President Trump considers whether to impose what may be broad trade restrictions on imports of steel and aluminum products under Section 232 of the Trade Expansion Act of 1962.

Notwithstanding these developments, the better-than-expected growth in 2017 have given economists a reason to expect a high rate of growth to continue at least through 2018, spurred by strong investment spending, growing demand in the EU, and new trade agreements. The WTO had forecasted global trade expansion for 2017 of only 2.4%, with the actual results being far better. For 2018, the WTO predicts trade growth to “pick up slightly.” Although much depends on the impact of political decision-making, the trend suggests that trade flows will continue to be strong this year.

The 11 TPP member countries account for approximately 14 percent of global GDP, and the planned reduction of 98 percent of tariffs in a $14 trillion market will result in an estimated net benefit of $37 billion for the trade pact participants. But the United States’ exit from the negotiations has changed the dynamic of the agreement. The United States’ inclusion in the agreement would have expanded the group’s representation to 40 percent of global GDP. The absence of the United States also puts Japan in a leadership role in the new agreement, shifting the focus of the agreement in many ways from North America to Asia. And the 11 TPP members suspended several provisions on intellectual property and investor state dispute settlement that had been important to the United States.

Many experts have opined on how the TPP, involving both Canada and Mexico, will impact current NAFTA renegotiations. TPP may free Mexico and Canada from dependence on NAFTA in the event the North American agreement dissolves (a new free trade agreement between Canada and the EU also entered into force in 2017). Yet, the United States will likely retain significant leverage in the NAFTA talks. The United States remains the most important trading partner for both Mexico and Canada, and many other provisions that the United States tabled in the TPP negotiations during the Obama Administration have survived, potentially weakening Canadian and Mexican attempts to revisit those issues in the NAFTA context.

One sticking point has been Japan’s high tariffs – up to 40 percent – on imported cheese. The EU claims about half of the global cheese market, while Japanese dairy farms struggle to survive. Japan had already agreed to limited tariff reductions on selected cheese products in the course of the TPP negotiations, and has signaled it has no interest in going beyond those concessions. Still, negotiators for each side are working hard to overcome these hurdles and have a final agreement in place by the end of 2017.

In January, as President Trump announced the United States’ exit from the Trans-Pacific Partnership negotiations, he also stated his intention to see a bilateral trade agreement with Japan. In May, U.S. Trade Representative Robert Lighthizer met with Japanese Minister for Economy, Trade and Industry, Hiroshige Seko, at the APEC meeting in Hanoi, but downplayed the imminence of bilateral negotiations. Agricultural issues are also critical to the U.S.-Japan trade relationship, particularly for Japanese rice farmers unwilling to open their market to U.S. exports, and for U.S. cattle ranchers struggling with high Japanese tariff rates on imported beef. When USTR Lighthizer and Minister Seko met again just last week to discuss U.S.-Japan trade relations, neither side mentioned a bilateral deal.