Trump’s team less hawkish on trade

WASHINGTON — President Donald Trump has called the Trans-Pacific Partnership deal a “rape” of the United States. He has scolded Germany for being “very bad” on trade because it runs a surplus. And in April he said that he was “psyched” to terminate the North American Free Trade Agreement with Canada and Mexico, only to reverse course.

Despite Trump’s tough talk, his top trade advisers are taking a more cautious approach to dealing with the United States’ trading partners, striking a more moderate tone than the president but still laying the groundwork for the changes he has promised.

That more moderate tone has come as a relief to those who feared that the Trump administration would swiftly usher in a wave of protectionism, while disappointing some people who hoped that a sweeping rewrite of trade deals would come in the administration’s early days.

Signs of greater moderation were on display this week when Wilbur Ross, the secretary of commerce, suggested that the administration would actually try to build off some aspects of the Trans-Pacific Partnership trade agreement, or TPP, that Trump abandoned in January, as NAFTA renegotiations begin this summer.

Ross also said that the U.S. trade deficit with Canada was “blameless” because it was the result of energy needs rather than misdeeds. And he dismissed the idea that Trump was really ready to pull out of NAFTA.

“The first guiding principle is do no harm,” Ross said at a Bipartisan Policy Center forum Wednesday.

Early moves by Robert Lighthizer, the newly installed U.S. trade representative, have also been surprisingly conventional.

The language in a letter that Lighthizer sent to Congress last month giving official notice that the administration planned to renegotiate NAFTA strongly echoed the wording used by the Obama administration when it laid out its negotiating objectives for the multicountry TransPacific Partnership pact two years ago.

Both administrations, for example, called for modernizing the trade agreements for a digital age, addressing competition with state-owned enterprises and developing provisions to protect intellectualproperty rights.

To trade experts, the similar goals indicated that the problems Trump and some in his administration have expressed about the TransPacific Partnership involved the politics of the pact more than its substance.

“If we could wipe away memories of the 2016 campaign and call TPP something different, it would have support,” said Scott Lincicome, an international trade lawyer at the law firm White & Case.

Sharp divisions over trade remain in the White House. Nationalists such as Stephen Bannon, Trump’s chief political strategist, and Peter Navarro, the chief trade adviser, are urging the president to take a more protectionist approach, and officials like Gary Cohn, the president’s chief economic adviser, and Steve Mnuchin, the treasury secretary, are expressing more openness to free trade. Cohn, Secretary of State Rex Tillerson and Defense Secretary Jim Mattis all expressed support for the Trans-Pacific Partnership before joining the administration.

The administration is now in the position of trying to reap the benefits that the Pacific trade agreement could have yielded while operating in the framework of the bilateral trade agreements that Trump prefers. It remains unclear what kind of concessions Trump will be able to extract from Canada and Mexico in negotiations over NAFTA outside the context of a broader agreement.

“In TPP, countries agreed to a whole bunch of rules for us because they were getting access to Japan, which they couldn’t get on their own,” said Michael Froman, the U.S. trade representative under President Barack Obama. “The question now is how Mexico and Canada sell this at home — making these unilateral concessions to us — in exchange for nothing.”

The talks will be Trump’s biggest test yet as a deal-maker on the international stage, and they could determine how other countries approach the administration in future oneon-one negotiations.

Despite Trump’s contention that multilateral deals are bad for Americans, Ross, the commerce secretary, said while speaking last week at the US-ASEAN Business Council, a group that advocates U.S. companies operating in Southeast Asia, that there were some “good aspects” to the Trans-Pacific Partnership. In an interview with CNBC this week, he suggested that he was “open to resuming” discussions with European countries about the very similar Trans-Atlantic Trade and Investment Partnership deal that has been frozen since last year.

The NAFTA talks are expected to start in August after a 90-day waiting period begun by the administration’s letter to Congress. The administration will offer more specific negotiating objectives in July. Ross said he hoped that issues regarding subsidies for Mexican sugar and for Canadian dairy products and softwood lumber could be addressed before the talks begin in earnest.

The administration has said it hopes to reach a deal by January. Major changes to NAFTA require congressional approval in the United States and in Mexico. And the resistance of some Republicans to Trump’s trade agenda could create a rare instance in which he needs the support of Democrats.