Trump should use TPP as playbook for NAFTA renegotiation — really
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Making the shift from campaigning to governing, Trump has outlined his 100-day plan in line with presidential tradition.

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First on the list is withdrawing from the Trans-Pacific Partnership (TPP) along with pursuing the renegotiation of NAFTA.

It may sound counterintuitive, but Trump might use TPP as his playbook for renegotiation. Trashing the TPP entirely would jeopardize the leadership role the U.S. has cultivated since World War II, ceding our influence to an ascendant China.

The prospect of renegotiation, or complete withdrawal, has unsettled the business community and our NAFTA partners. But Anthony Scaramucci, a senior advisor for the Trump administration, has described Trump as "a free-trader who is looking to make trade deals more fair."

"I don’t think we're looking to rip up NAFTA," he continued, "as much as we are looking to right-size and make it fairer."

These words will do much to soothe worried industries, as NAFTA partners represent a third of the world's gross domestic product (GDP). Additionally, Trump could provide for a new NAFTA that is open to accepting members beyond just Canada and Mexico.

Renegotiation by Trump could be an opportunity for him to exercise his negotiating skills while augmenting them with existing trade agreements.

Using the skeleton of NAFTA to craft an open trade deal, the renegotiation could draw in positive aspects of the TPP, thereby cementing the U.S. as a geopolitical player and creating a counterweight to China's Regional Comprehensive Economic Partnership (RCEP), a mega-regional free trade agreement being negotiated between China and 15 other Pacific nations.

By working off NAFTA and the text of the TPP, and creating an open agreement, a beneficial regional pact could be created much faster than by pursuing many bilateral deals.

It is without a doubt that NAFTA is a vintage agreement and there is expert bipartisan consensus that it could use some updating. The agreement was conceived by President Reagan, negotiated by President George H.W. Bush and signed into law by President Clinton in 1993, who added missing side agreements meant to address labor and environmental issues.

Rapid technological and geopolitical change in the interim has left the agreement lacking provisions that would adequately tackle the modern global economy. The issues facing trade today include labor rights, environmental protections, sanitary and phytosanitary measures, customs facilitation, the rise of state-owned enterprises, and effective methods of enforcement for trade violations.

Furthermore, the closed nature of NAFTA blocks other countries from joining, limiting channels for North American export growth and geostrategic influence, particularly in the Asia-Pacific.

TPP was in fact designed to be a renegotiation of NAFTA. Despite losing momentum after the election, the majority of its provisions and overall structure actually signal progress in the art of the trade deal. Using its provisions as a springboard would amplify Trump's negotiating prowess.

For example, the trade facilitation and customs administration provisions provide for faster, more cost-effective movement of goods across borders, while reducing corruption through the use of clear and simple rules and time targets on customs clearance. The sanitary and phytosanitary (SPS) chapter contains new rules to ensure that science-based SPS measures are developed and implemented in a transparent, predictable and nondiscriminatory manner, while at the same time preserving the ability of U.S. and other TPP regulatory agencies to take necessary steps to ensure food safety and protect plant and animal health.

The TPP contains provisions to tackle trade distortions caused by government favoritism toward state-owned enterprises. This levels the playing field for U.S. companies by preventing state-owned enterprises from discriminating against other TPP firms when buying or selling goods or services. It also provides radical transparency by calling on governments to point out and provide information on state-owned enterprises.

TPP also has provisions to strengthen international law on competition by addressing antitrust activities and collusive relationships between businesses and trading countries which have narrowed access to markets. These provisions could easily be added to the NAFTA renegotiation.

In a move all his own, Trump could very well resurrect the currency manipulation declaration that accompanied the TPP, adding it to a newly negotiated NAFTA and making it enforceable. This addition would be a first for modern trade deals and would be far more effective than simply labeling countries with a currency manipulation status.

For example, it will be difficult to pin the currency manipulator badge on China. In order to fit the bill, they must meet three provisions in U.S. law: an economy having a trade surplus with the U.S. above $20 billion; a current account surplus amounting to more than 3 percent of its GDP; and repeated depreciation of currency by buying foreign assets equivalent to 2 percent of output over the year.

Contrary to popular belief, China has been trying to appreciate its currency in an attempt to stem the outflow of investment.

Seeing as the next Treasury report on currency manipulation is in April, Trump could preemptively set the TPP currency manipulation declaration into the NAFTA renegotiation. When the report from the Treasury is released, Trump could say that the U.S. is already approaching the issue regionally with the help of our trade partners.

Our NAFTA partners are also keenly aware of the trade deal's shortcomings. Since the election, Canada and Mexico have both said they are eager to work with the U.S. toward strengthening and modernizing it.

On the other side, our TPP partners have expressed dismay in Trump's decision to scrap the pact, as the deal lacks teeth without the U.S. at the helm. Leaders of Japan, New Zealand, Malaysia and Singapore have all urged the U.S. not to abandon the deal. Therefore, it would be unwise for the Trump administration to throw out TPP wholesale and pursue exclusively bilateral agreements with our partners.

Rather, save the concessions made by the 12 member countries and incorporate them into an open version of NAFTA, giving countries the option to join. That way, Trump can signal to the Asia-Pacific region that he is not abandoning them to the whims of China.

If Trump wants to truly make America great again, then he should jump at the chance to create a global trade system that benefits both the U.S. and our partners.

Paula Stern is the former chairwoman of the U.S. International Trade Commission (ITC) and founder and chairwoman of The Stern Group Inc., which serves national and multinational organizations on business, political, and tech policy issues that affect their competitiveness in a global economy.


The views expressed by contributors are their own and not the views of The Hill.