Trump's first-day agenda: Kill TPP, renegotiate NAFTA Presented by Semiconductor Industry Association

With help from Doug Palmer and Adam Behsudi

TRUMP’S FIRST-DAY AGENDA: KILL TPP, RENEGOTIATE NAFTA: President-elect Donald Trump has promised a radical set of actions for his first day in office, including withdrawing from the TPP, announcing his intention to renegotiate the North American Free Trade Agreement and directing his Treasury secretary to label China a currency manipulator.


Even if congressional Republicans demonstrated the will and actually managed to approve the TPP in the lame-duck session that begins Monday, the chances of which appear next to nil with Trump headed to the White House, the president-elect would not implement the 12-nation pact, University of California-Irvine Professor Peter Navarro, a Trump adviser, told POLITICO in August.

That makes the Trump presidency the worst-case scenario for the Obama administration and other trade proponents who have been clinging to the hope that the Asia-Pacific pact could pass before the end of this year. There is a subset of Republicans who might feel that they don’t owe anything to Trump and might be willing to push through what they see as good policy before he gets a chance to take the reins, said Bill Reinsch, a distinguished fellow at the Stimson Center, a public policy think tank.

“He has kind of run against a lot of them, including Paul Ryan,” Reinsch said. “So kind of an odd question is, how much do these guys really feel that they owe him? And if you talk to four Republicans, you’ll probably get five different opinions.”

But more likely, he and others say, Republicans would hesitate to cross Trump on one of his clearest policy positions or might feel that the effort would be futile given his uncompromising pledges to tear the pact up. “It makes for an interesting conversation among the Republicans,” he added.

IT’S WEDNESDAY, NOV. 9! Our seemingly endless presidential campaign is over, and not in the way that most prognosticators expected. Come January, we’ll have Republicans controlling the White House, the House and the Senate. Until then, we have a massive Asia-Pacific trade pact pending that the Obama administration has pledged against all odds to get done in 2016 and deals on international services trade and environmental goods facing year-end deadlines for completion. And I know you have thoughts on last night, so let me hear ’em: [email protected] or @mmcassella.

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SESSIONS: ‘THE TPP IS DEAD’: Maybe there’s not even a reason to speculate over TPP’s future: Sen. Jeff Sessions, Trump’s top supporter in the Senate, told the New York Observer last night that the deal has no shot of passing either in the lame duck or any time next year.

“I think the TPP is dead, and there will be blood all over the floor if somebody tries to move that through the Congress anytime soon,” Sessions told the newspaper. “Both candidates opposed it, Hillary Clinton and Donald Trump.”

NAFTA DO-OVER NOT GOING TO BE EASY: Despite his easy vows to redo NAFTA, Trump might find it harder than he expects to get a better deal from Canada and Mexico, observers say. “There is a lot of bluster about getting the better deal, but there’s never really any specifics about what that better deal entails,” said Ed Gerwin, a senior fellow at the Progressive Policy Institute. “Right now, we have zero duties on all our trade with Canada and Mexico. I don’t know how you get a better deal than that. I mean, do they give us money to export there?”

On the other hand, if Trump’s goal is to reinstate tariffs on Canadian and Mexican products, he’ll soon find out that those countries will want something in exchange. “There’s no free lunch in a negotiation, and they have things that they want,” Reinsch said. “It’s hard for me to see him winning what he wants to win, but I can see him trying. Then, if he doesn’t get what he wants, I guess the choice is to fold or do what he says he would do, which is to withdraw.”

Even a withdrawal would be complicated, since it would require going to Congress to repeal legislation that put NAFTA into place. “It would be a mess, and lawyers would probably have a field day figuring out what to do,” Reinsch said.

As far as declaring China a currency manipulator, “it’s kind of like, let the facts be damned,” Gerwin said, noting that many economists do not believe China is currently undervaluing its currency for a trade advantage.

TRUMP’S SEVEN-STEP TRADE PLAN: Back in June, Trump laid out seven steps to “bring back our jobs.” Two of those include an immediate withdrawal from the TPP and a renegotiation of NAFTA. Trump got somewhat specific on what else he would do on the issue even though most trade hands said those moves would only spark a massive trade war. The remaining steps include:

— Appointing the “toughest and smartest trade negotiators.”

— Directing the Commerce secretary to “identify every violation of trade agreements a foreign country is currently using to harm our workers.” He would then direct all appropriate agencies to use “every tool under American and international law” to end the abuses.

— Instructing the Treasury secretary to label China a currency manipulator, a move the current administration and Republicans in Congress have not taken in the past partly to avoid stoking trade tensions with the giant economy. Trump said any intentional devaluation would be met with sharply through tariffs and taxes.

— China would once again fall into the USTR’s crosshairs. The trade agency would be instructed to bring trade cases against Beijing under both U.S. law and at the World Trade Organization.

— If China does not stop its illegal activities, Trump said he would invoke specific safeguards and tariff protections under sections 201 and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962.

AN SOB AT USTR? Trump has promised to draw from the business community to help him renegotiate NAFTA and the U.S. trading relationship with China, but there’s no clear front-runner for the post of U.S. trade representative.

“Using the greatest business people in the world, which our country has, I am going to turn our bad trade agreements into great trade agreements," Trump said in his acceptance speech at the Republican National Convention.

That could mean former Nucor Chief Executive Officer Dan DiMicco or businessman and investor Wilbur Ross, who also advises Trump. Whoever is chosen, “I can assure you it will be the toughest, smartest SOB on trade that Mr. Trump can find,” Navarro said earlier this year. “That’s the job description.”

AN ‘AMERICAN DESK’ FOR TRADE: Meanwhile, USTR might not even exist in the same form it does now if Trump gets his way. At a campaign stop in October, Trump proposed consolidating all the agencies and departments that handle trade policy into one office within the Commerce Department called “the American Desk.”

“American trade policy is currently mismanaged by dozens of competing bureaucracies, spread across the departments of Agriculture, Commerce, Labor, State, Treasury,” Trump said. “The mission of the American Desk will be to protect the economic interest of the American worker and the national interest of the United States.”

A Trump campaign paper suggested the new trade office would also include the trade-related aspects of the Export-Import Bank, the EPA and the Overseas Private Investment Corporation, as well as USTR. The plan resembles a reorganization proposal the Obama administration made in 2012 that failed to win support from key trade oversight committees in Congress.

THE SENATE FLIP THAT WASN’T: Republicans pulled off a handful of wins last night that optimistic Democrats had been counting as theirs, and the Republican-to-Democrat change in leadership that many had said was possible did not come to be. Sen. Rob Portman, the former U.S. trade representative, notched an easy win over Democrat Ted Strickland early in the night in Ohio, and Indiana Republican Todd Young, a member of the House Ways and Means Trade Subcommittee, won his bid for the Senate over Democrat Evan Bayh. Other races, too, didn’t bend the Democrats’ way as they had hoped: In North Carolina, incumbent Sen. Richard Burr won with razor-thin margins over Democrat Deborah Ross, while in Pennsylvania, incumbent Sen. Pat Toomey held his own in a tight contest over Democrat Katie McGinty.

The result means Trump will enter the White House with control of both chambers of Congress, a situation that will make it easier for him to push through what he wants. It also means that other aspects of trade policy that have been at a standstill, such as getting the Export-Import Bank up to full speed and advancing the TPP, aren’t likely to get a boost anytime soon.

EX-IM BANK STILL DOWN ON ITS LUCK: Democrats and other proponents of the beleaguered Ex-Im Bank had been hoping for a change in hands that would have put Democratic Sen. Sherrod Brown at the helm of the Senate Banking Committee. The Ohio Democrat’s office told Morning Trade he would have made it a priority to hold a vote on the next president’s nominees to the open board positions — but without a Senate flip, that chairmanship will remain with Alabama Republican Sen. Richard Shelby. The only seat to change hands on the committee was that of Sen. Mark Kirk, an Illinois Republican who lost to Rep. Tammy Duckworth.

Shelby has stubbornly refused to hold a vote on Obama’s nominees to the board, first denying the January nomination of Mark McWatters, a former aide to House Financial Services Chairman Jeb Hensarling (R-Texas), a fierce Ex-Im opponent, and more recently blocking former Ex-Im official Claudia Slacik, who was nominated in September.

As for the two positions that remain filled — those of Chairman Fred Hochberg and Vice Chairman Wanda Felton — they both expire in January, but they’re eligible for an extension of up to six months. It will be up to Trump to decide whether to extend their terms — less likely given the change in parties in the executive branch — or to put forth his own nominees from the start.

LITTLE SHAKE-UP FOR THE SENATE FINANCE COMMITTEE: Utah Sen. Orrin Hatch will maintain his spot atop the Finance Committee, and all its members who were up for reelection will remain in the Senate as well. That includes Burr and Portman, who was pressured into condemning the TPP during his reelection campaign despite his background as a former U.S. trade representative, as well as Toomey, who ultimately was pushed to flip and turn against the deal as well.

THE PRO-TRADE DEMOCRATS’ BODY COUNT: Congressional Democrats who sided with Obama last year and voted for trade promotion authority, breaking with the majority of their party and angering labor groups in the process, ended up largely unharmed, last night’s election results show. Likely about two dozen of the 26 House Democrats who voted for fast-track legislation and were up for reelection won last night, while all three Senate Democrats who voted for TPA also sailed to victory. (Two other Democrats who voted for TPA, Reps. Sam Farr and Ruben Hinojosa, did not seek reelection.)

In the House, with two close races from out west remaining outstanding, the only casualty was likely to be Nebraska’s Brad Ashford, who was closely pitted against Republican Don Bacon. A loss there may not have much of an effect on any vote counts, however: Bacon told the Omaha World-Herald last month that he believes in free trade and would like to support the TPP, but added he would like to hear more from the deal’s detractors to understand their views before he makes any final decisions.

The other race was California’s Ami Bera, who looked to be on track for victory. Bera, whom the AFL-CIO promised to make an example of for supporting fast-track last spring, did better in the primary election for his third term this June than ever before. But he faced increasing attacks from liberal groups like Fight for the Future, which showed up outside his Sacramento office this summer with what they called a “25-foot inflatable protest blimp.” If he did fall to Republican Scott Jones, the Sacramento County sheriff, his seat would flip to someone who has come out against the TPP and criticized it for not doing enough to protect American jobs.

In the Senate, Colorado’s Michael Bennet, Washington’s Patty Murray and Oregon’s Ron Wyden won reelection with healthy margins, in line with what polls projected.

On the Republican side, House Ways and Means’ Charles Boustany, a Louisiana Republican who gave up his House seat to run for Senate, failed to advance to the runoff election next month.

Under Louisiana’s system, unless any candidate receives 50 percent of the vote outright, the top two candidates regardless of party affiliation will move on to the second round of votes. Boustany, once a leader in the Friends of the TPP caucus who eyed the chairmanship of the Ways and Means Trade Subcommittee just two years ago, flipped against the deal “in its current form” in August, but his opposition may have been too little, too late. The two candidates moving on to the runoff both oppose the deal: Republican John Kennedy, who says he’s against the TPP primarily because it does not do enough to combat currency manipulation, and Democrat Foster Campbell, who criticizes it for skewing to the advantage of big businesses.

Elsewhere in the House, Illinois Republican Rep. Bob Dold, another member of the House Ways and Means Committee, lost to Democrat Brad Schneider by about 5 percentage points.

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NAM CALLS ON PRESIDENT-ELECT TO REUNITE THE COUNTRY: More than 1,000 chief executives from Fortune 100 companies as well as small- and medium-size businesses and trade associations are highlighting the need to work together to reunite the country after a lengthy and divisive campaign. They executives released a letter late last night to the president-elect offering their help in “mending the divisions.”

“We believe we, as business leaders, all have a unique responsibility to bring our country back together again — a responsibility we wholeheartedly embrace,” they wrote in the letter, which was organized and distributed by the National Association of Manufacturers. “We write today not only to offer our congratulations but also to express our commitment in reuniting our country and our people after this particularly difficult election.”

The group of business leaders, which included American Iron and Steel Institute President Thomas Gibson and Muhtar Kent, CEO of the Coca-Cola Company, also emphasized the importance of working together even when the administration and business communities are at odds.

“To be sure, we are aware that there will be times when we disagree on the specifics of important policies, and we will respectfully make our voices heard when we do,” they wrote. “We do believe, however, that we can be constructive — both when we agree and when we do not — if we can all approach challenging situations in good faith, guided by an unwavering commitment to a greater purpose.”

INTERNATIONAL OVERNIGHT

— EU Trade Commissioner Cecilia Malmström says it is too early to tell what Trump's election means for TTIP, a Swedish Radio journalist reports.

— Japan's Yoshihide Suga, the chief cabinet secretary, said at a regular morning news conference today that Japan would "of course" pass the TPP, the New York Times reports.

— Canadian economists are worried about Trump's trade policies more than any other policy area, saying Canada could become "collateral damage" if Trump embarks down a protectionist path, Canada's Global News reports.

— Now that the holiday shopping season is officially underway, the National Retail Federation and Hackett Associates have begun bringing attention to their monthly Global Port Tracker report, which noted Tuesday that imports are expected go up by 4.4 percent this month at the nation’s major retail container ports over the same period a year ago.

THAT'S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: [email protected] and @ABehsudi; [email protected] and @mmcassella; [email protected] and @tradereporter; [email protected] and @mjkorade; and [email protected] and @JsonHuffman. You can also follow @POLITICOPro and @Morning_Trade.

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