Reversal on trade pact leaves some in Northwest worried, others relieved

By Kip Hill and Scott Maben

The Spokesman-Review

Washington business and trade groups characterized President Donald Trump’s move Monday to back off from a proposed trade pact among Asia-Pacific nations as a setback for the state’s economy.

Aerospace, technology and agriculture industries in Washington depend on trade, and the 12-country Trans-Pacific Partnership championed by former President Barack Obama would have ensured U.S. exporters could sell goods and services on a level playing field with foreign competitors, the Washington Council on International Trade said.

The TPP, which sought to lower trade barriers and deepen economic ties among the member nations, “promised far-reaching benefits to trade-dependent Washington state, where 40 percent of our jobs are tied to trade,” said Lori Otto Punke, president of the trade council.

Trump on Monday signed an executive order to pull out of TPP negotiations. “Great thing for the American worker that we just did,” he said in brief remarks in the Oval Office.

Had the U.S. moved forward with the trade agreement, it could have increased Washington’s exports by $8.7 billion a year and created up to 26,000 additional jobs, according to a study last year by the trade council and the Association of Washington Business.

“It would have streamlined complex rules and regulations that make doing business abroad difficult, protected a free and open internet, enabled cross-border data flows, and raised standards on labor and the environment,” Punke said in a statement Monday.

The Association of Washington Business also released a statement Monday criticizing Trump’s decision, calling it “a set-back” for Washington state exporting industries.

“Washington is one of the most trade-dependent states in the nation, and employers here stood to gain from passage of the TPP,” the AWB said.

In a meeting Monday with union leaders at the White House, Trump said he also would renegotiate the North American Free Trade Agreement. His actions come as relief to members of the Spokane City Council, which voted last February to oppose the TPP over concerns it would move American jobs to foreign markets and erode environmental and labor laws.

“We definitely need to reopen the discussion,” City Councilman Mike Fagan said Monday.

But Fagan also noted the NAFTA discussions could affect funding for Spokane’s north-south freeway, which recently was included in a state transportation package. The future highway has been identified as a key corridor for trade promoted under the existing agreement.

Council President Ben Stuckart previously said his opposition was about protecting consumers and manufacturing jobs. The trade deal would have increased generic drug prices, allowed imported foods to enter the consumer market unlabeled and hurt the American car industry, Stuckart said last year.

In an interview Monday he echoed his previous comments, though Stuckart also urged Trump to push forward on bilateral agreements or replace the existing deal with something Congress will pass.

The deal was the cornerstone of Obama’s attempt to counter China’s influence in Asia. But his own Democratic Party was skeptical of the pact, and the former president never sent it to Congress for ratification.

U.S. agricultural interests that supported the TPP expressed uneasiness about what comes next. With no alternative trade policy to replace the pact, export opportunities that could help America’s wheat farmers are at risk, two national groups representing wheat growers said Monday.

“We can compete very effectively in Asian and Latin American markets where the demand for high quality wheat is rapidly increasing and our organizations took a long view of the benefits TPP held out,” said Jason Scott, U.S. Wheat Associates chairman and a wheat farmer from Easton, Maryland.

Now farmers will be forced to the sidelines of trade and lose market share to competitors such as Australia, Canada, Russia and the European Union, which have separate trade agreements or are negotiating new ones, said Gordon Stoner, president of the National Association of Wheat Growers and a wheat farmer from Outlook, Montana.

Representatives of local wheat growing associations echoed those concerns. Washington exports between 85 percent and 90 percent of the wheat grown within the state, and many of the largest customers are Asian countries.

“We were looking forward to selling much more wheat, to a place like Vietnam,” said Scott Yates, a spokesman for the Washington Grain Commission headquartered in Spokane. “We really felt that was the next big market for us. Now, it does not appear that is going to happen.”

Vietnam bought 92,500 metric tons of American-grown wheat in 2015 and 2016, according to figures cited by the grain commission. But the trade agreement would have lowered some taxes, making American wheat more affordable in the country and spurring future sales.

Glen Squires, chief executive of the Washington Association of Wheat Growers, said turning away from the Trans-Pacific Partnership does not necessarily mean the new administration wouldn’t seek individual deals with other countries, such as Vietnam.

Trump said in a brief statement from the White House on Monday he wanted future deals to be between just two countries.

“It’s disappointing, but in some regards we still need to figure out other ways to have trade agreements,” Squires said.

Trump’s action comes as no surprise, said Chris Schlect, president of the Northwest Horticultural Council, a Yakima-based organization that represents the tree fruit industry in international and domestic trade and government policies.

If the TPP is not possible, Schlect told the Yakima Herald-Republic, the agricultural industry would like to see two-party agreements with some of the countries, including Vietnam, a growing export market for the tree-fruit industry.

“It’s not in the cards right now, so we’ll look at the decks and see what cards are played now,” he said.

Greater Spokane Incorporated also supported the TPP, saying increased exports would make businesses in the region more competitive with foreign competition.

“The TPP stands to benefit local businesses by increasing market access and reducing barriers to entry,” the business development group said last year.