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What TPP Could Look Like with a President Trump

Donald Trump has been all but quiet in his campaign for president of the United States, and trade has been a thorn in the Republican hopeful’s side.

To sum up Trump’s thoughts on the pending Trans-Pacific Partnership (TPP), he thinks it’s a “horrible deal.” That’s at least what he said at the Republican presidential debate before he added, “It’s a deal that was designed for China to come in, as they always do, through the back door and totally take advantage of everyone.”

Then, in an article for USA Today, Trump said America’s “disastrous trade policies” are what’s killing the American worker, causing joblessness and bringing household incomes to unsustainable levels.

“And the situation is about to get drastically worse if the Trans-Pacific Partnership is not stopped,” he wrote, calling the agreement “a mortal threat to American manufacturing.”

Over at Breitbart earlier this month, Trump harped on currency manipulation in an exclusive interview, saying, “There is no way this country can compete with those nations in the TPP because of the fact there’s no currency manipulation restriction.”

Suffice it to say, Donald Trump does not have warm fuzzy feelings about the 12-nation trade deal, and that very vocal opposition has begged the question: What could happen to TPP if Donald Trump became president?

Surprisingly little might actually change.

“I’ve seen this before,” said National Council of Textile Organizations (NCTO) president and CEO Augustine Tantillo, who played a role in negotiating NAFTA. “I’ve seen trade become an inflammatory issue during the election, but for the most part, after the dust settles and after whomever gets elected, things generally have gone back to a more normal course of action despite what may have been said on the election trail.”

In the 1992 presidential debate between Bill Clinton, George H.W. Bush and Ross Perot, a third-party candidate, Perot coined a phrase for his negative views on NAFTA.

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“We have got to stop sending jobs overseas,” he said. “It’s pretty simple. If you’re paying $12, $13, $14 an hour for factory workers and you can move your factory south of the border, pay $1 an hour for labor…have no heath care—that’s the most expensive single element in making a car—have no environmental controls, no pollution controls and no retirement, and you don’t care about anything but making money, there will be a giant sucking sound going south.”

That giant sucking sound, according to Perot, would have been the sound of jobs flying south for endless winters.

Bill Clinton, who went on to win that election, realized NAFTA was a necessity, so he found a way to negotiate side agreements, explained Ron Sorini, principal and founder of Sorini, Samet & Associates, who was the textile negotiator at the Office of the United States Trade Representative (USTR) during the NAFTA days and also helped settle the deal.

“It’s just campaign rhetoric to say ‘if we don’t write the rules, China will,’” Sorini said. “Trade is an easy issue to demagogue and just say it costs jobs.”

While it’s still possible that TPP could be passed during a lame-duck session of Congress—meaning when Congress meets after the election but before the president-elect takes office—on the chance it isn’t, it’s unlikely that Trump could derail the deal entirely.

“It’s unimaginable that Donald Trump will walk away from the agreement,” Sorini said. “I think if it’s passed and enacted by Congress, saying ‘this agreement stinks, we need to have a better agreement,’ is very different than taking the step to have the United States drop out of an agreement. That’s a really hard thing for a president to do. It’s generally accepted that there’s a continuation in foreign policy with free trade agreements.”

The inflammatory talk hasn’t thrown Tantillo either.

“The bigger question is, is there anything different about this election that would force a different outcome than what we’ve seen in the past where trade faded into the background?” he asked, “Up until this point, the manner in which the president and executive branch have handled previous trade commitments have simply been to adopt them and accept them.”

What Trump might do if TPP is already passed, and similarly if it isn’t, is hack off at TPP, so to speak, by modifying an existing position with a future agreement.

One such area for amendments that might appeal to Trump is currency manipulation.

Trump has pointed to currency manipulation as being a serious advantage that countries like China possess, citing the Asian powerhouse as contributing to stateside manufacturing job losses since its entry into the World Trade Organization in 2001, and for devaluing its currency.

As it stands, TPP does not include provisions for the U.S. to address currency manipulation in trade deals.

Without one, the worry is that a country could make its currency weaker on purpose. So, for example, if a U.S. manufacturer were trying to sell a T-shirt for export to a country that has weakened its currency by 5 percent, that makes the manufacturer’s T-shirt cost 5 percent more in the local currency, which isn’t much different than a 5 percent tariff on the T-shirt.

There is a side agreement that the U.S. Treasury Department negotiated with the TPP members that says countries will “commit to avoid unfair currency practices and refrain from competitive devaluation.” TPP countries will also have to publicly report their foreign-exchange intervention and engage on efforts to avoid unfair currency practices, but critics say that declaration doesn’t impose reasonable penalties for currency manipulation.

On his campaign website, Trump says in his position on trade, “When Donald J. Trump is president, China will be on notice that America is back on the global leadership business and that their days of currency manipulation and cheating are over. We will cut a better deal with China that helps American workers and businesses compete.”

Currency manipulation aside, what Trump would be empowered to do as president are things like ramp up Commerce Department research into cases of countervailing duty and anti-dumping, and increase the amount of resources dedicated to detecting fraudulent activity to make sure imports aren’t being misclassified, undervalued, or that companies aren’t getting benefits they don’t qualify for.

But a wholesale dismantling of TPP isn’t likely in the cards.

Just as many of Bill Clinton’s promises about getting tough on China didn’t necessarily happen, and similar statements by George W. Bush didn’t come to fruition, a President Trump might meet the same fate.

Spokespeople from Trump’s campaign did not respond to requests for more information on the candidate’s plans for TPP.

“The interesting thing would be, if Trump got elected, with all the various players and congressional leaders understanding his positioning and understanding his statements, would that force them to act in an expeditious fashion before he actually took office,” Tantillo posed. “Or would they feel constrained not wanting to levy a defeat of his agenda before he even took office?”