After a more-bark-than-bite approach to trade during his first year in office, President Donald Trump took on the world in 2018 and shows no sign of letting up. In Europe, British Prime Minister Theresa May has so far failed to convince Parliament to accept the Brexit deal she negotiated with Brussels. And under the radar, the World Trade Organization is facing paralysis if there is no compromise on how to reform its system of settling disputes. These are among the ongoing challenges that are likely to make 2019 another unsettling year for global trade.
Even before the calendar turned to 2019, the salvaged Trans-Pacific Partnership, renamed the Comprehensive and Progressive Trans-Pacific Partnership, or CPTPP, went into effect for the first six countries to ratify it. That means American farmers, already under pressure from Trump’s trade war with China, now face a competitive disadvantage in another major market because of Trump’s withdrawal from the TPP. With the CPTPP’s implementation, Japan must reduce its tariffs on beef, pork and other agricultural imports, mainly to the benefit of Australia, Canada, Mexico and New Zealand. The breadth and size of the disadvantage facing American farmers will grow as more countries ratify the CPTPP and phase in the deal’s sizable tariff cuts that are not available to U.S. exporters.
In response, American farm organizations are pushing the Trump administration to quickly begin bilateral trade negotiations with Japan, perhaps as early as late January. But Japanese Prime Minister Shinzo Abe has not been enthusiastic about the bilateral alternative, and it is not clear how quickly any negotiations will move. The longer it takes, the less likely it is that American farmers and other exporters will be able to win back markets they are now losing to countries that are part of the CPTPP.