Former TPP Negotiator Says It Would Be Hard to Replicate USMCA Approach in Asia

Former Trans-Pacific Partnership negotiator Wendy Cutler told an audience for an Atlantic Council webinar that the U.S. cannot rejoin even a renegotiated TPP in the next two years, and maybe not during the next four. Cutler, a vice president of the Asia Society Policy Institute, said that the administration should try to ink mini-deals with TPP countries on digital trade, like it did with Japan, and said that maybe there can be coordination on supply chains or climate and trade. Cutler was also chief negotiator on the Korea free trade agreement.

She said trying to apply USMCA-style auto rules of origin or labor protections in Vietnam or Malaysia is unlikely to work. "Mexico and Canada export 75% of their goods and services to the United States," she said. "Which means the U.S. had a lot of leverage." But for most countries in Asia, China is their top export market, not America.

She also said the huge bipartisan majority vote for USMCA was a huge accomplishment, but that Republicans were more willing to go along with left-of-center priorities like removing biologics patent protections and investor-state dispute settlement because of the political environment with President Donald Trump wanting a win on NAFTA and the threat of the end of NAFTA without a rewrite.

She said that observers should not be too concerned about stakeholder complaints against Mexico and Canada for not fulfilling certain promises in the treaty. "In any trade agreement between three large economies … there are going to be implementation problems," she said, and the free trade commission meetings this week between U.S. Trade Representative Katherine Tai and her Canadian and Mexican counterparts are aimed at resolving irritants before they become formal disputes. "Probably Mexico and Canada are going to find instances where they don’t think the United States is living up to its obligations. That’s par for the course," she added.

She said it was quite interesting that even as Tai announced the first use of the rapid response mechanism against a GM plant in Mexico, she commended Mexico for its actions to address the allegations of interference in the union election there.

"I think that bodes well for the implementation of the USMCA," she said.

Cutler also noted that the European Union announcement that it will not double retaliatory tariffs responding to Section 232 tariffs on European metal exports. "Both sides were able to find a way forward at least for now," she said. "We’ll have to see how those negotiations proceed."

She said that rebuilding trust takes time, and that some countries are wondering if there will be another dramatic shift on trade policy in three-and-a-half years.

She said that the Biden administration's trade policy is still a work in progress, but it's clear that where trade policy aligns with the administration's goals of tackling climate change, there are opportunities for ambitious proposals.

However, when it comes to carbon border adjustment measures, "This is something that the EU is way ahead of us on," she said. "I think there is concern if the EU goes forward too quickly we may end up with another bilateral irritant."