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11 Pacific Rim nations form the Trans-Pacific Partnership in 2018. The Obama administration supported the trade pact alienating supporters in its union base particularly in the midwestern states. Mr. Trump opposed the TPP in his election campaign and made it a significant issue for swing voters in midwestern states after job losses in the auto industry. With the opposition of president Trump the U.S. decided to withdraw from TPP.  The 11 nations agreeing to join a revised agreement are Japan, Canada, Mexico, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. So far six countries have formally approved the deal, Australia, Canada, Mexico, Singapore, New Zealand and Japan, setting the stage for two rounds of tariff reductions starting December 30, 2018. Agricultural products duties will be duty free within 3 to 7 years including for Japan and Mexico. Australia, New Zealand, Canada are major agricultural exporters. Japan supported the deal as a way to counter China's influence in the region. In the U.S. the gains would be in intellectual property rights but losses for workers in the auto and manufacturing industries, a point Mr. Trump recognized in his election campaign as he campaigned in the midwestern states. Mr. Obama pursued TPP over objections of workers organizations and unions including auto workers union, with his advisors suggesting this as a way to counter China's influence in the region. By 2018 the Democratic party support base fractured on this as one of the major issues.   ...

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This editorial in the WSJ argues against Trade Representative Lighthizer's move to increase the percentage of North American content in a vehicle so that it creates more jobs. Currently Nafta rules require 62.5% of a duty free vehicle be made in North America. Lighthizer wants to lower the content coming from Asia or Europe. This is not favored by Canada and Mexico and it makes Mexico less competitive than it is now.

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The TPP as negotiated by Nov. 2015 gives biologics drugs 8 years of protection. Senator Hatch of Utah and the pharmaceutical industry seek 12 years of protection to recoup costly investments in these drugs. Japan says the agreement would be difficult to renegotiate. There is opposition to extending it beyond 8 years in many TPP countries.

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This report in the Economist points to the improved situation for Mexico after the scare from Trump's plans to build the wall and deport large numbers of immigrants. The peso dropped by 15% between mid November 2016 and January 2017, but has since recovered, and non-oil exports were up 5.5% in February 2017 over prior year with the manufacturing growth in the U.S.  Growth forecasts are now up from about 1% GDP growth previously to 2% for 2017, close to the 2.3% in 2016. Much of the change in mood in Mexico is a result of the failure of the early travel bans being blocked in the courts, the failure to get health care legislation through Congress, and the effort by the trade advisers and economic advisers around Trump to move Trump's positions more to the centre and closer to traditional Republican party positions. Wilbur Ross, the Commerce Secretary, says " a sensible agreement" can be reached with Mexico. Peter Navarro, trade adviser, talks about making "a mutually beneficial regional powerhouse." Robert Lighthizer, a veteran from the Reagan days, is likely to be made the new U.S. Trade representative. Still as the Economist points out the "20% border adjustment tax" continues to be supported by Paul Ryan in Congress to pay for tax cuts. But certainly the mood has lifted in Mexico in the first 100 days. This is true for economic policy in relation to China and Germany, and the close circle of Ross, National Economic Council head Gary Cohn, and Secretary of State Tillerson is moving Trump to the centre in policy statements to get things done. Mexico is faced with internal challenges of reestablishing the rule of law, improving infrastructure, reducing red tape and corruption, addressing problems in the education system, to promote economic growth. These challenges may prove to be as large as the external challenges were once thought to be. ...

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This response by experts on transatlantic relations rejects the other view expressed in Zeit Online that the U.S. under Trump remains estranged from Germany and the EU. These experts from the American Institute for German Contemporary Studies, American German Council, and Centers at John Hopkins and Georgetown for German Studies, reject the view that the Trump administration and Germany are that far apart on many issues as it appears from media coverage.  Foremost it points out that civil society relations are sound and growing. About 50 million Americans trace their descent to Germany, including president Trump, much larger to over half the U.S. population considering European descent. Much larger is the sense of a culturally shared future with the European Union, with the nations of Europe including Germany, France, Italy, Spain, the nations of Eastern Europe, and Britain. The civil society relationships run deep in a way that is hardly affected by the Trump administration. Within the Trump administration the policies to Europe these experts remind the reader, are determined by the "adults" in the administration, who are senior members of the administration. This is a crucial point as Trump administration policy is not determined by the president's liking for tweets as much as by senior cabinet members Tillerson at the State Department, Gen. Mattis at Defense, Kelly at the White House, and senior members of Congress including Senators Corker and other senior committee members. This is why Republican Senator Kay Hutchinson was chosen as Ambassador to NATO. It should be noted in this context of German-EU relations in president Trump's first year that there was a period of German disillusionment with president Obama, exacerbated by the NSA spying on German chancellor Merkel and on the EU delegation to the UN, with president Obama's failure to offer any apology. Relations recovered from that low point. No one suggested that there be a German led decoupling of the EU with America at that low point, or at another low point in German-U.S. relations with the setup of American Pershing II nuclear missiles on German soil under the Reagan administration when there were large scale protests.  The American view that the U.S. should not have to shoulder major responsibilities for defense and foreign relations by itself is not new say these experts, and goes back to earlier administrations before Trump.  The experts argue for an active role by Germany with its partners in Europe for defense and foreign relations, which should not be seen as a result of U.S. pressure, only responding to the situation as it has evolved upto this time. Views on immigration are also changing with effort by the EU and Germany, France, to reduce immigration from the source countries in Africa, and the changing perceptions about uncontrolled immigration in Germany and France, say the authors. A coordinated policy towards Russia  is seen as not having changed. And much as a reset in relations was advocated by Obama in the first year of his first term, the current policy of the Trump administration to work with Russia to lower tensions can be seen in the same way say these experts, and not as a fundamental shift in American policy. The deep relationship of Germany and the EU with China is another positive aspect that will also help the U.S. in framing its own policies towards China. The German-American relationship, and the European Union relationship with the U.S.  is seen as basic to the values and interests of the U.S. and Europe. This relationship is too deep and supported by civil society and Congress, the Republican Party, and the Democratic Party, by large trade relationships, to be affected by temporary differences under any one administration. Even these differences are part of a larger debate that is part of dialogue on issues in a democratic society, sometimes raucous and loud, and could be welcomed and carefully channelled in constructive ways.     ...

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An assessment of progress in free trade and generating jobs in N. America under the NAFTA agreement between the U.S., Canada and Mexico. The agreement was signed under President Clinton in 1994. NAFTA removed existing tariffs on over half of the exports from Mexico to the U.S. and phased out remaining tariffs between the U.S., Canada and Mexico. The U.S. had two way trade of $918 billion with Canada and Mexico in 2010, according to the Office of the U.S. Trade Representative. Canada is the U.S.'s top trading partner, with $462 billion in trade through Sept. 2012, and U.S. trade with Mexico- expected to overtake China- is at $369 billion in the same 9 month period of 2012.

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U.S. Senate majority leader Mitch McConnell tells the Washington Post in an exclusive interview that the dynamics surrounding the Trans Pacific Agreement pushed by president Obama have changed. He sees little prospect of it passing Congress before president Obama leaves office, and says it will be up to the next president to take it up after Obama leaves office in Jan. 2017. McConnell said that there is a lot of pushback all over the place. The Republican frontrunners Trump and Cruz both oppose the TPP, and all Democratic candidates including Hillary Clinton oppose it. In addition tobacco interests in McConnell's home state of Kentucky and pharmaceutical interests backing Senator Orrin Hatch, the Republican Finance chairman also oppose aspects of the negotiated deal. Labor unions, the automobile industry, environmental groups, and public interest groups, have strongly opposed provisions of the TPP that hurt workers and the public interest from the beginning, making it a risky proposition for Congressmen coming up for reelection in 2016. The divergence between the Republican establishment and the presidential front runners Trump and Cruz also have diluted support in Congress on the Republican side, making it a no win proposition....

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Kessler in the WP corrects Obama's claim that he created 800,000 jobs. He says this is clever arithmetic as it takes a low point in Feb. 2010 following the financial crisis. Kessler points out that according to the Bureau of Labor Statistics, U.S. manufacturing jobs were 12.56 million in Jan. 2009 when Obama became president. In Nov. 2016, early estimates show there were 12.26 million manufacturing jobs, a loss of 300,000. This loss does not reflect the problems in the U.S. auto industry and older industries in the midwestern states as a result of trade and globalization that speeded up with the rapid industrialization of China. And led as Greg Ip pointed out in a recent WSJ report to a rapid acceleration of job losses in a decade that did not happen in the same scale during Japan's industrialization and urbanization in the sixties. This aggravated the situation in Michigan, Ohio, Wisconsin, Indiana, and Pennsylvania, and was met with a feeble response from Democrats. Even a economist like Krugman favoring the Obama administration's efforts came to the conclusion that TPP did not add much to gains from trade as most of the gains had already been realized. More of the gains went to tech and IT in California, at the expense of the auto industry based in the midwest. A report in WP show a president too close to IT in California and failing to grasp the situation in the midwest. Voters punish whoever is in power, regardless of being Conservative or Liberal, in Canada the hollowing out of manufacturing under Harper in Ontario and Quebec led to the win by Trudeau's Liberals.  ...

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The recent appointment of fast food executive Andrew Puzder as Labor Secretary has caused great concern among union leaders. Puzder supports a $9 minimum wage compared to $15 supported by Democrats. Unions now represent 7% of the labor force, down from a high of 20% during Reagan's time when Reagan appointed a construction company executive as Labor Secretary and cut regulations.  Globalization has thinned the ranks of workers in unions. And the failure of Democratic administrations to stem the shift of factories overseas to China, Mexico and other places, as part of global supply chains focussed on cost, has weakened Democratic support among workers since the period of Bill Clinton. It eroded to the point where Obama won 65% of support among unions and Hillary Clinton won 56% in 2016. Interestingly the Republican Romney gained 33% versus 37% for Trump, showing voters were more inclined to move away from Democrats and only a smaller number willing to support Republicans, but the shift enough to give Republicans a win in 2016 for the presidency. The figures are from a Election Day survey of trade union AFL-CIO, and a larger proportion in midwestern states showed disaffection with policies from Clinton to Obama. In fact Obama spent years promoting another free trade agreement TPP that favored tech more than auto and older industries, just as Bill Clinton had promoted NAFTA, without giving thought to what this was doing to its worker base of support. A similar situation happened with Social Democrats in Germany as a SPD administration moved to the centre and handed Christian Democrats led by Merkel a win in parliamentary elections. As Democrats such as former Labor Secretary Reich, a professor at UC Berkeley who served under Bill Clinton, describe the problems of working class people their is less reflection on the impact of the changes from globalization and how Democrats handled or mishandled it, and more on the politics between the two parties.   ...

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Rattner looks with alarm at recent figures showing that of 2.65 million jobs created in the U.S. in 2015, only 30,000 were in manufacturing. He reflects on growth in manufacturing with the recovery in automobile manufacturing between 2009- 2013 - during this period employment in the U.S. auto industry went up by 23 percent to 690,000, and employment in Mexico's auto industry went up by 60 percent to 589,000, showing much faster growth overseas. Manufacturing has also experienced decline in private sector wages of 0.8% since 2009, with auto industry wages down 12.7 percent, says Rattner.

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Hillary Clinton narrowly loses the Michigan primary to Bernie Sanders in March 2016, as the Sanders campaign focusses on Clinton's support for trade agreements that hurt American workers and lead to loss of manufacturing jobs. About three fifths of voters in the Michigan primary considered this a major issue. Many less educated younger workers see their job prospects diminish and wages drop with free trade that hurts American manufacturing jobs. Bill Clinton signed the NAFTA agreement with Mexico, and as a member of the Obama administration Clinton supported the Trans Pacific Trade Agreement, later opposing TPP when she left the cabinet. Sentiment against trade that hurts manufacturing jobs in the U.S. is strongest in midwestern states such as Michigan, Ohio and Illinois. This was also a major issue benefitting the Liberals under Justin Trudeau who won in Canada's industrial Ontario province which has suffered hollowing out and loss of manufacturing jobs under the Conservative Harper administration. In the U.S. the issue goes back to the Clinton Administration for two decades. New jobs created by Apple, Google, and other tech companies pale in comparison with the industrial jobs created in another era that benefitted working class families. This issue and high unemployment or under employment, lower wages for working class families, was a major issue in the 2016 U.S. presidential election campaign. Widening wealth disparities, and lack of upward mobility, high tution and healthcare costs for ordinary families, dominated the campaign in the U.S....

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A Peterson Institute of International Economics study on the TPP trade agreement shows it would reduce growth in the U.S. manufacturing sector by a fifth, according to this report in the NYT. Workers incomes and job losses in manufacturing are a key concern for voters and account for the surge in polls for Trump and Sanders in the U.S. presidential election of 2016. All four leading candidates Clinton, Sanders, Trump and Cruz oppose the TPP agreement. Congress will wait till after the election to decide. This is a big issue today because about 5 million jobs have been lost in 1977-2014, according to the Alliance for American Manufacturing. The Peterson study predicts job losses of 50,000 a year, yet another study by Tufts University predicts job losses of 450,000 a year. Another study by the Economic Policy Institute study shows other damaging effects such as labor's share of national income declining from the TPP.

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A study by Prof. Peter Petri of Brandeis University, shows the Trans Pacific Trade Agreement boosting economic output in the U.S. by about 0.4% by 2025 or $77 billion. Winners are biologic drugs which get long term patent protection, tech firms and software engineering services. Losers are the Detroit auto industry with higher auto parts imports, light manufacturing, and some heavy manufacturing sectors. Prof. Douglas Irwin of Dartmouth College and other experts say it is not clear how U.S. consumers and businesses will benefit. The import duties as a percentage of total imports are now at about 1.4%. Experts say about 4/5ths of the benefits of TPP for the U.S. are from opening up trade in services and new rules for investment and commerce. TPP includes Pacific countries Canada, Australia, New Zealand, Chile, Mexico, Malaysia, Singapore, Vietnam, and Japan. Issues are environmental rules, worker protection and standards, agricultural imports in sensitive countries such as Canada and Japan, affordable drugs in poor countries....

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Researchers David Autor of the Massachusetts Institute of Technology, Gordon Hanson of the University of California, San Diego, and David Dorn of the Center for Monetary and Fiscal Studies in Madrid, in independent research, studied the impact of trade on 722 clusters of interrelated counties in the U.S. They focussed on the surge in Chinese imports and found a pattern. Counties with higher exposure to Chinese import growth showed higher unemployment and higher expenditures by the government for unemployment benefits, food stamps and disability benefits. Their calculations show the increased government payments amount to one to two thirds of the gains from trade with China. This does not include the losses suffered by people losing jobs who deplete savings as they look for new jobs. Hanson studied the effects of trade and Chinese imports in the 1990's and found the effects were relatively small. This time the effects are large and show counties that lacked local investments in industrial machinery and technologies in which China was still playing catchup such as Caterpillar in Peoria, Illinois, and Boeing in Everett, Washington, were most susceptible to higher jobless rates and in need of government support payments. Autor and Hanson found that from 2000-2007, communities in the 75th percentile- ones with greater exposure to Chinese import growth than 75% of all communities- saw a manufacturing jobless rate of about one-third more than communities in the 25th percentile. The government payments mean higher taxes or larger deficits are needed to support these communities, and long periods of unemployment reduce the incentive to work. Michael Spence, a Nobel prize winning economist from New York University, says the world has never seen such a rapid pace of growth as China experienced between 2000-2011, with rates approaching 12% in some years, making past experience and prevailing theories on trade an insufficient guide to what is happening....