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Changing International Landscape

The new Administration has been busy these last two months, meeting with heads of state, issuing more than 20 executive orders, and getting ready for the renegotiation of the North American Free Trade Agreement (NAFTA). However, several meetings that could have direct impact on trade relationships and SOCMA member companies have occurred.

President Trump started off his presidency by inviting the UK head of state, British Prime Minister Theresa May, to Washington, D.C., just a few days after his inauguration. The two heads of state reiterated that the “special relationship” the two countries share remains intact. With Brexit set to be officially initiated on March 29 and an “America First” agenda in the U.S., it was timely to have the two world powers confirm their commitment to negotiating a UK-U.S. trade agreement after the two-year process it will take the UK to exit the European Union. 

Soon after May’s visit, Canadian Prime Minister Justin Trudeau came to Washington to discuss economic issues, including the renegotiation of NAFTA, and to bridge gaps between trading partners. Mexico’s absence from the discussions were not unnoticed. Due to President Trump’s commitment to build a wall between the U.S. and Mexico, President Enrique Pena Neito cancelled his trip to the U.S. As the Trump Administration prepares its formal notice to Congress about its intention to renegotiate NAFTA, we can only hope negotiations between all three parties are successful and the partnership is not disrupted.

Mexico’s President is not the only world leader who has voiced concerns about working with the new Administration. German Chancellor Merkel, who had a close working relationship with President Obama, has drastically different stances on trade, immigration and climate change. During the meeting of the two Western powers, Trump and Merkel made a commitment to work together. The Trans-Atlantic Trade and Investment Partnership (TTIP) was put on hold after Trump’s inauguration, and it has been unclear whether talks will resume given the Administration’s preference for bilateral trade agreements. However, during the press conference with Trump, Merkel repeated her hope that EU-U.S. negotiations would resume.

The Trump Administration has put more than one trade agreement on ice. Throughout his campaign, Trump was critical of our current trade deals and vowed to remove us from the Trans-Pacific Partnership, an agreement the U.S. had worked on with Asia-Pacific partners, Mexico and Canada. Earlier this year, President Trump took steps to pull the U.S. out of the agreement, leaving the Asia-Pacific open to Chinese influence.

In an effort to continue U.S.-Chinese relationships, Secretary of State Rex Tillerson represented the U.S. at the 2017 China Development Forum (CDF), setting the stage for President Trump’s meeting with the Chinese President Xi Jinping in Florida in April. While Tillerson and Xi agreed to partner to maintain a relationship of mutual respect that creates a win-win environment, U.S. Secretary of State did not hesitate to condemn China's lack of market reforms that block U.S. companies from doing business there.

As the U.S., the UK and others adopt protectionist policies and close their doors, China promised at the CDF to do the opposite. Per Premier Li Keqiang, Li is China's head of government (second in the party to President Xi), China will lower market barriers to U.S. and other foreign companies. President Xi seeks to promote China as a leader in free trade, vowing to defend global markets as the U.S. tilts toward protectionism.

The New Administration, in its first two months, has set the U.S. on a new direction. “America First” policies will mean something different for those of us used to operating in the status quo but could represent a lot of opportunities for the specialty chemical industry.
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