 Welcome to ThinkTech Global on ThinkTech. I'm Jay Fidel. Today we're going to cover the post-election status of the TPP, the Trans-Pacific Free Trade Partnership. Our special guest is Russell Hanma, APEC master plan author and attache for the United States Trade Representative Office. The campaign this year, the presidential campaign, raised the question of whether we as a country should continue pursuing the Trans-Pacific Partnership. That's a free trade agreement within the Asia Pacific region. Donald Trump, President-elect, has said that he contemplated issuing a notice of withdrawal from the TPP membership. Japan has recently adopted the TPP in the National Parliament and some countries have said that if the US does withdraw from TPP, they will pursue other agreements instead, such as the trade agreement that China is pursuing under the ReCEP. That's the Regional Comprehensive Economic Partnership, which actually competes with the US, since the US is not a member of ReCEP and China is not a member of TPP. So dropping out of TPP could have enormous consequences on trade between the United States and our Asian trade partners. Today we're going to explore these events and possibilities with our guests Russell Hanma and examine the consequences, the ramifications of what Donald Trump has in mind. With due regard to his appointment just today of Rex Tillerson as Secretary of State, the stakes are high. We'll also take a look at Trump's replacement, potential replacement of Michael Forma as US Trade Representative and who he might appoint next, since that will tell us a lot about which direction Trump will pursue in office in January. Now let's see what Russell has to say. Welcome to the show, Russell Hanma. Thank you, Jay, for inviting me again. I remember when I attended the show back in March 22nd of this year regarding the Hawai'i's place in the Asia-Pacific region, I did speak about my APEC master plan back then and the consequences with the TPP, the Trans-Pacific Partnership Trade Agreement might have an impact to it. I remember I mentioned back then that because of this presidential election between Hillary Clinton and Donald Trump, my sense of direction of the future prospect of our trade agreements that's going to affect us in Hawai'i tremendously as well, the Asia-Pacific trade partners that we are engaging right now. So I think what the ramification what Mr. President-elect Donald Trump said back in when he was elected in November's election that he said he's willing to withdraw from the membership of the 12 members of the TPP. And that has really had a big impact in Council's questions with our trade partners and our trade negotiator because as you know, Jay, we've been negotiating this trade TPP for the past seven, eight years already. And matter of fact, in Hawaii, we have hosted it two times already, one in Big Island and one in Maui, and got the TPP members to come here for the negotiation meetings. We're going to lead the lead proponents of this agreement, haven't we? Yes, Jay. I think we show that the Hawai'i is capable of hosting these kind of trade delegates in the trade agreement because we want to make Hawai'i the place or hopefully if we can ratify the TPP and make Hawai'i the headquarters for the Asia-Pacific region and have a Secretary General in Hawaii to oversee the TPP trade agreement. So it has an effect on Hawai'i directly? Yes, I think there's roughly the study that we did. I think there's about roughly 400 companies in Hawaii who's going to be, who are exporters, who can export their services as well with their products. That's the perfect thing for Hawai'i. Exactly, we have our you know, many hooded water people, we have our coffee, chocolate, some of these, some of the goods and services that we provide here. We can even give a lot of these engineering consultant tourism as well. Hotel developers can go to help these countries to how to do a successful development and with international partners. Let me unpack some of this with you. So what is a, what is the Trans-Pacific Partnership? I mean, how does a free trade agreement work? How does this one work? I think you got to really look into the export and import and what the TPP does is they're more concerned about taking off the trade tariffs, like the U.S. Customs. Like there's a lot of non-tariff and tariff items and there's roughly about 18,000 items, like you know, from watches, clothes, clothing, automobile parts, medical supplies. So you look at what the U.S. Customs has in terms of liquidation when they justify the commodities and you get, they have a tremendous amount of database with 18,000 items in there and they, they, doesn't they, which country is coming from what commodities and what products are being imported from that countries and they have a, they have to set that database. And how, how serious is a tariff? How, what percentage or amount does the importer have to pay on the goods that are imported? Okay, you know, right now in terms of like a bilateral agreement, like country to country, I can set a good example, like Japan and United States. For example, automobiles, I know that we want to protect our, our three General Motors Chrysler as well for with our three Detroit, you know, big three over there. So what they're trying to put is tariffs, like an automobile parts, like pickup trucks or like 25% tariffs. For example, like Toyota, like we have a Tacoma trucks, they're charging them 25% import taxes. They want to make the fair market value so they don't want them to compete with the American pickup truck. So this is a, this would be Trump's way of putting American manufacturers at an advantage against Asian importers. Yes, I think he made a statement like, uh, colonizing China, like, uh, because I, you know, they're worried about the dumping law, currency modification and all that. So he was saying that they want to put a tariff of 45%. So none of those, anything that we bring in from China, made in China, uh, products, so they'll have 45% more compared to their invoice value. Yeah. And that's going to have like, uh, so what it does is it makes the American products more competable with the China's products. For example, you, you're selling a product for $2 on this, uh, item from China. For example, it could be slippers or, uh, any kind of plastic materials that brought in. And, and you put a 45% tariffs on that one. So that would be like, instead of purchasing it for $2, you're going to pay for like $2.90 cents. Yeah. And, uh, and that way the American similar product can, you know, when you get to that from wholesale, from X factory price to wholesale to retail, there's a markup value. So what it does is it sets the retail price equivalent. So that's part of the protectionist movement. So let me get the sequence. Under the TPP, what all of these tariffs would be for, for given, they would be deleted, or would they simply be reduced? I think most of it goes by case by case. I think, uh, uh, but within the TPP with the 12 countries, they kind of agree like most of like 95% of the items that's going to be brought in is going to be free trade, but they're, but they're going to have a phasing out period. Like for example, agriculture is like fruits and beef and poultry and stuff. They don't want to do it right away. They're going to have a phasing out period. I think they're going to, in terms of other, uh, commodity like automobile, automobile parts, it's not going to happen right away. It's going to have a phasing out period. What period of time is it? I would say within about, uh, five years, they want to see if they can. So it doesn't do violence to anything. Exactly. Exactly. Now I guess he's interested in this because he wants to, uh, make America great again in terms of manufacturing and all that. So he wants to try to discourage, uh, importing goods from Asia, uh, and he wants to, um, you know, therefore, um, make American goods more competitive in the American market. But, um, I guess the question I put to you is, will that happen? Do you have any thought about whether that will in fact happen if we drop out of TPP? I think that it's not going to happen overnight. I think what, uh, Donald, president like Donald Trump is trying to do is like, he wants to persuade, instead of having his multilateral kind of trading with a lot of members, like 12 members, or China has this RCEP with, uh, 16 members with 10 members, the ASEAN plus six members. And we even have our trade agreement with the European Union on the T-TEP, which stands for Transatlantic Investment, uh, Partnership. Uh, so that's going to have effect on us as well. But I think in terms of importing in, if you look at the history of a trade, you know, ever since the 18th or 19th century, we had trade with Europe, trade with Asia as well. And if you look at all the investors that we have in United States, we've got Germany, France, Japan, South Korea, all the European countries, they've been investing in the United States for all these years. So, you know, they already start up factories here. They have their subsidiary companies. They're doing, you know, they're part of our economy already. And this goes hand in glove with their investment. Exactly. And if they want these countries to come and invest again, they can set up the factories here, uh, retool their, uh, equipment and create, uh, more additional jobs. And I think you're, you're, you're going to close that window opportunity if we don't, uh, pursue the TPP. One other point before we take our break here is that if the United States, if, if there is no TPP, we're not a member of the TPP, all kinds of things will flow out of that. But one of them that comes to mind, we can talk about others too, um, is that, that doesn't mean that, um, we will have the advantage in selling overseas, because if I add a 25% tariff on cars or a 45% or whatever you want, you know, on slippers, that means that China and other countries, um, will respond accordingly. And they will add a 25% or a 45% tariff on stuff we'd like to sell in China. And so it's tit for tat, it's reciprocal, isn't it? Isn't that what happens? I think, yeah, I think there would be ways of retaliation, maybe if we do give it like a 45% tariff to China. I remember like in the 1980s when we had a trade war, kind of similar with Japan. I remember when President Ronald Reagan was the president back then and, uh, Yoshiharu Nakasone was a prime minister. And we had so much trade, uh, issues with the U.S. and Japan back then. Even it affected Hawaii without his foreign investment from Japan was buying up golf course, hotel, resort developments. That was back in the late 80s and we learned quite a bit from that and they became our, uh, you know, best partners and, uh, and their allies and, you know, in those kind of aspects. So those were good investments, I think. And I hope that maybe in the future we can have a good relation with China and hopefully we can iron out the differences. And part of a good relationship is to go easy on tariffs. Part of a good relationship is to have free trade agreements, yeah. Yeah, I think so. I think China was showing an example that they want to be a member of a TPP. And all the other countries in the APEC, I know that even India, they're not even a member of APEC. And they're, they're showing us they want to be a member of APEC and TPP. Let's take a short break, Russell Hanwa. Um, and he is the APEC master plan author and deals with Trans-Pacific Partnership. We'll be right back for more about that subject. Thank you, Hawaii. Asia in reveal. I am Johnson Choi, the host. I'm looking forward to see you next month, December 15th, Thursday, 11 o'clock. Right here again. Hi, this is Jane Sugimura. I'm the co-host for Kondo Insider. And we're on Think Tech Hawaii every Thursday at 3 o'clock. And we're here to talk about condominium living and issues that affect condominium residents and owners. And I hope you'll join us every week on Thursday. Aloha. Aloha. I am Reg Baker and I am the host of Business in Hawaii with Reg Baker. We broadcast live every Thursday from 2 to 2 30 in the Think Tech studios in downtown Alululu. We highlight successful stories about businesses and individuals and learn their secrets to success. I hope you can join us on our next show on Thursday at 2 o'clock. Until then, Aloha. We're back. We're live. I'm here with Russell Hanma. He's the APAC master plan author and he knows a lot about the Trans-Pacific Partnership in that capacity. And we want to find out more about how this does work or would work. So right now the U.S. does have some free trade agreements out there, don't we? Don't we have some? Oh, yeah. Actually, you know, we're kind of generous because we have this trade agreements with this developing nation, the Third World countries. And you know, we're giving them a free trade agreement and a status in that way. Yeah, sure. And we help them out. It's a way of giving them aid, I think. Exactly. To encourage their development. Yeah. Even we have one with Africa. Nobody mentions, talks about, they might be the next region that's going to grow after India. And it's called American Growth Opportunity Act, which is AGOA. So I know there's a lot of trade agreements that we've been initiating, but I think, you know, President like Donald Trump needs to understand what these trade agreements really stand for and what we went through to ratify it or, you know, all the past presidents went through as well. It's not easy because people do oppose on the basis that you're competing or making it more difficult for them to manufacture in your country. Exactly. And I think the world is changing so fast and even if Third World developing nations are coming up to the same par now and, you know, with the internet, with the communication and technology enhancement that everybody's got the same amount of information. So they're really, they all want to be, you know, they want to have quality of life in their country and do well and stuff. Sure. But why, why don't we just go to the bottom line and make a, make the world a free trade agreement? Why limited to Asia and Europe and Africa? Why don't we just say, no more tariff. We love you all. We want everybody happy together. So we're going to have a free trade agreement that covers every single country on the planet. A, why not this happen? And B, is this ultimately where we're going? I think that's like a utopia kind of thing. It doesn't happen overnight. We've got people like President like Donald Trump who's, who wants to protect the United States industry as a nationalism kind of concept. So, you know, we have a leading agency that sits on top is called WTO, World Trade Organization. And they look at the, they're in Brussels in Europe, the headquarters and they look at the overall of the trade policies. And, you know, there's a dispute settlement where, you know, countries can protest what other countries are doing in terms of harming their industry. And a good example, we had one in the past about the solar panels from China. And there was a lot of concern because they're selling it below the fair market value in terms of anti-dumping law. So kind of a duty act. So they had a grounds to make that argument under WTO. And how do we do on that? I think solar homes or, you know, some of the other companies in the United States that looked into it. And they, you know, found out that it was justified that there were dumping law regulations. That mechanism with the WTO, were we able to stop China from dumping? Oh, yeah, definitely. They want to be a member of the WTO. So they want to make sure that they're in a law-abiding country. So the world is looking at them now. So ever since they were part of the, they became a member of International Monetary Fund. And so, you know, they're part of the banking system. Trying to be respectable. Right. So they can actually do the currency manipulation. So then I want to, so we have this continuum where ultimately, hopefully someday, I know it's not going to be in our lifetime, but someday in the world we'll reach the utopia of free trade everywhere. But we're not there yet. Yeah, I don't think so. Take quite some time. There's all kinds of special interests, political and diplomatic considerations and all that. But right now, so we have one with Europe. We have one with Africa or about to be, I guess. We'd like to do this one with Trans-Pacific Partnership, except for Donald Trump. And we have a competing one. Just talking about the four corners of our conversation here. But China's trying to set up for its interests. What's the advantage of doing with one neighborhood and not another? Why 12 members of TPP? Why not 15? Why not 18? Why not 36? How do you make that decision? Is it a diplomatic issue? Is it a strategic issue? Is it a military issue? Why do we limit it to 12? Yeah, that's a good question, Jay, because, you know, when I proposed my, when I drafted my APEC master plan, I drafted in a fashion where I wanted to include all 21 countries or APEC. Yeah, it should be part of the Bogar doctrines on 1994 Bogar. It states that by year 2020, all APEC countries throughout the Asia Pacific region should have a free trade area in that region. And that's why we're pursuing this TPP to meet the 2020. And as well, China is pushing for RCEP, which is trying to meet the requirement of the Bogar doctrine. So right now, what is the Bogar doctrine? Bogar doctrine is when it happened in 1994 in Bogar, Indonesia, there was an APEC conference. And that's when the world leaders of the APEC got together and say, all right, we're going to have this trade agreement. And by year 2020, we're going to have all members to be part of the free trade agreement on developed countries and undeveloped countries. Open-minded. Yeah, exactly. So we still got, I guess, three more years to pursue this. So hopefully, if we're going to meet the requirement. And just recently, this past about a week ago, there was an APEC conference in Peru. And when the trade ministers and the leaders got together and they said that we don't want to have protectionist movement, we want to have a free trade. We want to continue pursuing the free trade area for Asia-Pacific region by year 2020. And hopefully, the members, and the dialogue, it came out that they wanted all members of APEC to be part of the TPP. And so that's interesting. Yeah, yeah. I mean, hopefully it'll get there. Let's take a moment to talk about APEC and why APEC wants to have a master plan, what it is for APEC to have a master plan, how influential, how important is that, and your role as a trade, working for the trade representative, U.S. trade representative in developing this plan. Can we put that together so we understand? Yeah, I think overall, because what APEC does is it's a pretty much an independent agency. Alternate leaders. Asia-Pacific economic cooperation. And the headquarters is located in Singapore right now. And they just changed the leadership. I believe the Secretary General is a gentleman from New Zealand, one of the trade ministers. We consider him as ambassador. He's a senior official there. So he's supposed to oversee that and hopefully see if we can come up with some kind of regional trade agreements. But APEC is so diversified. It's 21 countries. 21 countries. And you're actually contracted with APEC? No, I'm not contracted. I did the contract with the U.S. trade representative. More like I did my master plan. So I'm just, I was a trade delegate on this, when they had the negotiation in 19th round in Burnel, Darsamo. And I did a presentation on my APEC master plan as a trade delegate from the USTR's office. So that was one of my involvement. It was a long time, Russell. Yes, I've been, so I'm pretty much an advocate. And I like to make it work, but I want to make sure that United States and Hawaii benefits from this trade agreement. And we're such in the middle of the Pacific. We're an island here. And as you know, we are the gateway of Asia already. And we're the hub of Asia Pacific. We have to hold on to that. Exactly, exactly. And I think our future for our, you know, our next generation of kekis coming up well, as well, if we can maintain our economic growth, we need to get involved with the international trade and some of the issues. We have to be on the route. We have to be connected between the U.S. and Asia. And, you know, not only in that, but I think it helps from tourism as well. Even some of these investments, developments, real estate as well. You know, if you go from a military aspect with your U.S. Pacific command here during the RIMPAC exercise, we got all the APEC countries through the minister of defense to precipitate in Hawaii to bring peace within the region. So what do you say to the manufacturer in the Midwest who's, you know, Tita Tottering because he's in competition with China or, well, some member of that 12. And they're, you know, selling cheaper in the U.S. What do you say to him, you know, on the question of how, what he can do to survive? And what do you say to him to sell TPP to him? How can you make him happy? What would you say? Yeah, I would say, you know, TPP goes both ways, not only for exporting, but it goes for importing too. If that gentleman on the other side of the fence wants to do business with the United States, not only importing American goods there, we want them to invest in the U.S. soil as well. And hopefully maybe they can set up factories or they can renovate new buildings or start up new, you know, shopping malls or development or real estate development. You know, in terms of investment, and we've seen that happen with Japan, South Korea as well and Taiwan since the 1980s and 90s that we had that trade war with Japan in the early late 80s and 90s and Japan said, hey, man, we're going to start investing in the U.S. soil. And they start building factories here with the automobile industry, electronics firms are all over, you know, and so there are often factories in the United States. It strikes me that we could do TPP, but we would have to step up to new technology because our labor expenses are likely to be higher against some countries in the 12 or in Asia. But if we got really smart about the technology and rebuilt our factories and became the best in the world in terms of efficiency of factory production, then we'd have no problem being part of TPP. And we do swell that way, wouldn't we? Yeah, exactly. But you've got to look at two ways, Jay, if you're going to have efficient manufacturing production in the factory automation, because instead of using manual labor, you've got to use robotics or machinery to do the continuous production, flexible machine system kind of operation. So that might take less jobs in terms of white collar, I mean, the blue collar job industry with the union workers. So that's another concern too, you know, if you want to bring up a high tech, but with Donald Trump's elected, he's got to realize the working force with the labor. You know, I don't mind seeing some of these industrial products like we have our, you know, we have a stronghold for industrial like washing machine, dryers, some of these kitchen kind of appliances. I think we're leaders if we can manufacture that in the US, and even in our air condition units, anything that's heavy industry products. So to conclude, Donald Trump has made some real threats on TPP and it sounds like, you know, he's going to try to stop US membership in TPP. So there's camera one over there. Could you please talk to Donald Trump and see if you can change his mind. You have one minute to do this, okay? Okay, this message is to President-Elect Donald Trump. Congratulations for your presidency election. I know there's a lot of controversy right now going through with your election, your selection of your cabinet members, but and my concern is like what the ambassadors from the other countries are trying to persuade you as well. I know there's ambassadors, Maripuni from Singapore as well, ambassador from Australia, Joe Hockey has brought it up to your staff with your transition team that TPP just reconsider ratified in the Trans-Pacific Partnership. I think in the long term, if you realize consequence, we can make it work because TPP is going to be changing anyway. You know, if you set the terms and condition of the TPP, the members are going to eventually see they're going to meet periodically and as well, there's 12 members right now. We want to include other members in the APEC. So it's not static. Yeah, right. So there are no terms of the members. This is a dynamic arrangement that TPP is not static. I think it's an important point. I hope you listen to Russell. And hopefully, hopefully we can make the United States or Hawaii the headquarters for TPP. And that's going to bring us a tremendous amount of competitive edge to us in the U.S. creating jobs and made in USA products. Thank you, Russell. That's Russell Hanra. He's the APEC master plan author, part of the Office of the U.S. Trade Representative. We've been talking about TPP. We've been talking about Donald Trump's inclinations on it, and maybe he should reconsider what he has said so far. Thank you to our staff here, Zuri Bender, our senior production manager. Thank you to Robert McLean, our floor manager. This is Think Tech broadcasting every hour on the hour with things that you need to know about Hawaii and the world. Thanks for watching, and thank you, Russell. Thank you, Jay.