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TPP may see little support, no matter how congressional races end up

November 03, 2016

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[Matt Johnson| November 02, 2016 |Politics in Minnesota]

If Minnesota importers, exporters, ports and others involved in international trade benefit or suffer from either of two international trade treaties currently under consideration, Minnesota’s congressional delegation may factor little in the praise or blame.

Two trade deals — the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership — have little support among the 16 major-party candidates running to win election to Minnesota’s seats in the U.S. House of Representatives. Only three say they would vote to ratify the completed trans-Pacific treaty, known as TPP, and only one of those supporters is an incumbent. Ten of the candidates oppose the treaty and three are undecided on the issue.

The trans-Atlantic pact, known as T-TIP, has few commitments on either side. It is still being negotiated between the U.S. and the European Union. Details of those negotiations have not been made public.

TPP might come before current members of Congress for a ratification vote. President Barack Obama wants to put the treaty up for a vote before he leaves office. It may get it, said U.S. Rep. Kevin Brady, R-Texas, chairman of the Ways and Means Committee in the U.S. House of Representatives. A measure to ratify must pass out of the committee before the House can vote on it. That could happen, provided the White House builds more protection for U.S. intellectual property into the treaty.

“The short answer is ‘It depends,’” Brady said in a recent interview.

TPP is being touted by Obama’s administration and the U.S. Department of Commerce as beneficial to the U.S. economy. A fact sheet compiled by the department claims that tariff duties that increase the prices of U.S. goods overseas will be largely eliminated under the treaty. In Minnesota, 50 percent of all the state’s exports go to the other 11 Pacific Rim nations that have signed onto the treaty.

The Pacific trade deal has been waiting for a ratification vote in Congress since it was signed in February. It has Obama’s support, but presidential candidates Hillary Clinton and Donald Trump have said they oppose the deal. That has contributed to what Brady termed the “anti-trade environment” legislators are seeing throughout the nation.

That sentiment is pronounced in this year’s congressional races. Of the major-party candidates running for Minnesota’s congressional seats, 10 outright oppose TPP. Eighth District Rep. Rick Nolan, a Democrat, sees the treaty as a threat to the nation’s economy.

“The proposed Trans-Pacific Partnership is a terrible idea — an unmitigated disaster of historic proportion that would cost us millions of jobs, trillions of dollars in wages and taxes and quite possibly our economic independence,” he wrote in an email.

Candidates opposing TPP say it will increase the U.S. trade deficit with other Pacific Rim nations, that it endangers U.S. intellectual property, and that it will pull industry and production off shore. Stewart Mills, a Republican running against Nolan, is in one of several races where party affiliation does not sway position on TPP. He, too, opposes it.

“There’s no question that free trade leads to economic growth, but too often our trade deals are lopsided giveaways to our so-called trading partners,” he said in a statement.

How the candidates line up on TPP comes down to whom they represent, said Robert Kudrle, the Orville and Jane Freeman chair of international trade and investment policy at the Humphrey School of Public Affairs at the University of Minnesota. Until recently, Republicans could generally be counted on to support trade deals, he said. With TPP and T-TIP, potential downsides including job losses in the U.S. have been widely publicized and are well-known to candidates and the people who will elect them.

“I think it’s almost a district-by-district thing,” Kudrle said. “The candidates really do matter.”

Still, TPP has some die-hard supporters. Third District Rep. Erik Paulsen has boosted the treaty and serves on the T-TIP caucus in the U.S. House. The Eden Prairie Republican held a round-table trade discussion in Bloomington in July aimed at putting a positive spin on a conversation around TPP and T-TIP he felt had gone unduly negative.

“Despite the rhetoric going on around trade today, the benefits of trade to Minnesota have never been greater and more important than what I’m advocating and pushing for right now,” Paulsen said at the July event.

His opponent, DFL candidate Terri Bonoff, is also a TPP supporter. She is the only Democrat in the race to favor the pact.

“My value statement first is that I support free and fair trade,” Bonoff said in an interview. “I’m a pro-business, pro-growth Democrat.”

If the TPP is ratified by the current or the next Congress, some trade organizations expect it to boost Minnesota business. The state exported $10.6 billion in goods to TPP nations in 2014, according to the International Trade Administration, an arm of the U.S. Department of Commerce. Companies involved in that trade numbered over 4,800 in 2013.

A position paper released by the trade administration extolls the elimination of foreign import taxes on U.S. goods. Without the treaty, products including machinery, high-tech instruments and health products carry tariffs of 25 to 59 percent, making their pricing less competitive in the nations that import them.

But among those directly involved with foreign trade, big gains from the treaty are uncertain.

Deborah DeLuca, the government and environmental affairs director for the Duluth Seaway Port Authority, said in an email that TPP’s potential effect overall trade traffic is murky. Duluth’s port does expect to see freight activity grow by 45 percent by 2045 from 2012 levels, but what part of that could be due to new trade treaties is difficult to predict.

“They may have marginal effects on freight movement through our port, but it is almost impossible to predict the direction of these effects,” DeLuca wrote.

Rep. Brady said that despite the anti-trade sentiment among Minnesota’s congressional candidates, he believes TPP will be ratified.


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