Lame-Duck Prospects Fading for Pacific Trade Pact

August 08, 2016


In an elec­tion defined by Don­ald Trump’s eth­no­cen­trism, there’s at least one thing that both his and Hil­lary Clin­ton’s cam­paigns agree on: They want to un­ravel the Trans-Pa­cific Part­ner­ship, the largest re­gion­al trade pact meant to tie closer to­geth­er the United States, Ja­pan, and 10 oth­er na­tions around the Pa­cific Rim. Over the protests of ma­jor U.S. busi­ness fed­er­a­tions and the Obama ad­min­is­tra­tion, the pres­id­en­tial can­did­ates ar­gue that the pact be­ne­fits oth­er coun­tries’ work­ers over our own.

[Alex Rogers| August 4, 2016 |National Journal]

The un­usu­al polit­ic­al al­li­ance between the Left and the Right—which stretches to run­ner-up Sens. Bernie Sanders and Ted Cruz—means that the agree­ment’s best chance through Con­gress is in the brief time after the elec­tions and be­fore either Clin­ton or Trump takes the oath of of­fice. And even then the pro­spects don’t look good.

Labor groups and their Demo­crat­ic al­lies in Con­gress see TPP as a de­marc­a­tion line in the United States’ ap­proach to trade. Rep. Sandy Lev­in, a key Demo­crat­ic crit­ic, is not only sure that a vote on TPP would fail, he thinks its down­fall has already ushered in a “new age.” He ar­gues that the ba­sic eco­nom­ic the­ory of com­par­at­ive ad­vant­age, one of the most im­port­ant con­cepts in in­ter­na­tion­al-trade the­ory, is an­ti­quated in a world of cur­rency ma­nip­u­la­tion, com­pet­i­tion with huge state-owned en­ter­prises, and coun­tries’ vary­ing stand­ards for col­lect­ive-bar­gain­ing rights.

“That old no­tion—whatever its jus­ti­fic­a­tion was a cen­tury or two ago—doesn’t work today,” he said. “This is a new age. That’s why you need to take a totally fresh view and re­view of the over­all trade policy.”

“I think we are fi­nally turn­ing the corner on the cur­rent free-trade mod­el,” adds Bill Samuel, the AFL-CIO’s dir­ect­or of gov­ern­ment af­fairs. “We want [the White House] to start over again and fo­cus on strength­en­ing man­u­fac­tur­ing and jobs in the U.S. first.”

Mean­while, many of those in sup­port of the deal won’t say wheth­er they ex­pect a vote this fall. The most de­press­ing sig­nals for TPP sup­port­ers have come from Sen­ate Ma­jor­ity Lead­er Mitch Mc­Con­nell and House Speak­er Paul Ry­an, both his­tor­ic sup­port­ers of free-trade deals who have thrown doubt on the deal’s out­look. Ry­an has con­sist­ently said he doesn’t think there are the votes for it, while Mc­Con­nell, just be­fore leav­ing for the sum­mer re­cess, said TPP’s chances for con­sid­er­a­tion this year were “pretty slim.”

In the weeks since, its chances haven’t got­ten much bet­ter. On Monday, six Re­pub­lic­an con­gress­men who sup­por­ted grant­ing Obama great­er trade au­thor­ity urged the pres­id­ent not to send TPP to Con­gress for a vote in the lame duck. Not­ing that three oth­er like-minded GOP mem­bers came out in op­pos­i­tion to the pact earli­er this year, the TPP op­pon­ents at the Com­mu­nic­a­tions Work­ers of Amer­ica look at the num­bers in the House and claim that that the agree­ment is “vir­tu­ally dead.”

One ma­jor reas­on why the pact’s fu­ture is murky is that all of the ad­min­is­tra­tion’s al­lies aren’t fully com­mit­ted. In par­tic­u­lar, it needs Sen. Or­rin Hatch, the Sen­ate Fin­ance Com­mit­tee chair­man who has aired his con­cerns over one of the last pro­vi­sions ne­go­ti­ated in the agree­ment con­cern­ing in­tel­lec­tu­al-prop­erty pro­tec­tions for phar­ma­ceut­ic­al com­pan­ies mak­ing bio­lo­gic drugs. While TPP sup­port­ers note that the ad­min­is­tra­tion has largely fixed oth­er dis­agree­ments with key groups, in­clud­ing those in the fin­an­cial-ser­vices and dairy-pro­duc­tion in­dus­tries, the ad­min­is­tra­tion will need to find a way for­ward to sat­is­fy Re­pub­lic­ans with ties to the phar­ma­ceut­ic­al in­dustry for Con­gress to rat­i­fy the deal.

“The clock is tick­ing,” said House Ways and Means Chair­man Kev­in Brady, a key Re­pub­lic­an back­er of the deal. “It’s im­port­ant that the White House pick up the pace if there is to be sup­port for ap­prov­ing or con­sid­er­ing it this year.”

Sup­port­ers of the pact press their case on more than just eco­nom­ic grounds; the pro­jec­ted be­ne­fits of TPP to the U.S., which largely has free mar­kets already, are small. Ac­cord­ing to the non­par­tis­an U.S. In­ter­na­tion­al Trade Com­mis­sion, the agree­ment would in­crease U.S. gross do­mest­ic product by .15 per­cent, or $42.7 bil­lion, by 2032, and em­ploy­ment by 128,000 full-time jobs. But it would set new labor, en­vir­on­ment­al, in­tel­lec­tu­al prop­erty, and oth­er rules, provide a lar­ger eco­nom­ic boost to more pro­tec­tion­ist coun­tries in­volved such as Vi­et­nam, and elim­in­ate more than 18,000 taxes on U.S. products, ac­cord­ing to the Obama ad­min­is­tra­tion. TPP pro­ponents also em­ploy a stra­tegic ar­gu­ment; eight former sec­ret­ar­ies of De­fense are in sup­port of the deal in part as a counter to China’s in­flu­ence in the re­gion.

“It should be rat­i­fied,” said John En­gler, the pres­id­ent of the Busi­ness Roundtable, an as­so­ci­ation of ma­jor U.S. cor­por­a­tions’ CEOs. “The fail­ure to do that would rep­res­ent a sig­ni­fic­ant loss in U.S. cred­ib­il­ity and prestige.”

“Clearly, it has sig­ni­fic­ant im­plic­a­tions in terms of our role as a lead­er in glob­al trade,” ad­ded En­gler, the former Re­pub­lic­an gov­ernor of Michigan. “The United States has stood for the pro­pos­i­tion of bring­ing bar­ri­ers down—and open­ing mar­kets is the way to help lift people out of poverty.”

TPP op­pon­ents like Lev­in ar­gue that the ITC re­port didn’t ad­equately take in­to ac­count how the pact would af­fect in­come in­equal­ity and wages. In the in­ter­view, Lev­in also re­jec­ted the stra­tegic ar­gu­ment, say­ing, “This is a trade agree­ment and it has to be ba­sic­ally judged in terms of its im­pact on the stand­ard of liv­ing in the United States of Amer­ica.”

The Re­pub­lic­an and Demo­crat­ic con­ven­tions were clear in­dic­at­ors that the parties have broadly em­braced the ar­gu­ments of TPP’s op­pon­ents, even as pub­licpolls show a ma­jor­ity of Amer­ic­ans broadly in fa­vor of the concept of free trade. They showed a marked polit­ic­al shift from even four years ago. In 2012, the GOP plat­form pledged that a Re­pub­lic­an pres­id­ent would com­plete TPP ne­go­ti­ations; in 2016, Trump de­cried the deal in his speech ac­cept­ing the party’s nom­in­a­tion. In 2012, then-Sec­ret­ary of State Hil­lary Clin­ton called TPP the “gold stand­ard” in trade agree­ments; in 2016, it was hard to miss the Demo­crat­ic crowd’s anti-TPP signs and heckles even while Pres­id­ent Obama was speak­ing.

Des­pite the clear ad­vant­age among anti-TPP ad­vocacy groups, neither side will let up in the com­ing weeks. Kev­in Mad­den, a strategist of the BRT-af­fil­i­ated group Trade Be­ne­fits Amer­ica, noted that they countered the on-stage rhet­or­ic at the con­ven­tions with di­git­al ad­vert­ising, rap­id-re­sponse me­dia out­reach, and geo-tar­get­ing at­tendees with pro-trade mes­sages. The group will con­tin­ue to con­nect its mem­bers and com­pan­ies to of­fi­cials, res­ult­ing in up to 70 let­ters to con­gress mem­bers a day. Samuel said the um­brella uni­on group is also fo­cused on its “fairly nar­row” tar­get list to make sure TPP is de­feated this year.

“There’s no oth­er scen­ario for this vote to hap­pen,” he said. “We’re not tak­ing our foot off the gas.”

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