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Can the Trans-Pacific Partnership Survive 2014?

By Glenn W., Leaper – Mar 4, 2014 at 11:23AM

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The Obama administration must explain the Trans-Pacific Partnership to its base sooner rather than later.

Fast track to prosperity?

The Trans-Pacific Partnership (TPP), the pending free-trade agreement between the United States and 12 of its biggest commercial partners in the Asia-Pacific region potentially worth up to $80 billion to the U.S. annually, is a remarkable opportunity for U.S. foreign investment. It is also a pioneering fusion of a trade agreement with elements of U.S. foreign policy and domestic lawmaking, considering the range of legal and regulatory harmonization it encompasses and its import for the Obama administration's strategic 'pivot' to Asia-Pacific.

The treaty, which would reduce tariffs on 40% of U.S. trade, requires, however, so-called Congressional 'fast-track' authority, an up-or-down vote on the treaty, in order for the president to win difficult concessions from Pacific Rim countries on issues such as intellectual property and market access (for example, to force Japan to allow a higher market penetration for the American automotive industry than its current rate of 1%). The president's main problem is his own party.

Politics & timing

Democratic representatives on Capitol Hill last week nixed such a vote in the immediate future due to election year concerns. Already disinclined toward trade pacts, the democratic base has opposed this agreement in particular due to familiar concerns about environmental and labor protection, protecting U.S. industries, and perceptions that the agreement would exacerbate economic inequality. The president, who can count on some Republican votes to reauthorize his fast-track privileges, is therefore probably facing the prospect of holding off the vote for the next nine months, until after the midterms.

An uncertain post-November congressional make-up complicates the matter further, which is why the administration had hoped to pass the agreement by the TPP summit in Singapore late last year. Most analyses suggest that the GOP will almost certainly retain control of the House of Representatives and that the Senate will probably remain democratic – though only just (a Congressional-Executive Agreement like Fast-Track Authority requires a majority of both houses to pass). The TPP is an integral component of President Obama's envisioned dual economic and foreign policy legacy; the president can thus be expected to continue to push hard to obtain Fast-Track Authority.

The central challenges are 1) how he entices skittish congressional democrats and a restive, polarized party, and 2) timing: There is pressure on the U.S. to commit to the agreement as soon as possible if talks with partners this year are not to fail altogether or, at best, stall. If politics makes this all but impossible before November, the president is then faced with quasi-lame duck status and the difficulty of selling a trade agreement unpopular with democrats in the shadow of his successor as the 2016 presidential race heats up.

Old attitudes, new challenges

Where TPP, along with the Trans-Atlantic Trade and Investment Partnership with Europe, is this administration's answer to NAFTA, herein lies part of the problem for the democratic base. Many remain apprehensive about NAFTA due to loss of U.S. manufacturing jobs and the trade deficit with NAFTA partners and assume the TPP, given its scope and potential impact on domestic legislation, would severely exacerbate such conditions. How does the administration make its case while time is running out?

The obvious angle, as Vice President Biden argued to congressional democrats last week, is to suggest the benefits of counterbalancing China-which is not party to the TPP-and its economic dominance threatening the prospects of U.S. partners in the region, and therefore those for U.S. foreign investment. This iteration of economic integration with dedicated allies won't hold water with organized labor, but the administration owes its base a discourse on some of the best reasons the TPP is a better alternative to a pervasive ideology of economic isolationism. Among these:

1) Manufacturing jobs will continue being lost in an ever-more competitive global economy. Foregoing TPP will only put U.S. manufacturers at a negotiating disadvantage with the region of the world most favorable to their economic and political concerns. The best opportunities for labor and environmental protection remain in engaging natural U.S. allies in the Pacific Rim region with increasingly similar concerns within a treaty streamlining international regulation not possible within existing WTO mechanisms,

2) Intellectual property-intensive industries, according to the U.S. Chamber of Commerce, now account for "over 55 million American jobs, 74% of total U.S. exports and 48% of U.S. GDP." Considering the vast theft of U.S. Intellectual Property – often stemming from the Asia-Pacific region – IP should be considered as critical a contemporary issue as manufacturing was when NAFTA was agreed upon. A key provision of TPP is to implement a muscular IP protection that underwrites both the protection and creation of American jobs,

3) TPP would be a considerable boon to U.S. Small and Medium-Sized Enterprises. According to testimony by Brookings fellow Joshua Meltzer to the House Small Business Committee, "[i]n contrast with large businesses, SME's [would] benefit the most from... reduc[ing] trade barriers overseas, as their capacity to overcome these barriers by establishing subsidiaries in other countries is much more limited."

Do something, fast

Unfortunately, a recent national survey by Hart Research Associates and Chesapeake Beach Consulting found broad antipathy across the political spectrum to TPP (including from right-leaning conservatives), further reducing prospects for an effective sales pitch for Fast-Track Authority by the administration before November. Democrats in agreement with the administration, however, should begin making the case to their constituents sooner rather than later if the specter of collectivist isolationism and the party's prevailing anti-business stigma are not to loom uncontrollably large stretching into the battle for the next administration-one potentially deprived of one of its greatest economic and foreign policy assets in TPP.


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