US Trade Officials Prepare for a Post-Election Landscape on TPP

3 November 2016

With less than one week remaining until US voters go to the polls, officials both from the current Obama administration as well as from other Trans-Pacific Partnership (TPP) countries are ramping up their efforts to build support for ratifying the 12-country pact.

“The President [Barack Obama] very much wants Congress to act on TPP this year, and we are doing everything we can, across the administration, whole-of-government, whole-of-White House to maximise the likelihood of that happening,” said US Trade Representative Michael Froman on Tuesday at a Washington conference.

The US trade chief told CNBC in a separate interview that he held hope that Congress would be able to approve the deal, should top lawmakers choose to bring it forward following the election.

“If they bring it forward, I think we can get the votes there,” he told CNBC, referring to congressional leadership in both chambers.
However, whether Senate and House leaders will retreat from their stated positions that the TPP does not have the necessary votes to pass if brought to the floor remains to be seen. Substantive concerns raised by some US lawmakers, such as on the data protection periods for biologic drugs, are also expected to be hurdles in any attempts at ratification.

Election politics

In the year since TPP negotiations were concluded in Atlanta, Georgia, the process of moving the deal through the various steps needed for its enactment has been slow-going at best. The politics of the US election have largely been credited for hindering the ratification process in Washington, as the nominees from both major political parties have disavowed the accord. (See Bridges Weekly, 8 October 2015 and 29 September 2016)

The US general election is scheduled for Tuesday 8 November, with voters choosing who will serve in the White House once Obama concludes his second term in January. Also on the ballot is the entire House of Representatives and one-third of the Senate, together with various other state and local officials.

Republican candidate Donald Trump has repeatedly likened the Pacific Rim trade deal with an existing trade pact – the North American Free Trade Agreement (NAFTA) – which he has termed the “worst trade deal in history.” Democratic candidate Hillary Clinton, who previously championed the accord as Secretary of State, has said in recent months that the final version of the TPP does not meet the standards she had envisioned.

The election politics surrounding the TPP has put officials in the current administration in a difficult position as they try to secure the passage of a deal that has become increasingly unpopular both with the public and in political circles. Along the way, they have also had to encounter the various arguments raised against the deal, touting instead its potential to improve people’s lives and correct problems that have arisen from earlier accords.

This includes, for example, attempting to sever the link being made between NAFTA and TPP, or at least clarify how the two accords are manifestly different in content and scope.

“Junking the TPP actually means sticking with the status quo that NAFTA created – which means this trade agreement is our only real shot at bringing NAFTA up to code,” said Obama in response to written questions on website Quora about the NAFTA-TPP comparisons.

Japan moving on ratification?

Meanwhile, other TPP countries have been taking steps towards ratifying the accord, despite the uncertain prospects for the trade deal in Washington.
The lower house of the Japanese Diet had aimed to vote on the TPP this Friday, followed by deliberations next week in the legislature’s upper house. While the recent postponement of a committee vote in the lower chamber is now expected to slow down the process, the move is widely expected to pass if and when a vote takes place – meaning that the TPP’s second-largest economy will have ratified.

Under the TPP’s rules, signatories have an initial two-year window from when the deal was signed to complete their respective domestic procedures for ratification. Should all 12 not ratify in that timeframe, the trade agreement will enter into force only after meeting two thresholds. The first is that six countries will have completed their domestic procedures; the second is that those who have ratified make up 85 percent of the overall group’s combined GDP, under 2013 figures.

In other words, ratification by both the US and Japan is essential to meet the 85 percent GDP threshold.

Other TPP signatories are also taking legislative steps in this direction, including New Zealand. Australia is expected to see legislation introduced on the subject early next year.

The TPP’s members include Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Japan, Singapore, the United States, and Vietnam.

Global positioning, credibility

As the ratification efforts continue, TPP proponents have argued that the issue is more than just about opening new markets and enacting ground-breaking rules in areas such as labour and the environment, though both are essential elements of the deal’s potential.

Rather, they also say that it has become an issue of credibility, influence, and strategic positioning in the Asia-Pacific in a rapidly changing world – and that not approving the TPP would be a devastating blow on all of these fronts.

“If we were to see the TPP rejected, it would be a gigantic self-inflicted wound on our nation – a setback to our own interests in the region, where our credibility as a country on any agreement we’re trying to negotiate would be in doubt,” said US Secretary of State John Kerry in Chicago last week.

Other TPP leaders have issued similar warnings, including Singaporean Prime Minister Lee Hsien Loong on repeated occasions.

Speaking to Time Magazine, Lee affirmed that approving the TPP would be a sign that the US is “serious” and dedicated to deepening its relationships in the region.

“Now, let’s say you cannot deliver on the TPP. After you have gotten Vietnam to join, after you have gotten Japan to join, after Japanese Prime Minister Shinzo Abe has made very difficult arrangements on agriculture, cars, sugar, and dairy. Now you say, ‘I walk away, that I do not believe in this deal.’ How can anybody believe in you anymore?” said Lee.

Similar arguments have been raised in other major trade debates, including in the fraught process of getting all 28 EU member states on board to sign a new accord with Canada, which required round-the-clock negotiations and sparked fears that the EU’s larger trade agenda could be dealt a potentially crushing blow. (For more on the EU-Canada deal, see related story in this edition)

ICTSD reporting; “Not dead yet – TPP free trade deal could pass in lame duck Congress, US trade rep says,” CNBC, 1 November 2016; “Japan lower house to vote on TPP ratification bill on Friday,” NIKKEI ASIAN REVIEW, 1 November 2016; “Trans-Pacific Partnership Bill returns to Parliament,” NEWSHUB, 27 October 2016; “Singapore deputy PM warns on US retreat from Asia,” FINANCIAL TIMES, 24 October 2016; “PM Lee on TPP, US-China ties and jobs in Singapore,” TODAY ONLINE, 26 October 2016; “Australian Trade Minister Ciobo sets sights on FTAs,” NIKKEI ASIAN REVIEW, 26 October 2016; “Ruling coalition gives up trying to pass TPP-ratifying bill after minister’s gaffe,” THE JAPAN TIMES, 2 November 2016.

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