Obama Renews Call for TPP Ratification in Final State of the Union Speech

14 January 2016

US President Barack Obama openly called upon domestic lawmakers to ratify the Trans-Pacific Partnership (TPP) Agreement, referring once more to the need for Washington to play a leading role in setting trade rules in Asia.

Speaking at a joint session of Congress on Tuesday evening for his final State of the Union address, the US president said that the 12-country trade pact would “open markets, and protect workers and the environment, and advance American leadership in Asia.”

“With TPP, China does not set the rules in that region, we do. We want to show our strength in this new century? Approve this agreement, give us the tools to enforce it. It’s the right thing to do,” Obama said.

The speech otherwise featured little on trade, besides a call upon lawmakers to vote to lift the US embargo on Cuba, building upon last year’s restoration of diplomatic relations and steps to increase travel and trade with the island nation.

No mention was made by Obama of either the ongoing negotiations with the EU for a Transatlantic Trade and Investment Partnership (TTIP) agreement, nor of his thoughts for the WTO’s future following the Nairobi ministerial conference last month. (See Bridges Daily Update #5, 19 December 2015

Even regarding the TPP, little detail on what the president aims to do – or what he would like to see from Congress during the ratification process – was included in the speech, and no reference was made as to the possible timing of a vote.

Obama did note, however, that the US has “recovered from the worst economic crisis in generations” and raised the issue of how to give people a “fair shot at opportunity and security in this new economy” as one of the questions he says the country must aim to address.

“Anyone claiming that America’s economy is in decline is peddling fiction,” he said on Tuesday. “What is true – and the reason that a lot of Americans feel anxious – is that the economy has been changing in profound ways, changes that started long before the Great Recession hit, changes that have not let up.”

February TPP signing

The State of the Union speech comes just weeks before leaders from the 12 TPP nations are set to meet in New Zealand on 4 February to sign the agreement.

The signing of the deal kicks off a two-year window for the original signatories to finish their domestic approval, legislative, and ratification processes. Should that timeline be met, the deal would enter into force within 60 days.

Otherwise, 60 days following the end of that two-year window the agreement will still enter into force as long as six of the signatories have notified the completion of domestic legal procedures, and that those six make up 85 percent of the group’s combined GDP under 2013 figures. Should that threshold not be met, the TPP will enter into force 60 days following whenever a minimum of six signatories making up 85 percent GDP is reached. (See Bridges Weekly, 12 November 2015)

The US is the largest economy of the Trans-Pacific Partnership members, with the 12-country group together making up 40 percent of global GDP. Negotiations for the proposed agreement were concluded in October 2015 following a ministerial-level meeting in the US city of Atlanta, Georgia. (See Bridges Weekly, 8 October 2015)

Election politics

This year’s address comes just weeks before the first presidential primary, scheduled for 1 February in the state of Iowa. The months ahead are set to be frenetic ones both in Washington and across the country, as presidential candidates vie first for their respective party’s nomination and then for the White House.

While the upcoming November presidential contest has been most in the spotlight, the stakes are also high for many US lawmakers, with the entire House of Representatives also up for re-election in November, as well as one-third of the Senate.

How those politics will affect TPP ratification, as well as other processes, remains an open question, particularly given the rancorous Washington trade debate in 2015 when lawmakers were discussing the renewal of Trade Promotion Authority. (See Bridges Weekly, 2 July 2015)

In recent weeks the pact has drawn the support of some key US business groups, such as the National Foreign Trade Council, the American Farm Bureau Federation, the Business Roundtable, and the US Chamber of Commerce.

The Chamber of Commerce, for example, has cited the results of a new World Bank report on the TPP’s implications, which found that the trade pact could boost the GDP of participating economies by an average of 1.1. percent by 2030, while increasing their trade by 11 percent. The report also found that, given the “positive spillovers” the TPP would have for other countries, the deal would only have a limited “detrimental impact” as a result of trade diversion and preference erosion for countries outside the agreement.

However, some TPP compromises made to clinch a final deal – such as the length of data exclusivity periods for biologic drugs,  which are those derived from a biological background rather than a chemical one – have drawn harsh words from key US lawmakers, such as Senator Orrin Hatch, a Republican of Utah, who has cited them as insufficient. (See Bridges Weekly, 22 October 2015)

Some legislators, such as Senate Majority Leader Mitch McConnell, a Republican from Kentucky, have reportedly urged for the TPP vote to wait until after the November 2016 general election – in other words, until the lame duck session between the election and when a new president and lawmakers take office in January 2017.

Climate change, other priorities

While the trade references in the speech were brief, one of the key themes of the president’s speech was on the importance of tackling the challenges of climate change and transitioning more quickly from “old, dirtier energy sources” to cleaner ones, suggesting that doing so would not only be good for the planet but also give a chance for US companies to play a leading role in the production and sale of “the energy of the future.”

Along with calling for energy sources to better reflect their actual cost to taxpayers, specifically by changing the management of coal and oil resources, Obama also noted that wind and solar power are becoming cheaper than “dirtier, conventional power,” along with creating new jobs.

The US president made multiple references in praise of the universal climate deal reached by nearly 200 nations in December during their annual UN meeting, which in 2015 was hosted by Paris, France. (See BioRes, 13 December 2015)

Addressing climate change – an issue that has been raised repeatedly by Obama during his years in office – was also linked to national security, one of the speech’s overarching themes, with the US president also raising the challenges posed in areas ranging from terrorism to economic security.

In these areas and many others, however, Obama warned that the tone of the political debate in Washington has moved away from compromise and, at times, away from reasoned discussions.

“The future we want, all of us want – opportunity and security for our families, a rising standard of living, a sustainable, peaceful planet for our kids – all that is within our reach. But it will only happen if we work together. It will only happen if we can have rational, constructive debates. It will only happen if we fix our politics,” said Obama toward the end of the speech.

The US president urged lawmakers to move past the “rancour and suspicion between the parties,” which he noted has worsened over the course of his presidency, while addressing the American people more broadly in urging them to change the existing system to one that “reflect[s] our better selves.”

ICTSD reporting; “Govt confirms plans to sign TPP in Auckland,” RADIO NEW ZEALAND, 13 January 2016; “Business leaders announce support for TPP,” THE HILL, 5 January 2016.

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