Tuesday, June 16, 2015

Trans Pacific Partnership: Crashed and Burnt?

White House ineptitude, Congressional dysfunction, short-sighted labor unions sink pact

After seven years of bargaining, the landmark Trans-Pacific Partnership (TPP) trade pact was seemingly within reach, only to become the latest casualty of the American government’s crippling dysfunction.

This time it was President Obama’s own Democratic Party that did a number on him.  Labor unions had threatened to cut off campaign funding to any members who voted to authorize Obama to cut the deal.  Clearly many liberal Democrats were spooked.  House Minority Leader Nancy Pelosi could have whipped enough members into line to win a bare majority for the requested grant of “trade promotion authority.”  Infamously, she did not. Republican House Speaker John Boehner has committed to trying to save the trade pact, but with the opposition of so many Democrats, it appears a long shot at best.

By any rational standard, the TPP ought to have been a no-brainer for Washington.  Rightly touted as a “new-model trade agreement,” the all-but complete text requires adherent countries to go where no multilateral pact has yet ventured. Its scope is breathtaking. It would include 12 countries on both sides of the Pacific, from Chile to Vietnam and most others in between. For Vietnam and Japan especially, the ratification of the pact is crucial to the economic ambitions of the countries’ leaders, partly because it would redraw geopolitical relations in the Southeast Asian region through trade and lessen the dependency of ASEAN nations on China, helping to curb Chinese expansionism.

Japanese Prime Minister Shinzo Abe has committed to a dramatic overhaul of his country’s agriculture structure, which for decades has been a roadblock to trade negotiations, in order to get access to US auto parts and other markets. Vietnamese Prime Minister Nguyen Tan Dung has committed to embracing free labor unions, intellectual property rights and transparency in rules, regulations and practices. The governments of TPP signatory countries are committed to barring preferential treatment to state-owned enterprises or otherwise allow them to cause trade distortions, meaning a substantial reduction of the role of SOEs in Vietnam.

Chapters of the draft pact address not only conventional tariff-cutting, market-opening issues, but also raise the bar on workers’ protection and respect for intellectual property rights, do away with preferential treatment of state-owned companies, and widen coverage to include trade in services.  All of this is to be enforced by a robust dispute settlement system.  These are provisions that US trade policymakers have strained to achieve for three decades, not so long ago with solid backing by both business and labor.

Any good agreement is a win-win proposition for all adherents, and so the TPP would be.  However, the unholy coalition of liberal Democrats and conservative Republicans who voted down trade promotion authority for the Obama administration chose to dwell on the prospective erosion of low-tech jobs rather than consider the TPP’s potential to supercharge an American industrial renaissance that’s already well-launched.  That same coalition evidently could care less about the proposed pact’s positive impact on relations with like-minded friends and allies around the Pacific Rim.

In the weeks leading up to the pivotal vote in the lower house of the American Congress, the TPP was pilloried as a secret trade deal that would drive down American wages, cost American jobs and erode America’s manufacturing base. Even the Nobel economist Joseph Stiglitz swelled a chorus of opposition to provisions that, it was claimed, would simultaneously drive up the price of medicines and lower their availability. 

Vietnam, the least developed of the 12 nations that have negotiated the TPP, was routinely held up as a horrid example, a sweatshop economy against which US workers should never be “forced to compete.”   

The Obama Administration has been regularly savaged by a Republican Party whose Congressional leadership has shown little to no interest in crafting constructive, bi-partisan legislation.  And, if truth be told, Obama’s been consistently inept in the role of Leader of all the People.  Now Democrat members as well, their eyes also on the late 2016 elections, seem to have few to no qualms over shafting a lame-duck President.

Perhaps it’s just Obama and the feckless bunch who serve him that are the root of gridlock in Washington on a host of issues both domestic and foreign.  It seems more likely, however, and much more disturbing, that the 21st century has ushered in an existential crisis for America’s hitherto durable political system.

The TPP is on life support in Washington, but it’s not yet quite dead.  Cooler heads could still engineer another vote to give Obama the negotiating authority he has sought.  Don’t bet on it, though.

David Brown is a retired US diplomat with extensive experience in Southeast Asia


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