U.S. Secretary of State John Kerry participates in a meeting with nations’ leaders discussing the Trans-Pacific Partnership (TPP) in Bali, Indonesia
President Obama traveled to Beijing last Monday for a three-day visit as part of the Asia-Pacific Economic Cooperation (APEC) forum. For months, the prospect of finalizing the Trans-Pacific Partnership — a groundbreaking trade pact between the United States and eleven other Pacific Rim countries — had generated a great deal of anticipation around this year’s conference. However, as soon as it became clear that Congress would not grant fast-track negotiating authority to the president ahead of the meeting, any hope of a deal being reached in Beijing quickly faded away.
The fact that Congress failed to pass fast-track legislation — known as Trade Promotion Authority, or TPA — is not surprising. International trade is one of the last great “wedge” issues that reliably divide both Republicans and Democrats. Although there are plenty of dissenters in both parties, Republicans are much more likely to support free trade than Democrats. This intra-party divide has been a major source of frustration, particularly for President Obama. His top Democratic “allies” in Congress, (former) Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi, have both refused to sponsor Trade Promotion Authority after intense lobbying efforts by labor, environmental, and consumer-advocacy groups.
It’s safe to say that the Obama administration has seen better days. APEC has come and gone, and the president has little to show for it. There is a case to be made, however, that Obama’s failure to obtain TPA bodes quite well for his trade agenda, and for his presidential legacy in general.
Why is TPA Significant?
TPA authorizes the president to submit trade agreements to Congress for a straight up or down vote without the possibility of amendments or any other delaying tactics. It is, in essence, a prerequisite for any major free-trade agreement, alerting negotiators to what Congress will and will not support. More importantly, it assures negotiators from other countries that what they sign is what they get. Prime Minister Abe, for example, will refuse to open the Japanese market to U.S. agricultural products as long as there is a possibility that Congress can withdraw America’s pledge to reciprocate.
Obama’s failure to win Congress’ approval is not merely a result of polarization; it is a sign that something is wrong with the trade deal itself. Indeed, there are three flaws in the agreement that must be addressed as soon as possible — secrecy, corporatism, and the containment of China. All three jeopardize Obama’s chances of securing a deal that not only benefits Americans, but also enhances the country’s foreign relations.
Secrecy
In May 2012, Darrell Issa — Chairman of the House Oversight Committee — disclosed the administration’s secret position on intellectual property rights, after leaked drafts of the Trans-Pacific Partnership suggested that the White House was promoting Internet policies banned by Congress. This story speaks volumes about the level of secrecy surrounding TPP negotiations. For one, there is absurdly little communication between the White House and Capitol Hill, even though the onus is on the president to convince Congress that the deal is worthwhile. Moreover, members of Congress are willing to go to extraordinary lengths (shelving TPA or leaking documents, for instance) in order to ensure that they are not circumvented by the president.
According to Jagdish Bhagwati, a renowned expert on international trade, the procedures governing TPP negotiations are “ludicrous,” and complicate the issue of obtaining fast-track authority. Secrecy not only deters Democrats (who are already trade-averse); it also discourages Republicans, who are generally in favor of expanding free trade. The Republican Party, however, is not a monolith. Due to the secrecy of negotiations and a broader distrust of President Obama, several Tea Party groups have vehemently opposed the idea of granting TPA to the president. Judson Phillips, the founder of Tea Party Nation, sums it up neatly: “Does anyone really trust Barack Obama to deliver an international agreement that is good for America?” However extreme, Phillips makes an important point. If the president fails to encourage more transparency, he will eventually lose the little faith Congress has in him.
What’s equally troubling is the fact that the public has hardly raised any concerns about the trajectory of negotiations. According to a recent poll by the Chicago Council on Global Affairs, 63 percent of Americans are in favor of the TPP. This is an extraordinary figure, given that the details of the agreement have never been made public, either by the government or the press. The finding, then, is little more than a sign of ignorance, and another reason why the Obama administration must become more transparent. If the TPP is truly designed to benefit small- and medium-sized businesses, the president cannot ignore the need to inform the very people who own and operate these enterprises.
Corporatism
At a speech last year to the AFL-CIO, Massachusetts Senator Elizabeth Warren pulled no punches on the topic of international trade: “For big corporations, trade agreement time is like Christmas morning. They can get special gifts they could never pass through Congress out in public […] I’ve heard people actually say that [trade agreements] have to be secret because if the American people knew what was going on, they would be opposed [to them].”
It is important to note that Warren was giving a speech at an organization extremely opposed to the TPP, and that she herself is among the least likely in the Senate to support the president’s trade agenda. That being said, she makes an important point. It’s not too far from the truth to say that “Wall Street, pharmaceuticals, telecom, big polluters, and outsourcers are all salivating at the chance to rig the upcoming trade deal in their favor.” After all, trade is politics. A plethora of conflicting interests are jockeying for position at the negotiating table. The problem at hand is not that these interests exist; it’s the fact that they are treated differently.
For example, the United States Trade Representative (USTR) — the executive body in charge of negotiations — tends to over-represent corporate interests. This is evident in the way that the agency interacts with the private sector. Communication occurs through a network of “advisory committees,” which are organized into three levels. The first comprises a motley group of representatives from various industries and trade associations. The second level consists of a 23-member labor committee consisting of union presidents, along with a 19-member trade and environmental policy group — so far so good. The most important committees, however, occupy the third level. Here, there are 16 industry advisory committees, whose interests include pharmaceuticals, information and communications technologies, and steel, among others. There are no labor, environmental, or consumer representatives on any of these third-level committees.
At this rate, the likelihood that the TPP will serve the interests of ordinary Americans is low. While it may not harm them, it reinforces the notion that powerful interests not only exercise immense influence on the formation of trade policy, but also stand to gain the most from the government’s hard work.
Containing China
In an essay published in the most recent issue of Foreign Affairs, Michael Froman — the head of the USTR — makes his case for expanding international trade. He says: “In recent decades, leaders have come to see the economic clout that trade produces as more than merely a purse for military prowess: they now understand prosperity to be a principal means by which countries measure and exercise power.” In other words, trade functions as an arm of national security policy.
The “strategic logic of trade” is a major pillar of the Trans-Pacific Partnership. In late 2011, the Obama administration announced its “pivot to Asia,” which was seen as a change in U.S. foreign policy toward China. The “pivot” was, in effect, a euphemism for containment. As part of this policy, the U.S. has modernized and reinvigorated a number of defense treaties with China’s bilateral rivals. The commercial equivalent of this military containment is the Trans-Pacific Partnership, which includes twelve Pacific Rim countries, but not China.
The broader question, according to Henry Kissinger, is “whether China can work with us to create an international structure in which, perhaps for the first time in history, a rising state has been incorporated into an international system and strengthened peace and progress.” A better question to ask is whether we (the United States) are willing to help China assume its rightful place as a world leader in order to avoid serious conflict in the future. By excluding China from the TPP for conspicuously strategic purposes, we are saying that we are not.
Any proper agreement must contain a mechanism by which China can join the TPP. Moreover, it would be prudent to begin these preliminary negotiations with China as soon as possible, for the sake of goodwill if nothing else. As Michael Froman says, trade is an effective means of sending signals to allies and rivals. Presently, we are sending the wrong signal to China.
Looking Forward
So, how does Obama’s failure to obtain TPA bode well for his trade agenda, and for his presidential legacy in general? Think of TPA as a performance review. Although Obama did poorly, he still has the job, and a chance to rectify his prior mistakes on trade. For that, he can thank his friends (and enemies) on Capitol Hill. By withholding TPA from the president, Congress performed a massive service — it alerted the White House to the major flaws in the TPP that need to be addressed. Of course, with time fast running out, some will argue for a heavily expedited agreement for the sake of Obama’s legacy. However, if negotiators fail to address these three points, that legacy will be one to forget.
Demetrios Papageorgiou is studying Government and Economics in the College of Arts & Sciences at Cornell University.
Image Attribution: “Secretary Kerry Participates in the TPP Meeting with Nations’ Leaders” by East Asia and Pacific Media Hub U.S. Department of State, licensed under Public Domain
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