Next week, President Obama is going to Asia, where he’ll talk up a proposed deal to increase U.S. trade with that region.
If he succeeds, he could open up huge new markets for U.S. farmers and manufactures, strengthen U.S. influence in Asia and set a path to greater prosperity.
At least, that’s what the White House says.
Critics say that cheery outlook is all wrong. They believe the Trans-Pacific Partnership would lead to environmental harm, more expensive prescription drugs and a less open Internet. Worst of all, the deal would have a “devastating impact” on U.S. jobs, Rep. Rosa DeLauro, D-Conn., says.
Everyone agrees on this: The TPP would be a big deal.
Such a trade pact would pull together the United States, Japan, Australia and nine other countries whose collective gross domestic product accounts for 40 percent of all the goods and services produced in the world. The deal would influence geopolitics, the economy and the future of global trade.
Could something that momentous really get approved in the Age of Gridlock? Why are critics and supporters so riled up — and far apart?
Let’s break it down.
WHAT? The agreement would create a tariff-free trade zone where partners could enjoy much closer economic ties. For example, Japan could sell cars in this country without facing the current 2.5 percent tariff and U.S. farmers could sell lots of chickens in Asia. Everything from Washington state apples to Australian zucchini could be affected.
WHO? The TPP would include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. And here’s the big thing: the partnership does not include China. By pulling together the economic powerhouses of North America with Japan, the agreement would create an enormous counterweight to China’s rising economic power.
WHY? Supporters say the pact would advance U.S. geopolitical aims by reminding smaller Asian nations that China is not the only attractive business partner.
Moreover, it would help U.S. companies expand, supporters argue. Currently, U.S. exports are limited because “a typical Southeast Asian country imposes tariffs that are five times higher than the U.S. average, while its duties on agricultural products soar into the triple digits,” the U.S. Chamber of Commerce says. The TPP would eliminate such barriers.
Opponents say the pact would hurt U.S. workers.
“TPP would force Americans to compete against workers from nations such as Vietnam, where the minimum wage is $2.75 per day,” DeLauro said on a press call this week. “It threatens to roll back financial regulations, environmental standards, and U.S. laws that protect the safety of drugs, and food and the toys we give to our kids.”
WHERE ARE WE? Many issues have been settled, but several sticking points remain. For example, Japan has been insisting on keeping tariffs high on rice imports and the U.S. has been trying to delay removal of tariffs on Japanese auto imports.
Formal negotiations kicked off in 2010, with the work heating up one year ago when Japan officially joined in.
The White House originally had hoped that Obama’s trip to Tokyo and other Asian capitals would yield a big announcement about TPP. But the tour, which begins Wednesday, now looks less promising. Most analysts say it seems unlikely Obama will nail down even a broad agreement in principle, let alone a detailed pact.
HOW CAN THEY MOVE FORWARD? One important step would be for Congress to renew “fast-track authority,” which expired in 2007. That authority sets up a legislative process wherein Congress can hold only yes-or-no votes on trade pacts, with no amendments.
Presidents always want such authority, saying they cannot negotiate trade deals only to have Congress tack on amendments after the fact. If all 12 countries in the TPP were to do that, the process might never end because the agreement would keep changing with each amendment in each country.
But in January, Senate Majority Leader Harry Reid, D-Nevada, said he opposes renewal of fast-track authority and added that “everyone would be well-advised just not to push this right now.”
Some members of Congress have complained that they don’t even know what might be right or wrong with the deal because negotiations are being done behind closed doors.
For example, Sen. Ron Wyden, D-Ore., told the Senate that “the majority of Congress is being kept in the dark as to the substance of the TPP negotiations, while representatives of U.S. corporations — like Halliburton, Chevron, PHRMA, Comcast, and the Motion Picture Association of America — are being consulted and made privy to details of the agreement.”
PROSPECTS? Obama has a tough battle ahead, but says he is hopeful about winning over Democrats. He says any final agreement would actually “raise the bar” for workers.
In his State of the Union address, Obama promised to support expanded trade that will “protect our workers, protect our environment and open new markets to new goods stamped ‘Made in the USA.’ ”