Obama, to sell trade pacts, will outline the benefits of globalization


President Barack Obama and Vice President Joe Biden, left, meet with U.S. Trade Representative Michael Froman (2nd from right), U.S. Secretary of Commerce Penny Pritzker (right) and other members of Obama's Cabinet, in this Dec. 16 photo. (MICHAEL REYNOLDS / POOL/EPA)
December 17, 2013

After months of international negotiations over two new trade treaties, the Obama administration is planning a major push to make the case that the agreements will put Americans to work at a decent wage and not further winnow the country’s manufacturing base.

European and U.S. negotiators are in Washington this week to continue work on an agreement that would mesh the world’s two largest economies more closely together. A second proposed treaty, the 12-nation Trans-Pacific Partnership (TPP), may be finished early next year, creating a trade zone covering 40 percent of world economic output and reaching from Chile to Japan.

The legislation needed for both agreements to clear Congress is expected to be introduced early in 2014, and the administration “is beginning to ramp up” for what could be the most extensive debate in more than a decade over the opportunities and risks of globalization, said an official who was not authorized to speak publicly about the administration’s strategy. “We will be mobilizing a whole administration effort” to build public and congressional support, the official said.

It is likely to be a controversial battle, forcing Obama to stump for policies that some of his strongest political allies — particularly organized labor and environmental groups — are likely to oppose. It is a debate set against the backdrop of 7 percent unemployment and concern about the loss of U.S. jobs that coincided with the rise of manufacturing power in countries such as China.

The measures under consideration would cover the bulk of global economic activity and reshape economic relations around the globe — setting the first rules for new industries that are thriving thanks to the Internet and renegotiating standards for old ones such as shoemaking.

Obama has focused much of his recent economic policy on boosting trade and global investment. He will now need to make the case that a broad new set of trade agreements will help U.S. workers and not merely shift jobs overseas or benefit a small clique of global corporations, as many trade skeptics argue has happened before.

These agreements “will set the rules of the game . . . in a way that levels the playing field and allows our workers to compete more effectively. If we don’t do that, the rules will be set by others,” U.S. Trade Representative Michael Froman said Tuesday. Chinese economic influence in Asia is a particular concern.

“At the end of the day, when the deal is done, we will be able to explain to everybody the balances that we struck and we will have support for the substance of it,” Froman said.

The countries involved range from long-standing U.S. industrial allies such as Germany and Japan to developing nations such as Vietnam and Malaysia, each posing its own challenges in completing the agreements and winning support in the United States.

A more open Japanese auto market could be of great benefit to U.S. manufacturers, for example, while the administration envisions Vietnam becoming a geopolitically important model of how a government-planned economy can transition to a system of stronger individual rights and more market-based rules for state-run enterprises.

Several major union leaders, as well as some corporate executives and civil society groups, have been skeptical that those benefits will ever be realized and argue that the TPP in particular is being negotiated with such little public disclosure that it is hard to judge the potential effects.

On Capitol Hill, there is ill will to overcome from the recent government shutdown and controversy over the rollout of the health-care law. Unemployment is high and a core group of Democrats feels that prior trade agreements — from Clinton-era treaties with Mexico and Canada to the decision to let China join the World Trade Organization — have helped hollow out America’s manufacturing middle class.

Democrats who favor trade — including important figures such as Rep. Sander M. Levin (D-Mich.) — want tougher guarantees in any upcoming treaty, including enforceable rules to ensure that major trading partners don’t unfairly manipulate the value of their currencies to gain advantage.

Civil society groups have raised a myriad of complaints, and the usually pro-trade GOP may splinter as members affiliated with the tea party movement argue against providing Obama with the same authority that presidents since Gerald R. Ford have been given to negotiate trade treaties without fear of congressional amendment.

In fact, the first battle will be over not a trade agreement but that “fast-track” authority. Fast-track rules let Congress set negotiating parameters for the administration but requires any subsequent treaty to receive a quick up-or-down vote without amendment — a way to assure negotiating partners that deals will not be returned with a long list of congressional changes to barter over.

The Republican and Democratic chairmen of the House Ways and Means Committee and the Senate Finance Committee are working on a trade promotion authority bill expected to be introduced early in 2014. That will be the forum to work out some of the major fears or complaints lawmakers have voiced over the TPP and the Transatlantic Trade and Investment Partnership with Europe.

Obama “needs to make clear this is important,” said Jake Colvin, a vice president of the National Foreign Trade Council, a business lobby. “Potentially there is a significant amount of support in the center among Democrats and Republicans to get it over the line.”

Free-trade agreements with South Korea, Colombia and Panama have been approved under Obama. But they originally dated to the Bush administration and were covered by fast-track laws that have since expired.

The last debate over trade promotion authority, in 2002, showed how narrow and politically fraught the margins can become: The measure was approved 215 to 212 in the House on a largely party-line vote.

The politics of trade since then have arguably become more intense. The U.S. sway over the world economic system was rocked by the financial crisis, and China’s rapid growth has led U.S. unions, politicians and others to insist that future trade agreements not only open markets but also ensure that U.S. workers are not left at a disadvantage.

New “21st century” issues such as the transfer of data across national borders, intellectual property rules for biotechnology, and appropriate regulations for state-owned enterprises are being negotiated for the first time, alongside age-old disputes over agriculture and whether cheese from somewhere other than Roquefort-sur-Soulzon smells just as sweet.

When the latest round of Pacific talks ended this month in Singapore, House Ways and Means Committee Chairman Dave Camp (R-Mich) said there had been “considerable bipartisan and bicameral progress” on a trade promotion bill.

He said he felt legislation could pass “early next year, if we have the administration’s active participation.”

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