The question about the TPP — the Trans-Pacific Partnership, President Obama’s signature trade agreement — is whether it has already gone to the political morgue or whether it’s still in intensive care. Both Hillary Clinton and Donald Trump oppose the agreement, while the president has urged ratification. With Obama’s term ending and his already-modest influence eroding by the day, the TPP seems dead.
But it may still be in intensive care.
In a speech to the Peterson Institute for International Economics, a Washington think tank, Rep. Kevin Brady (R-Tex.), the chairman of the House Ways and Means Committee whose jurisdiction includes trade agreements, said that the TPP could still be ratified in the lame-duck session after the election and before a new Congress takes office.
Brady gave two main reasons to approve the TPP.
The first is geopolitical: It would maintain and enhance U.S. influence in the Asia-Pacific region and act as a counterweight to China’s growing economic and political power.
As Obama has often argued, the TPP would give the United States a major role in regulating global commerce in the 21st century. The trade agreement codifies rules on “intellectual property” (patents, copyrights), data flows and state-owned firms, among other things. Ratification of the TPP would fortify Asian confidence that the United States intends to remain a Pacific power. Rejection would sow doubts.
The second reason is economic: Asia remains a fast-growing region. The TPP would eliminate most tariffs among the 12 member countries, aiding U.S. exporters in these markets. The advantage may be particularly important in services (tourism, consulting, finance and engineering), where U.S. firms are especially strong. In 2015, the United States had a $762 billion deficit in goods trade (machinery, steel, medical equipment) and a $262 billion surplus in services trade, leaving an overall deficit of $500 billion.
According to the Peterson Institute, the 12 countries in the TPP accounted for about 36 percent of the world economy and 24 percent of global trade in 2014. The biggest countries ranked by their economies are the United States, Japan, Canada, Australia and Mexico. The other countries are Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. Other countries — say, South Korea and Indonesia — might someday join, perhaps even China.
Still, anti-trade sentiment is pervasive in the campaign. Why doesn’t Brady dismiss the TPP’s prospects as bleak?
“People change once they get into office,” he says. Translation: The campaign’s anti-trade and anti-globalization rhetoric might recede before the realities of governing. Although Brady didn’t say so, one implication is that a victorious Clinton might put up only token opposition to the TPP, both because the case for approval is strong and because she might feel obligated to Obama for his political support.
Even with this, getting a deal would be difficult. Brady indicated that there are some details to the TPP that require further explanation to members of Congress or renegotiation. These include rules on drug pricing, data storage and tobacco products, according to a spokesperson for Brady.
In addition, with many Democrats adamantly opposed to the TPP, Obama would need to rely heavily on Republicans to approve the agreement. Unless the president can round up enough Democratic votes to ensure victory, it’s unlikely that Republicans would even allow the agreement to be taken up.
“We are running out of time,” Brady told the Peterson audience. The TPP may yet wind up in the political morgue.
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