The United States’ reputation in Asia was suffering under the weight of economic and political turmoil at home when Secretary of State Hillary Rodham Clinton arrived in Hong Kong in the summer of 2011 to reassure American business executives that the future was brighter.
Back in Washington, President Obama was locked in a budget dispute with Congress that would ultimately damage the nation’s credit rating. But in remarks to the American Chamber of Commerce, Clinton painted a robust vision of U.S. economic leadership, anchored by an emerging free-trade deal that “will bring together economies from across the Pacific.”
The goal of the Trans-Pacific Partnership, she explained, was to “create a new high standard for multilateral free trade,” a pact that would cement the United States’ standing in the world’s fastest-growing region.
Four years later, with Obama making a desperate final push to complete that 12-nation pact, his former partner and most effective global advocate for the deal has gone quiet. As the president has scoured Capitol Hill for elusive Democratic support in recent weeks, Clinton has said virtually nothing about the TPP, other than to point out areas of the deal with which she has concerns.
Clinton’s silence on trade, coming at the worst possible time for Obama, dovetails with her transformation into a presidential candidate eager to align herself more squarely with the liberal wing of her party. In other areas in which Clinton has moved to the left — such as immigration reform and gay marriage — White House aides have been delighted that she has forcefully embraced the president’s governing record.
But on trade, Clinton’s hedge has left Obama without political cover in his increasingly bitter feud with Sen. Elizabeth Warren (D-Mass.) and other progressives, who have fiercely opposed the pact as a boondoggle for big business. On Tuesday, a bill to grant Obama “fast track” trade authority failed to clear a procedural hurdle in the Senate, with only one Democrat voting in favor of it. Republican leaders have vowed to try again, but it was an embarrassment for the president.
“One of the biggest proponents of the TPP in the administration now, as a candidate, picking on a couple of technical issues just looks like pure politicking,” Ernest Bower, a Southeast Asia expert at the Center for Strategic and International Studies, said of Clinton.
White House aides have refused to criticize Clinton for remaining on the sidelines, noting that the trade pact has undergone changes since she departed more than two years ago. But she has been mocked by her political rivals on both sides of the aisle for her refusal to take a clear position.
“She can’t sit on the sidelines and let the president swing in the wind here,” House Speaker John A. Boehner (R-Ohio) said on “Meet the Press” last week.
Clinton’s campaign pointed to a statement from three weeks ago, in which her spokesman said any trade pact must “raise wages and create more good jobs at home” and strengthen national security. Clinton reiterated those criteria a few days later during an appearance in New Hampshire, her only public comments on the trade deal since launching her campaign.
In many ways, the politics for Clinton are playing out in a fashion similar to 2008, when both she and Obama, competing for support in Rust Belt states during the Democratic primary, distanced themselves from the 1993 North American Free Trade Agreement, signed by President Bill Clinton.
Longtime allies described Hillary Clinton as generally less inclined to support large, multilateral trade deals than her husband was. As a senator, she voted against the Central American Free Trade Agreement in 2005, as did Obama, then also a senator.
“Some people are generally pro-trade or anti-trade. She’s case-by-case on trade,” said Gene Sperling, director of the National Economic Council in both the Clinton and Obama administrations.
With manufacturing-heavy Iowa holding the first-in-the-nation caucuses — which she lost to Obama seven years ago — Clinton would be foolish to actively stump in favor of the president’s trade initiative, allies said.
But this time, the political calculus is complicated by her legacy as the nation’s top diplomat.
Foreign policy analysts have pointed to the Obama administration’s bid to shift U.S. attention and resources toward Asia to counter China as potentially one of Clinton’s most significant achievements as secretary of state.
From the start of her tenure, Clinton made Asia a priority; her first trip in office was a swing through Japan, Indonesia, South Korea and China. Early on, Clinton and her top aides endorsed the TPP to balance the Pentagon’s military buildup in the Asia Pacific region.
Clinton’s team helped elevate the trade pact as a pillar of what Clinton later described, in a Foreign Policy magazine cover story in October 2011, as the administration’s “pivot” to Asia.
“Clearly, we all saw this as strategic,” said James Keith, the U.S. ambassador to Malaysia from 2007 to 2010. Before the administration publicly unveiled its Asia strategy, “there was lots of talk of having to add meat to the bones, not just on security but on economics, too.”
Yet a primary concern Clinton has raised about the TPP after leaving office did not register alarms inside the State Department during her tenure.
In 2009, the agency oversaw a review of a component of U.S. trade policy, appointing a panel of business officials, labor leaders and academics to review the language in the United States’ “model bilateral investment treaty.” That treaty is used by U.S. negotiators in most trade deals.
During the review, which lasted six months, one of the primary disagreements centered on the standard inclusion of a dispute settlement mechanism that allows corporations to sue nations over policies that damage their profits. Under the provision, the cases are heard by an international tribunal that rules outside of domestic legal systems.
To the chagrin of the labor representatives, the dispute mechanism provision remained intact during the State Department review after the business representatives on the panel fiercely defended it.
“I had the feeling that we were a box that was just going to be checked off,” said Kevin P. Gallagher, an associate professor at Boston University who was on the panel. “It was a multi-stakeholder dialogue in which we did not agree with each other, so they just go with the old model.”
Warren has made this arrangement — formally known as “investor-state dispute settlement” — a chief part of her objections to the TPP. She has argued that the mechanism potentially exposes U.S. taxpayers to massive monetary damages outside of U.S. courts if corporations sue the government over new laws to protect the environment or workers.
Obama has called her arguments “dishonest,” noting that the United States has been sued just 13 times over the provision in previous trade pacts and never lost a case.
In her book “Hard Choices,” published last year, Clinton raised concerns that echo Warren’s. She cited a case in which the Asia division of tobacco giant Philip Morris sued Australia over a “plain packaging” law, employing the dispute settlement provisions in an Australia-Hong Kong trade pact.
“We should avoid some of the provisions sought by business interests,” Clinton wrote.
Robert Hormats, a high-ranking State Department official from 2009 to 2013, oversaw the trade policy review and emphasized that Clinton was not involved in those types of granular policy discussions.
By the time she left office, the general framework for the TPP was already in place. During a speech in Australia in November 2012, Clinton referred to the pact as “the gold standard in trade agreements.”
The risk now for Clinton is that if the trade deal fails, the Obama administration’s “Asia pivot” strategy risks being viewed as more rhetorical than tangible, foreign policy analysts said, which could lead to a reevaluation of her legacy at the State Department.
“We saw it as a chance to make a difference,” Hormats said, reflecting on the Clinton team’s early embrace of the TPP. He added, “The weakness of the American economy in the financial crisis led many to assume the U.S. was backing off and incapacitated.”
After he and other Clinton aides made trips to China in 2009, Hormats said, “we came back more resolute than ever that we had to do this.”