Trump the TPP!
Remember those discussions you had at college with Marxists in which the United States cunningly constructs free trade agreements to exploit developing countries and the world? What happens next will surprise you. (Sorry, can’t help it.) Because the U.S. is having trouble passing a free trade agreement.
There is a gigantic trade agreement for countries in the Pacific Rim, called the Trans-Pacific Partnership. Members include Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the U.S. Agreement was reached on the provisions by October 5 last year, and the finalized proposal was signed in February 4 this year.
Its ratification is pending in U.S. Congress because it will probably become the biggest casualty of the changing pro-trade coalition in America.
Back in the old days when the privilege of straight, white men went uncriticized… Wait. That’s for another piece. Back in the old days when American politics weren’t so polarized, passing a trade deal in Congress was pretty straightforward. The President would ask Congress to ratify the agreement. Then, with support mainly coming from pro-trade House Republican members and some successfully-persuaded Democrats, the deal would be ratified.
With that logic, TPP should have been ratified by now. Both chambers were controlled by traditionally pro-trade Republicans. Even though the president is a Democrat, there should have been a middle ground for the deal to pass. But socialist Kenyan Obama is too reviled by the Party of Abraham Lincoln. And Republican voters have grown tired of free trade, while Democrats haven’t reflected their base warming towards globalization.
So will TPP be ratified? There are two scenarios of TPP passing.
Scenario 1: Obama actually succeeds before stepping down.
With his executive actions and regulatory prerogative, the Obama administration has been relatively active than the usual second-term president with an opposition-controlled Congress is. Indeed, it has notified Congress that it will send a bill to be ratified, possibly in the lame duck session after Election Day.
It’s not an impossible feat for Obama to have TPP ratified before stepping down. Yet, it is a tall order. So far, the actual plan by Obama to convince Congress is to simply sit down and talk about the “actual facts”. Not exactly an encouraging plan when even the presidential candidate from his own party has gone publicly against it. I wouldn’t bet my money on it, but hey, who knows.
Scenario 2: After winning the presidency, Hillary pushes for ratification with some revisions.
Yes, Hillary has come out against the deal. “I oppose it now, I’ll oppose it after the election, and I’ll oppose it as president,” she said. But remember what Obama and NAFTA? He would renegotiate it, he said during the election. He didn’t do it, after the election. And he didn’t either as president.
My assumption is that Hillary herself is personally for the TPP. Her public opposition is due to pressure from Sanders during the primary. As a former Secretary of State, she doesn’t need the Singapore Prime Minister to remind her of the pact’s strategic necessity. And the recent appointment to her transition team seems to confirm there’s more than meets the eye in her TPP’s public opposition.
How will Hillary Clinton go about this if she wins? (And most polls say she will.) Probably the same way Bill did with NAFTA. The North American Free Trade Agreement was originally negotiated by George H. W. Bush since 1990. But he couldn’t gather enough Congressional approval and his fast track expired. (Without fast track, Congress has to approve a trade agreement per each chapter. A nightmare scenario.)
So, it was up to his successor, Bill Clinton, to do the job. After two supplemental agreements (meaning, cosmetic) on labor and environment, he did it. With blood, sweat, and tears.
That is what I think Hillary Clinton will do if she wins. She will ask TPP countries to come back to the negotiating table to agree on either side agreements or additional provisions. The side agreements will be cosmetic; not changing the overall substance. They will most likely be on labor, environment, and intellectual property rights since she will need something to sell to Democrats. The additional provisions might be in the form of bilateral protocols. Say, with Japan or Vietnam, to satisfy specific agricultural and labor demands of Congress.
Needless to say, America ratifying the TPP is crucial. Besides the simple matter of the agreement entering into force, many countries joined TPP lured by the promise of more access to American markets. Without America, the cost-and-benefit calculation of TPP will change.
Another aspect is credibility. TPP is the economic arm of the so-called U.S. rebalancing to Asia, its attempt to craft the trade and commercial rules in the region. On the threat to U.S. credibility in the eyes of its Asian partners should it fail to deliver on TPP, let me outsource this to Singapore PM Lee Hsien Loong:
“In terms of America’s engagement in the region, you have put your reputation on the line… Mr. Abe came through and decided to commit. Why? Because he wants to help. He wants his country to benefit and to open up its markets… And you don’t do this… It hurts Mr. Abe is one thing. But it hurts your relationship with Japan, your security agreements with Japan. And the Japanese living in an uncertain world, depending on an American nuclear umbrella, will have to say: on trade, the Americans could not follow through; if it’s life and death, whom do I have to depend on? It’s an absolutely serious calculation, which will not be said openly, but I have no doubt will be thought.”
Interesting times, eh?
P.S. What about Indonesia? If TPP enters into force and Indonesia doesn’t join, as I explained, there will be costs to Indonesia. I did a little explainer on what TPP is to an Indonesian audience (in Indonesian, of course). I’m also currently involved in a study to further learn the benefits and costs of Indonesia participating in TPP.
Photo courtesy of Associated Press.