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Is the Trans-Pacific Partnership Agreement Possible?
Noted among the omissions in President Obama’s 2012 State of the Union address was the absence of the once highly-promoted Trans-Pacific Partnership (TPP) trade agreement. “Increasing American Exports, Supporting American Jobs” is its motto, the latter half of which is a political sop to union backers, since increasing exports is part and parcel to creating and – (gulp) saving – jobs. This will not be one of those old-fangled treaties, designed to increase the opportunities for American producers to sell their wares abroad. That is much too provincial an objective. No, with this free trade agreement (FTA) , we will settle the family business in Asia, per the US Trade Ambassador's office:
• Core issues traditionally included in trade agreements, including industrial goods, agriculture, and textiles as well as rules on intellectual property, technical barriers to trade, labor, and environment.
• Cross-cutting issues not previously in trade agreements, such as making the regulatory systems of TPP countries more compatible so U.S. companies can operate more seamlessly in TPP markets, and helping innovative, job-creating small- and medium-sized enterprises participate more actively in international trade.
• New emerging trade issues such as addressing trade and investment in innovative products and services, including digital technologies, and ensuring state-owned enterprises compete fairly with private companies and do not distort competition in ways that put U.S. companies and workers at a disadvantage.
These framework objectives have yet to grow teeth, so I will refrain from airing my suspicions. The point is that this is supposed to be a new breed of trade pact, as the president stated when meeting with leaders of participating countries:
In a larger sense, the TPP has the potential to be a model not only for the Asia Pacific but for future trade agreements. It addresses a whole range of issues not covered by past agreements, including market regulations and how we can make them more compatible, creating opportunities for small and medium-sized businesses in the growing global marketplace. It will include high standards to protect workers’ rights and the environment.
An agreement with such ambitious implications should definitely be front and center in the president’s annual message. That it was not is odd, if only to my amateur political antennae. I wonder if pushback from potential trading partners – fearing Obama’s vision for the pact – inhibited him. Alternately, perhaps the Richard Trumkas – and other unionists that occupy the presidential soul – are calling in their chits, after suffering the passage of three FTAs in 2011. The first possibility is understandable, if unpleasant; the second, expected but disturbing nonetheless.
The countries so far party to the TPP are the US, Australia, New Zealand, Malaysia, Brunei, Singapore, Vietnam, Chile and Peru. Canada, Japan and an iffy China are potential partners, as well. The majority of these are probably less interested in “socially responsible” trading than are the American negotiators. Many either are or would like to be recipients of outsourced American jobs. Those that subsidize their industries will be hard-pressed to divest in order to make trade fairer for the US, especially since the latter is not spotless in terms of subsidies. I can only imagine that they would want some very sweet carrots before coughing up any concessions.
On the domestic front, war was declared on this prospective agreement by unions and progressive groups early on. When the pact leaders convened in Chicago in September of 2011, they were met by protests from labor, liberal clergy, and other lefty activists like Ben Cohen, of Ben & Jerry’s fame. Said Cohen:
We want an agreement that puts people first. We want an agreement that makes global trade an instrument of justice.
Whether Cohen himself has been an instrument of justice with his own employees is open for debate. The point is that the president’s political backers are looking for specific and identifiable social ends, whereas his potential trading counterparts hold to a more traditional view: that freer trade and open markets will – by necessity – yield improvements in the quality of life for their citizens. Sallie James, a trade analyst for the Cato Institute, echoes this original understanding.
The whole point of trade negotiations usually is to reduce barriers to international commerce. Consumers gain, as do U.S. firms that benefit from cheaper imports. The benefits of free trade to an economy overall have been known for more than 200 years. What also is known is that powerful special interests that gain from keeping out the foreign competition will fight tooth and nail to prevent consumers from having access to new and cheaper products.
If President Obama can successfully walk the tightrope between trading partners and financial backers, he will have accomplished a phenomenal political feat. More likely, he will alienate one or both of these competing forces, a prospect that is best left unspoken before November.