Wed, May 27, 2015 - Page 8 News List

US trade bill to catalyze TPP talks

By Andrew Hammond

The US Senate agreed on Friday last week to a landmark “fast-track” Trade Promotion Authority (TPA) bill. Subject to the approval of the House of Representatives, potentially as soon as next month, this would grant the White House the ability to finalize negotiations on the Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP) without congressional amendment.

These two proposed treaties, which would encompass about 40 percent and 50 percent of world GDP respectively and would be the biggest trade deals since the North America Free Trade Agreement (NAFTA), would be major wins for US President Barack Obama as he seeks to define his presidential legacy. The TTIP with the 28 EU states, for instance, would represent the largest regional free-trade and investment agreement in history.

Meanwhile, TPP negotiations comprise a dozen countries in the Americas and the Asia-Pacific region (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam), which collectively account for about 40 percent of world GDP. This free-trade and investment treaty, which trade ministers will meet to negotiate again this week, has a significant US geopolitical component too, inasmuch as it would help reorient and lock in US international policy toward the Asia-Pacific region (the so-called “Asia pivot”) and other strategic high-growth markets.

In part, this is about curbing the growing regional influence of China. For instance, Obama administration officials have asserted that the TPP would enable Washington, rather than Beijing, to write the rules of the road for important 21st century issues, including trade in the digital economy.

Moreover, about 20 years after the NAFTA was agreed, the TPP would potentially give the US a chance to review that 1994 agreement, since both Canada and Mexico are members. For example, the Obama administration has pointed to the need to push Canada on greater market access.

While negotiations still need to be done on both treaties, the TPA would potentially catalyze both and, for that reason, Obama described the measure last week as a “smart, progressive, growth-promoting deal.”

Reflecting this, Australian Minister for Trade and Investment Andrew Robb went as far earlier this month as to say that TPP negotiations could be concluded within a fortnight after the passage of the TPA, although that is likely to prove overoptimistic.

The TPA is so important to US trade agreements because it enables the White House to negotiate deals without significant congressional interference after negotiations are complete. The legislature must still approve final agreements, but must pass or reject, not amend, in straight up or down votes.

Although some agreements have been passed without the TPA, these were relatively small deals, such as a free-trade agreement with Jordan. Renewal of the TPA is needed for the TPP as well as the TTIP.

The bill was passed in the US Senate despite the concerted efforts to stop it of some Democrats, including Senator Elizabeth Warren, the darling of the liberal wing of the party. Given support from Republicans on this issue, the White House only needed the acquiescence of a relatively small pro-trade group of Senate Democrats.

With a majority of Senate Democrats voting against the bill, the TPA issue has once again exposed the divisions in the party on international trade. This is personified by recent disagreements between Obama and Warren, who might yet choose to run as a presidential candidate next year. In recent weeks, Hillary Rodham Clinton, who supported TPP when she was US secretary of state from 2009 to 2013, has declined to comment on the issue.

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