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US trade fight underscores long road ahead for Pacific pact in foreign capitals

Even if President Obama gets his fast-track trading authority, his Pacific trade legacy faces a long slog. Dark road via www.shutterstock.com

US trade fight underscores long road ahead for Pacific pact in foreign capitals

Even if President Obama gets his fast-track trading authority, his Pacific trade legacy faces a long slog. Dark road via www.shutterstock.com

Republican leaders and President Obama appear to have aborted a plan to put off a “final” vote on a fast-track trade bill until the end of July and may bring it before the House as soon as today.

The latest plan would be to separate Trade Promotion Authority (TPA) – which allows the president to put a trade deal before Congress for a straight up-or-down vote – from the workers’ assistance program that tripped up the bill last week. Lawmakers would then pass the two pieces of legislation separately. So it seems the Trans Pacific Partnership (TPP) that TPA is essential for still has a chance of being successfully negotiated and implemented.

Yet the problems experienced by the Obama Administration of getting TPA through Congress only serve to underscore the fact that many of the other 11 member governments involved in the negotiations face similar highly motivated opposition to the TPP.

Indeed, a number of government leaders in TPP capitals will be secretly pleased by the deadlock in Congress. It gives them every excuse to delay negotiations further and put off making the really tough decisions that inevitably come toward the end of lengthy trade negotiations.

TPP’s troubles

In places like Australia and New Zealand, the kind of broad coalition that challenged the Obama Administration is likely to band together to oppose the TPP being ratified by their governments. Just as in the US, organized labor, environmentalists, “netizens,” health care workers and consumer groups all have reasons to oppose the TPP.

In Japan, Prime Minister Shinzo Abe, under pressure because of his national security reforms, will not want to make tough decisions about key agricultural policies were TPP negotiations to start up again in the early fall.

Similarly, Canadian Prime Minister Steven Harper, who must go to the polls in October and is facing a tough three-way fight, would not relish having to admit to ceding ground on supply management in the poultry and dairy sectors and the attendant possibility of losing crucial rural seats.

Among the Asian members, the Obama Administration’s talk of the TPP ensuring that US rules, rather than China’s, would govern trade and investment in the Asian region does not sit comfortably. China has become the largest trading partner of nearly all East and Southeast Asian economies, and such explicit talk of working to limit China’s influence puts them in a difficult position.

In addition, the transparency provision in the TPA authored by Senator Ron Wyden means that should the TPA eventually pass, then the full text of the TPP, once signed, would be made public. This could well help to galvanize opposition in the member countries as the TPP agreement goes through the ratification process.

Transparency, IP and aging

One issue that will be influenced by the new transparency will be the Investor State Dispute Settlement (ISDS) mechanism, which makes it easier for an investor to challenge a foreign government. In recent years, sentiment has moved against the ISDS, especially in developing countries. This may be one of the reasons that a recently leaked version of the investment chapter states that the details would be made public only four years after the TPP came into force.

The ISDS, as well as concerns about the extent to which the TPP’s intellectual property rights provisions will raise the price of pharmaceuticals, has mobilized health care professionals and consumer groups in a number of countries.

In addition, politicians in countries with aging populations will also no doubt want to analyze the impact the TPP will have on their ability to keep health care costs in check.

Long, hard slog

Of course as time goes by, political calculations and governments change. In Malaysia, the government, which got a major scare at the last election, finds significant portions of their political base in the Malay community implacably opposed to the TPP.

They fear it may take away their hard-won economic privileges. And, in Chile, the Bachelet government, which came into power just over a year ago, has never been as convinced as its predecessor of the value of the TPP for the Chilean economy.

With such a diverse set of participants, the road to a ratified TPP was always going to be a long, hard slog. Still, it is important to note that the TPP has considerable support within the participating countries.

But, as we’ve seen over the last month in the US, opposition around the Pacific Rim to the TPP is mobilizing. Even if the current Congressionally induced detour does not eventually force it off the track, the Obama Administration has plenty more obstacles to overcome.

The principle of single undertaking – or “nothing is agreed until everyone and everything is agreed” – means that there is still a great deal of negotiating both among the 12 TPP participants and by each government with its constituents at home before the pact can be successfully ratified and implemented.