The President’s Corner

Wake Up Call 

It’s Time to Admit TPP is in Trouble … and in Need of a New Strategy

By William Maroni

 

For months we advocates for TPP have been reassuring ourselves that a “comprehensive, high standards, 21st Century trade pact” was not just obviously essential, but also only a few months from completion.  When the unrealistic “hope” evaporated that a deal could be finished last December, the new year began with predictions of a TPP deal “in the next two months.”

It’s time to admit that TPP – and perhaps the U.S. trade agenda – is in trouble for the moment.

All trade agreements begin with an aspirational economic vision, but they are concluded in the world of the politically possible.  If we hope to salvage TPP and other trade initiatives, we need to take a hard look at the current political realities.

 

Reality 1:  It’s All About Control of the Senate

This year, Job #1 for the White House is to retain Democratic control of the US Senate in the upcoming 2014 elections.  This may seem obvious, but its importance cannot be over-stated.  Without a Democratic-led Senate, President Obama becomes a de facto lame duck for the final two years of his presidency.  Thus, the President is not going to ask fellow Democrats to cast unpopular votes until after November.  At the moment, any trade vote is unpopular.

 

Reality 2:  Trade Policy Vs. Income Inequality

President Obama’s priorities for 2014 were clearly stated in his January 28th State of the Union address.  Of the 6,975-word speech, 56 words were devoted to trade and of those only 31 were about Trade Promotion Authority.  No mention of TPP or T-TIP, the Transatlantic Trade and Investment Partnership.  More troubling was the absence of a positive link between trade liberalization and middle-class workers.  In a speech focused largely on income inequity, the President chose not to tell trade’s success story.

 

Reality 3:  Vacuums Are Being Filled

While TPP supporters were disappointed the President didn’t connect trade with domestic economy growth, others did it for him  –  but not in the way we had hoped.  One day after the State of the Union, The New York Times published an op-ed by former US Rep. David Bonior (D-MI) that argued trade agreements like NAFTA (and TPP) are the enemy of America’s lower- and middle-income workers, the constituency on which President Obama’s 2014 agenda is focused.  Other members of Congress are likely to highlight the nexus between globalization and inequity.  So, instead of promoting TPP, we now find ourselves re-debating NAFTA and the wisdom the TPA, an authority given to every president since the mid-1970s.

 

Reality 4:  Positions Are Getting Locked In

TPA is supposed to be an Administration priority.  Yet, the Administration’s own point-man in the Senate, Majority Leader Harry Reid (D-NV), has announced his opposition to it.  He said he’s not even sure he will bring it up for a vote in the Senate this year because there is no certainty that the measure can gain the 218 votes needed to pass the House.  As the Wall Street Journal wrote, “Mr. Reid’s opposition places him as the leader among Democrats who contend trade deals are bad for U.S. workers.”  Already, 17 Democratic senators and a majority of House Democrats have expressed opposition to TPA.  Without Republican crossover votes, TPA is dead.  But even some free-trade Republicans are having second thoughts.  “I seldom agree with Harry, but this may be one time,” said Republican Sen. Lindsey Graham of South Carolina.

According to Scott Miller and Murray Hiebert, two distinguished experts at the Center for Strategic and International Studies (CSIS), “Congress will only manage to pass TPA with effective, consistent, and high-profile leadership from the president.”  This will require Obama to be personally invested – as Lyndon Johnson or Bill Clinton were during tough congressional battles – working the phones, member by member, and expending a lot of political capital.  Two problems:  1) Historically, Obama has shown little interest in this sort of “retail selling” to Capitol Hill; and 2) See Reality #1.

 

Reality 5:  The “Chicken or Egg” Dilemma

TPA was intended to give Congress the opportunity to define broad negotiating objectives at the start of trade talks.  But with large portions of TPP already “completed” (at least conditionally), everyone is playing catch-up.  Ideally, TPA goals should synch with TPP results, but the TPA legislation contains several issues (like currency manipulation) that are not part of TPP talks.  That’s not an insurmountable problem, but it is a problem.

Some trade scholars believe the President doesn’t need TPA to implement a TPP agreement.  Theoretically, yes.  Practically, probably no.  First, our negotiating partners are not likely to come forward with their final, best offers – especially those that could be unpopular back home – without assurances that the deal couldn’t be modified by the US Congress.  Second, given the chance, Congress is likely to modify the deal … in a variety of troublesome ways … causing it to unravel.  Most former US trade officials believe TPA is essential for TPP to succeed.

 

Reality 6:  TPP May Not Be Possible in 2014

In any trade negotiation, the most difficult decisions are left to the President and his senior political advisers.  “The key issue is whether the United States is serious about making changes to its import regulations for agricultural products, textiles and other products,” wrote Stephen Jacobi, executive director of the NZ International Business Forum.  The same question pertains to Japan and Canada.  It’s not likely President Obama will make such politically-charged decisions that impact important domestic constituencies before November – especially if he’s simultaneously attempting to solicit votes for TPA.  At some point, all 12 parties are going to have to hold hands and jump!

 

So, where do we go from here?

Some are frustrated by the public’s seeming “inability” to understand the value of trade pacts.  Others are calling for President Obama to “to convince Democrats that trade is good for Americans.”  That’s not only a bit condescending, it’s also not likely to happen.

The Financial Times urged the President to make the same “strong case for globalisation to the American public” that President Clinton did during the NAFTA debate.  “The time for Mr. Obama to make those arguments has arrived.  He has every incentive to succeed,” wrote the FT.  Maybe … but maybe not right now.  Go back and read Realities #1 through #6.

CSIS’s Miller and Hiebert believe enacting TPA “will require a hefty dose of leadership, patience, and all-around goodwill.”  Those commodities are as rare in Washington these days as above-freezing temperatures.

Here’s what TPP advocates might consider:

1)    Stop talking about “landing zones,” “end games” and hope-filled deadlines.  Such talk only fuels the perception that TPP is losing momentum.  Sure, a lot of work has been completed on TPP texts, but if a vote on TPA or TPP is many months away, we must pace ourselves for a well-planned, methodically-organized, long-term campaign.

2)    Engage more potential converts, not the same old choir.  Like any political campaign, resources need to be targeted to “possible supporters” and “neutral” voters.  This requires member-by-member, district-by-district analysis of the economics – and the politics.  This is the first step to creating plainly-worded, brief messages that have local appeal.

3)    Put a human face on TPP and tell a compelling, jargon-free story.  At a time when millions of Americans are out of work or fearful of losing their jobs, we need popular messengers at the national and local levels to tell compelling stories about real jobs.  Drop the “trade expert” lingo, hackneyed rhetoric, and trite terms like “level playing field” and “high quality agreement.”  None of it means much to the people who matter in this debate.  And today the American public is reflexively suspicious of anything from Washington.

4)    Tie TPP to President Obama’s middle-class agenda.  Trade needs to be an integral part of the President’s domestic agenda, as he defined it in the State of the Union.  We must demonstrate how increased trade – exports and imports – grows the US economy, creates jobs on Main Street, promotes higher skills, and leads to more income equality, not inequality.  Simply saying these things won’t change minds; we need relevant proof.

5)    Make TPP about US interests in the Asia-Pacific region.  China is now New Zealand’s largest trading partner and the USA’s second largest.  Our economies are inextricably linked.  But US-China relations – and their politics on Capitol Hill – are far more complicated than balance of trade numbers.  Congressional concerns go beyond currency manipulation to state-sponsored piracy, rule of law, human rights and censorship, and regional provocations in the East and South China seas that have unsettled Vietnam, the Philippines, and Japan.

In the long-term, China may become a valued TPP member, as six former USTRs recommended at the US | NZ Council’s 2013 Pacific Partnership Forum (see http://www.usnzcouncil.org/6-former-ustrs-talk-trade/).  But in the current environment, TPP will gain more votes in Congress if it is perceived as an economic and strategic balance to China’s growing influence and expansionist plans.  Some of our trading partners might not like that message, but it wins in Washington because the public understands it.

It’s been 12 years – and six Congresses – since TPA was last approved, which makes the political calculus that much harder to assess.  On top of that, TPP – with its 12 parties and 29 chapters – is more complex than NAFTA or any previous trade deal.

But there is one constant worth remembering:  Americans – and their elected officials – want to embrace a winner.

If TPP advocates portray the agreement as a winning initiative – for American workers and their families, our influence in Asia, and future growth and stability, the pending trade agenda can succeed.  The American people will insist on it.

It will not be an easy challenge, but it’s a necessary one.

 

William Maroni served as Assistant US Trade Representative for Congressional Affairs, Assistant Secretary of Labor for Congressional Affairs, and Special Assistant to the President during the Reagan Administration.

 

###

If U.S. Trade Agenda Implodes ... ; Forbes

Obama's Free-Trade Conundrum; The New York Times Op-Ed

Reid Deals Body Blow to Obama on Trade; The Wall Street Journal

Harry Reid Rejects President Obama's Trade Push; Politico

Analysis: White House Hopes for Fast-Track Trade Hit Political Tangle; Reuters

A Critical Test of Leadership, Huffington Post

President Obama's 2014 State of the Union Address