The Obama administration has not pushed hard enough for a wide-ranging free trade deal that could yield significant economic and geostrategic benefits, experts say.
Final negotiations for the Trans-Pacific Partnership (TPP), a proposed free trade agreement involving 12 countries in the Asia-Pacific region and North and South America, resumed on Saturday in Singapore.
The United States and Japan, the two largest economies taking part in the talks and vital signatories to any deal, aim to resolve the lingering concerns of Japanese farmers and U.S. automakers over increased competition.
However, the TPP could still be derailed in Congress. Bipartisan legislation that would grant President Barack Obama trade promotion authority (TPA) to “fast-track” the deal with a simple yes or no vote and no amendments—a tool viewed as essential to convincing other nations to sign on—has stalled in the Senate due to opposition from his own party’s leaders.
Senate Majority Leader Harry Reid (D., Nev.) told reporters at the end of last month that “everyone would be well-advised to not push this right now,” just a day after Obama urged lawmakers to pass TPA in his State of the Union address. House Minority Leader Nancy Pelosi (D., Calif.) joined Reid in opposition earlier this month when she told unions—key Democratic allies and fundraisers staunchly against free trade—that fast-track authority was “out of the question.”
Dan Blumenthal, director of Asian Studies at the American Enterprise Institute (AEI) and former senior director for China, Taiwan, and Mongolia in the George W. Bush administration, said in an interview that Obama has yet to fight for the TPP.
“It’s fair to say he has not pushed harder for it,” he said. “He didn’t get his own leadership in line to make sure they’re coordinating this being a priority on the legislative agenda.”
“Having the best gold-plated mass trade agreement in the Asia-Pacific would be a great show of American engagement,” he added.
The TPP is the most ambitious free trade agreement proposed to date, representing 40 percent of global GDP and one third of world trade. The United States already has bilateral trade agreements with six of the TPP nations, accounting for 80 percent of U.S. merchandise trade with the potential trading zone.
The TPP countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.
While the TPP covers everything from agricultural tariffs to food regulations, it would also strengthen intellectual property protections and promote competition between state-owned enterprises and private companies.
China, conspicuously absent from the agreement, has been accused of violating copyright protections and patents and relying too heavily on government-owned companies.
Claude Barfield, AEI resident scholar and former consultant to the U.S. trade representative during the Ronald Reagan administration, said in an interview that although the TPP was not designed to “constrain” China, it presents a different regional trade paradigm than the one preferred by Beijing.
Critics say China favors parochial trade agreements that exclude countries such as Taiwan.
“[The TPP] is not anti-Chinese, but it’s a model that would stand in contrast to what a Chinese trade model would be,” Barfield said.
The TPP also has the potential to strengthen U.S.-Japanese relations, which have soured in recent weeks as Japanese officials expressed frustrations with the U.S. response to their territorial disputes with China.
Congressional approval still looms large in the TPP’s fate, regardless of potential benefits. More than 150 House Democrats have stated their opposition to fast-track authority and the potential for the TPP to hurt job growth and depress wages.
However, the Peterson Institute for International Economics has estimated that the TPP would produce $295 billion in annual global income gains, including $78 billion for the United States. Proponents say it would also assist low-income Americans by lowering the prices of goods and services.
Sen. Orrin Hatch (R., Utah), cosponsor of the TPA bill, noted in a recent floor speech that “every president since FDR has sought Trade Promotion Authority” and that “no economically significant trade agreement has ever been negotiated … without it.”
“Put simply, if Congress does not renew TPA, the TPP negotiations and those with the European Union will almost certainly fail,” he said. “That is why it is so disconcerting to me to see how some of my colleagues across the aisle have responded to President Obama’s call for TPA renewal.”
A spokesperson for U.S. Trade Representative Michael Froman told the Washington Free Beacon that the Obama administration “will continue to robustly engage with both Democrats and Republicans in Congress on our trade agenda.”
Obama said at a summit with Canada and Mexico on Wednesday that “we’ll get this passed if it’s a good agreement.”
Still, critics say the president must do more.
“If he cannot drag Democrats back to their senses, the world will lose its best opportunity in two decades for a burst of liberalization,” the Economist wrote in a recent editorial. “It will also be a signal that America is giving up its role as defender of an open global economy in the same way that Mr. Obama has retreated in foreign policy.”