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Did Obama’s Trade Agenda Just Quietly Run Out of Time?

By Phil Levy
August 3, 2015 - 4:08 pm

Did Obama’s Trade Agenda Just Quietly Run Out of Time?

It was just weeks ago that the Trade Promotion Authority (TPA) passed after a perilous journey through the U.S. Congress. The episode prompted numerous reminders of just what was at stake: the Trans-Pacific Partnership (TPP) and U.S. standing in the Asia-Pacific. When TPA passed, that agenda remained alive.

But did it escape the jaws of Congress only to quietly miss its window?

With TPA in hand, the United States convened a ministerial meeting in Maui of the 12 nations participating in the TPP. A delayed Friday afternoon news conference ultimately announced the failure to close the deal. Of course, ministers being ministers, they did not announce failure. They lauded the progress that had been made and exuded optimism about prospects for completing the deal soon, though no date was set for a follow-up meeting.

It may be a bit hard to fathom why the present situation is so dire. After all, there is nearly a year and a half left in the Obama presidency. It would have been nice to wrap things up, but what great harm in a little delay? The problem is that it becomes dramatically harder to see a path whereby the TPP could be concluded before President Barack Obama leaves office.

First, the substantive obstacles are real. There were impasses reported between the major players on dairy, auto parts, intellectual property protection (particularly in biologics), and on sugar. In theory, it’s possible that countries could drop their objections to a deal or sweeten their offers in a very short time period, the way Senate Democrats who opposed TPA early in May reversed themselves one week later. But the pressure to conclude a deal in Maui was sufficiently intense that this seems unlikely. If the sticking points could remain stuck under that degree of urgency, they may prove durable. They might be soluble with time, but there is no time.

Instead, there is the daunting U.S. political calendar. Even if the Maui talks had ended successfully, it was getting hard to see how the TPP could move through Congress by year’s end. After an agreement, there is a period when everything is arranged in legal terms and translated into all the relevant languages. Then the agreement is made public. According to TPA, it is only 60 days after that release that the president could sign the agreement. With the president’s signature and submission of the agreement to Congress, additional deadlines and consideration periods kick in. It is possible that some of these periods could overlap or be condensed, but any attempt to rush the agreement through could exacerbate concerns about the process being opaque. And it is equally possible that Congress approaches the end of the year with other, non-trade items filling its calendar.

Of course, that was the difficult scenario if Maui had succeeded. It did not. Setting aside thoughts of finishing by the end of the year, there are two other possibilities: pushing the agreement through in the midst of the 2016 election campaigns, or passing it during the lame duck session that will follow the November 2016 vote. Received wisdom is that putting an agreement through during a presidential election year is a bad idea, but could it be done?

TPA passed the House with 28 Democratic votes. Those votes appear necessary for TPP passage; there is enough discontent among House Republicans to preclude passing the TPP on a party line vote. The pressure on those Democrats will grow intense during campaign season. It is already sufficiently intense that former Secretary Hillary Clinton has forgotten the extent to which her State Department played a central role in the interagency trade policy process. Further, a number of those Democratic votes were based on promises that the TPP would be “the most progressive trade deal in history.” It is not clear that the agreement that was shaping up in Maui would have satisfied those high expectations, particularly in terms of labor measures. Given the charged political atmosphere and the narrow, delicate coalition that passed TPA, it is hard to see TPP moving in the midst of next year’s campaign.

What about the lame duck? That seems to be the favored path among the cognoscenti, if the TPP doesn’t move through this year. It’s a possibility, but it has its own problems. Suppose there is an informal understanding among the participants that the TPP would move during the U.S. lame duck. At what point would they then strike a deal? If you’re Mexico or Japan or Australia or Canada and you’ve seen the inability of a fully-empowered President Obama to push his legislation, how confident are you in his ability to do so as a lame duck? Are you confident enough to make very politically sensitive concessions and sit back and wait? When do you make those concessions? Is it during the party conventions in summer 2016? It can’t be too late or you hit the same deadline pressures we’re facing this year. Or do you just decide to talk to the next administration?

Not only would those countries need to worry about accommodating the U.S. election schedule, but they have politics of their own. As one example, Canadian Prime Minister Stephen Harper just called an election on Oct. 19. Traditionally, Canadian governments do not make major moves in the midst of an election. Even if that tradition could be overcome, the election (expected to be close) will do nothing to reduce pressure to protect Ontario dairy farmers.

There is a tendency in trade circles to brush away such concerns. There is a mythology that in trade negotiations you often have a near-death experience before success. True. But sometimes you have a near-death experience right before death.

https://foreignpolicy.com/2015/08/03/did-obamas-trade-agenda-just-quietl...