Trans-Pacific Partnership: yes, no or maybe?
See reader feedback posted at end of the entry.
Six months ago, SAFE endorsed a since enacted Trade Promotion Authority (TPA) bill that renewed the president’s authority to negotiate trade agreements and submit them to Congress for “fast track” approval. As for the Trans-Pacific Partnership (TPP), a major 12-nation trade deal that was then in the works, we said congressional approval was likely but refrained from declaring support before the details were available. Free trade yes, TPP maybe, 5/18/15.
•At such time as negotiations are completed and the text is published, members of Congress will vote on an up or down basis (no amendments or filibusters, simple majority). Unless some of the warnings about a scheme to promote sinister policies [of the administration] panned out, approval of the deal would be likely.
•Subject to seeing what’s in it, if and when the test is published, our inclination would be to support the TPP as a constructive effort. But that being said, we do have some reservations about the case that has been made for it.
The TPP was published on November 5, and in due course a decision will be made re US participation. As was true for TPA, sentiment diverges from the normal partisan fault lines. Centrist Republicans and the business community generally support the TPP; conservative Republicans, many Democrats, and labor unions are against it.
This entry will review the arguments for and against the TPP and offer our conclusions.
I. FOR - According to the president, the TPP would not only grow the economy (benefit business), but also help “working families get ahead.” Many potential customers live outside this country, exports support 11.7 million US jobs, export-supported jobs pay better than other jobs, 18,000 tariffs that other countries impose on US products (from automotive parts to food products) would be eliminated, and there would be enforceable protections for labor and environmental standards.
There is no need to take these claims on faith. Skeptics can read up on the subject and make up their own minds. Obama asks people to read TPP deal themselves, Nicole Duran, Washington Examiner, 11/10/15.
Detailed information about the TPP has been posted by the Office of the United States Trade Representative (Ambassador Michael Froman since June 2013), which represented this country in the negotiations. Here’s the deal: The text of the Trans-Pacific Partnership, November 2015.
We confess to not having read much of the TPP text, but commend the administration for making it readily accessible. And the benefits of free trade are well known. Accordingly, the burden of establishing objections to the TPP would seem to be on the critics who are raising them.
II. AGAINST – A threshold consideration is that the TPP is very lengthy, e.g., considerably longer than the Affordable Care Act [GovCare], fueling suspicions that many undesirable provisions may be buried in the text. [Senator Jeff} Sessions: 2 million word TPP “confirms our worst fears,” Pete Kasperowicz, Washington Examiner, 11/5/15.
One provision cited by Sessions is the creation of a multilateral commission, which would meet regularly to discuss the operation of the TPP and be empowered to make adjustments to its provisions. In a similar vein, see this Americans for Limited Government cartoon.
Based on our reading of the relevant TPP provisions (Chapter 27), however, the Trans-Pacific Partnership Commission would basically operate based on consensus. Thus, it’s unclear how the interests of the US could be seriously impaired.
Talk radio Host Mark Levin attacks the TPP from another angle, namely the delegation of authority and power to unelected bureaucrats. Even if US representatives can block actions by the commission, after all, who’s to say they will represent the interests of ordinary Americans? Mark Levin: “Destroy-the-Constitution” TPP deal would allow Obama to “take us to fast track to hell,” Tony Lee, breitbart.com, 11/9/15.
No conservative—none—in the Senate or the House should vote for this based on the nature of this phony deal. It’s too long. It’s too massive. It empowers the government. It empowers the bureaucracy… It empowers other governments and bureaucracies too.
Also, says Levin, the TPP is clearly a treaty. As such, a 2/3 vote in the Senate is required to ratify it – which would be well nigh impossible to arrange. While this argument carries some weight, it’s hard to distinguish the TPP from other trade agreements that have been approved by Congress over the years, e.g., NAFTA.
If the only objective in play were free trade, suggests tea party economist Gary North, governments could simply eliminate tariffs and import quotas. The [nearly 500 word] preamble of the TPP, written by “high salary international lawyers,” recites numerous other goals. What’s really involved is a surrender of national sovereignty. ObamaTrade: Total surrender to the [New World Order], garynorth.com, 11/7/15.
The TPP preamble is muddled and repetitive, but it does not strike us as a NWO manifesto. Consider, for example, how this passage about state-owned enterprises threads the needle between socialism and capitalism.
AFFIRM that state-owned enterprises can play a legitimate role in the diverse economies of the Parties, while recognising that the provision of unfair advantages to state-owned enterprises undermines fair and open trade and investment, and resolve to establish rules for state-owned enterprises that promote a level playing field with privately owned businesses, transparency and sound business practices;
North may be right in theory that countries only hurt themselves by imposing trade barriers, but as a practical matter it would be foolish to abolish this country’s tariffs and import restrictions without seeking reciprocal concessions from our trading partners. Further, any trade agreement worthy of the name should seek to secure protection for US-owned intellectual property rights, which often represent this country’s most potent advantage in the global economy.
According to its preamble, the TPP is intended to “promote high levels of environmental protection . . . and further the aims of sustainable development.” Sounds a bit like a plot to further the crusade against manmade climate change (global warming), and such a connection has been implied in various official statements. Obama: Trade would hold back the “ravages” of climate change, John Siciliano, Washington Examiner, 9/28/15.
Thus, in a speech to the UN General Assembly, the president “tied the [TPP] to meeting higher environmental standards, which in turn would help meet global emission reduction targets.”
OK, but the applicable provisions of the TPP (Art. 20.15) seem aspirational rather than binding so we don’t see real cause for concern. Thus, “transition to a low emissions economy requires collective action,” but “each Party’s actions to transition to a low emissions economy should reflect domestic circumstances and capabilities.” And while numerous “areas of cooperation” are specified, the Parties only agree to engage in cooperative and capacity-building operations “as appropriate.”
Objections to empowering new layers of bureaucracy, etc. don’t seem to resonate with the Left, but many Democrats oppose the TPP on grounds that the implementation of previous trade agreements has been accompanied by US manufacturing job losses and declining real income for American workers. Obama's trust-me approach falls flat with Democrats, Mike Lillis, The Hill, 6/3/15.
While the adverse economic data are real, we think this complaint confuses correlation with causation. Some decline in US manufacturing jobs was inevitable as this country’s post-World War II dominance of the global economy faded, and the trend has been exacerbated by unwise fiscal and regulatory policies. But for efforts to promote freer trade, US economic results might well have been worse.
Getting down to brass tacks, the Wall Street Journal has noted concerns about various details of the TPP. The editors suggest that Congress should take its time in reviewing the TPP and identify all relevant issues before deciding whether to approve it or not. The Pacific trade stakes, Wall Street Journal, 10/6/15.
•Some schedules for phasing in tariff reductions “stretch out for far too long,” e.g., the Japanese beef tariff will drop to 9% from 38.5% over 15 years.
•The dairy chapter only opens a small portion of the Canadian market to foreign milk and cheese producers.
•Period of data exclusivity for advanced biologic medicines (made from living cells and organisms) has been watered down from the US standard of 12 years to as little as 5 years for other countries (after which other firms can attempt to design copycat products).
Senator Orrin Hatch, one of the key GOP supporters for TPA, has noted concerns about the aforesaid period of protection for biologic medicines, and also about provisions on tobacco, labor rules and dairy products. He suggests that the administration try to get these issues resolved now rather than having Congress vote on the TPP in its present form. White House may have to renegotiate Pacific trade pact, Reuters, 11/9/15.
"We're losing votes as we speak for no good reason," [Hatch] told reporters. "My suggestion is, get back to the bargaining table [with representatives of the other 11 countries] and let them know that this may not pass."
Republicans aren’t the only ones complaining about compromises that were accepted in the rush to finalize the TPP. Consider the scathing comments of Rep. Bill Pascrell (D-NJ). You won't believe who's bashing Obamatrade, americanactionnews.com, 11/7/15.
The text that I’ve read so far includes annexes and exclusions up the wazoo. You think you’ve seen it all? You have not. Exclusions to rules by each country. Bilateral deals with Japan, and more than 50 two-way side letters.
Finally, we previously expressed concern about China’s exclusion from the TPP (Free trade yes, TPP maybe, 5/18/15), but on second thought this doesn’t seem to be a major problem.
•China may be invited to join the TPP by “the back door” (Donald Trump line) at some point, as recently happened in the case of Indonesia. Obama in secret pact with world’s largest Muslim country, Curtis Ellis, wnd.com, 10/27/15.
•In any case, China has many ways to exert its economic influence, e.g., it already has trade agreements with over half the TPP countries. Why China doesn’t mind being left out of the Trans-Pacific Partnership, Allison Jackson, USA Today, 10/9/15.
III. CONCLUSIONS – Based on the foregoing discussion, we think the TPP probably deserves approval on the merits. However, the last minute compromises, exclusions, side deals, etc. should be carefully reviewed before making a decision. Good for the political leaders who have withheld judgment until their due diligence is done.
The administration has urged that Congress approve the TPP by the end of the applicable 90-day review period (in February), but indications are that the review will take months longer – especially if it is decided to go back to the negotiating table as suggested by Senator Hatch. An up or down vote by Congress seems unlikely before the lame duck session (December 2016). White House prods Congress to quickly pass Asia trade deal, Nicole Duran, Washington Examiner, 11/5/15.
There is a good chance that the next president will not favor the TPP. On the Democratic side, both Hillary Clinton and Senator Bernie Sanders have gone on record in opposition. On the Republican side, there is a split: Trump, Cruz, Huckabee & Santorum are against the deal; Carson, Bush & Kasich are for it; Rubio is straddling the fence and we’re not sure about the others.
It would be quite fair, we think, for GOP congressional leaders to privately convey to the president that they expect some suitable legislation of a conservative thrust to be enacted before a vote is taken on the TPP. Do you readers agree, and if so what suggestions would you make as to the quid pro quo?
In principle, I believe in open trade-free trade, but agreements the size of the TPP are suspect and any trade agreement should be subject to 2/3 Senate approval as a treaty. The best approach is a modestly sized agreement between the US and maybe 2 or 3 other countries, which can be read, understood and submitted to the Senate. Lengthy agreements don't get read and should be avoided. So, I am with conservatives who oppose TPP. We do not need another fiasco like ObamaCare. – SAFE member