Key Factors For Reaching Final Agreement On The Trans-Pacific Partnership
The massive TPP trade agreement talks have been ongoing since 2012
The massive Trans-Pacific Partnership (TPP) trade agreement talks have been ongoing since 2012. Twelve countries — the U.S., Japan, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam — are participating in the talks to create the largest trading block in history, with the potential to create hundreds of billions of dollars of additional global income in coming years.
Two of the critical components necessary for bringing the talks to a successful conclusion are 1) a bilateral agreement between the U.S. and Japan; and 2) the approval by U.S. lawmakers of Trade Promotion Authority. Definite progress has been made on both fronts in the last few weeks, but the final outcome is still uncertain.
U.S.-Japan bilateral talks
Japan entered the negotiations as the 12th and final participant in July 2013, a move which was supported by the U.S. government and many American stakeholders. Key among the issues to be addressed between the U.S. and Japan is market access for agricultural goods.
Japanese Prime Minister Shinzo Abe visited Washington, D.C. during the last week of April, and met with President Obama. The two discussed trade as well as other issues. The visit was widely considered positive, and reports suggest it helped advance trade talks between the two countries. Both leaders suggested that an agreement between the two countries is close at hand.
In an address to a joint session of Congress, Prime Minister Abe did not announce concessions, but very clearly stated he is willing to make major reforms in Japanese agriculture in order to achieve an agreement on TPP. He and other Japanese leaders have previously indicated a willingness to make concessions on some of their most politically sensitive agricultural commodities, including pork and rice.
Trade Promotion Authority
The other key piece of the puzzle is passage by Congress of Trade Promotion Authority (TPA), often referred to as “fast track authority.” Under fast track authority, Congress would consider the TPP agreement on a single up-or-down vote, without the ability to offer amendments, which means Congress cannot dismantle the trade deal — they can only accept it or reject it. This is particularly important to U.S. trading partners, who are encouraged to negotiate more freely knowing any bargaining in which they engage won’t be subject to amendment by the U.S. Congress. Otherwise, it would be impossible or nearly impossible to achieve an agreement among the 12 TPP countries.
Fast-track authority for consideration of trade agreements has been granted by the Congress to every president since Gerald Ford. However, this authority most recently expired in 2007 and the Congress must pass a bill to re-authorize TPA before it can once again go into effect. When the Republicans gained their majority in Congress after the November 2014 elections, international trade — and TPA, specifically — was touted as a common priority among Senate and House leadership and President Barack Obama. Despite agreement between the President and Republican leaders in Congress on the importance of achieving approval of TPA, gaining approval of TPA in today’s Congress is likely to be difficult.
During the week of April 20, the Senate Finance and House Ways and Means Committees took initial steps toward passage by approving nearly identical bills to authorize TPA. The Senate vote was 20-6, with all Republicans except Sen. Richard Burr (R-NC) voting in favor, and seven of 12 Democrats also voting in favor. The House vote was 23-15 with all Republicans voting yes, but only two of 15 Democrats voting in favor — Reps. Ron Kind (D-WI-03), and Earl Blumenauer (D-OR-03). Both bills now go to the Senate and House floor, respectively, for a vote by the full chamber.
On Friday, May 22, the Senate passed its TPA bill by a vote of 62-37, after defeating several amendments which may have otherwise prevented passage, including one that would have taken a hard line with TPP negotiating countries on currency manipulation. The vote tallies are very predictive of the prospects in each chamber. Because of the protection of minority rights in the Senate, bills normally require 60 votes to end debate and achieve passageand the minority party has the ability to delay progress on legislation by making demands on amendments to the underlying bills. These dynamics stymied the progress of the bill during the month of May in the chamber that was supposed to have the easier time of passing TPA. In mid-May, Republican leadership failed to garner the necessary votes to cut off debate and move to consideration of TPA, and disagreement over which and how many amendments to allow nearly derailed it a second time in the days before the vote on final passage. In the end, 14 Democrats voted along with 48 Republicans to pass the legislation.
In the House of Representatives, however, the story is much different. Only two Democrats of the 15 on the Ways and Means Committee voted for TPA. The political dynamic is such that most observers believe there are likely fewer than 20 House Democrats that would vote in favor of TPA. One reason is that labor unions have been working very hard to convince Democratic members to vote against the bill.
House Democratic leader Pelosi (D-CA-12) was supportive of House Ways and Means ranking Democrat Sander Levin’s (D-MI-09) effort to derail TPA consideration in the Ways and Means Committee and other Democrats — most notably Congresswoman Rosa DeLauro (D-CT-03) — are actively working to persuade their colleagues to vote against TPA. A strong majority of House Republicans are expected to vote for TPA. However, enough Republicans are expected to vote against it that House Republican leaders will need more than the 15 to 20 House Democrats currently expected to vote favorably in order to gain final approval. Despite the uncertainty around the necessary votes for passage, Ways and Means Committee Chairman Paul Ryan (R-WI-01) and House Majority Whip Steve Scalise (R-LA-01) have indicated that the House will vote on its TPA bill, along with three other trade-related bills, during the week of June 1.
Further TPP negotiating sessions will take place along with another possible meeting of trade ministers from the 12 participating countries. Many U.S. agriculture trade organizations, including the National Pork Producers Council, support TPA and TPP. They will be working very hard to garner additional “yes” votes in the House when the TPA legislation comes to the floor. Whether a TPP agreement can be concluded and approved by Congress this year will largely depend on if and when Congress can approve TPA.