The dust is still settling in the US on the fate of the Trans-Pacific Partnership Agreement. Rationally we should say it’s a dead duck. But, to mess up the metaphor, we should not count our chickens too early. Everything still depends on what happens in the 16 sitting days of the lame duck session of Congress.
There are at least five points on the ‘dead duck’ side of the ledger – but warning, this account may not have a happy ending.
- Proceeding with implementing legislation in the wake of such a landslide victory for Trump would seem provocative, especially at a time when people on all sides are calling for calm and reconciliation.
- Key gatekeepers in Congress, especially Majority Leader of the Senate Mitch McConnell, have said the bill will not be presented this year.
- There are several other measures competing for floor time. In particular Congress has to pass the budget bill or the government will close down at Christmas.
- The vote will be determined in the House of Representatives. They are currently short about 12 votes from people who are unlikely to shift because to do so would be political suicide. A number of Republicans in the House who supported Obama in the vote to grant fast track authority recanted on their support for the TPPA during the election for their own political survival. While politicians are fickle, a number of them will be up for re-election in two years and voters are unlikely to forget.
- Several fixes to the TPPA that were seen as pre-conditions to a vote have not been fixed: the solution to Wall St’s demands that they can hold financial services data offshore, by including it in the Trade in Services Agreement (TiSA) is being block for now by the EU; the tobacco states remain furious with the exclusion of tobacco control policies from investor-state disputes; no TPPA country has said publicly it is prepared to give longer protection for biologics medicines than is in the text.
- New issues underpin the grievances of Republicans and some Democrats: demands for rules against so-called currency manipulation, which Japan could never agree to; changes to rules of origin for automobiles, which pit Canada and Mexico against Japan; and dairy. There is no sign of any change on any of these.
- Congress may not be willing to pass its own legislation when the other countries have not. To date New Zealand’s is the only (stupid) government to have (almost) passed its legislation – the third reading of the legislation was interrupted on Thursday and will probably resume and conclude next week. The next closest is Japan, where the lower house just approved the law and the upper house has 30 days to do so. All the rest adopted a prudent wait and see attitude.
- Even if Congress passes the implementing legislation that is not the end of the process. The US still has to certify the compliance of every other country with the US view of what the TPPA requires. That is a long way off and would happen under the Trump administration and Trump has said he would withdraw from the deal. So what’s the point?
- They already have a fall-back position in the TiSA negotiations, where chapters of the TPPA have been transferred across, especially on e-commerce and state-owned enterprises. Trump seems unaware of its existence and because he is most concerned about the industrial decline, he may not be too fussed about offshoring of services. Indeed, he might positively welcome the SOE chapter, as it attacks enterprises seen to unfairly compete and do Americans out of jobs.
On the downside of the ledger:
- The TPPA is a key part of Obama’s legacy. He has nothing to lose by putting it to the vote, probably not even his dignity. It is a bigger blow to his reputation to lose by default.
- The US Trade Representative’s office had the implementing legislation ready to roll before the election and is still talking about presenting it.
- The person who will decide whether the Bill gets to Congress, the Speaker of the House Paul Ryan is a total fan of the TPPA and has been ominously silent. If he brings it in, the Senate leader is likely to play ball.
- There are rumours of some kind of side-deal on biologics that will satisfy the demands of crucial senator Orrin Hatch, who is bankrolled by Big Pharma.
- Other Republicans who want changes to the financial data and tobacco issues also want the TPPA.
- The corporate lobby has been working hard to remind Republicans especially who pays their keep.
- China has called for urgent conclusion of the Regional Comprehensive Economic Partnership (RCEP) agreement as the principal rulemaking agreement, which will fuel the arguments that the TPPA is essential to show US leadership in the region and make sure America makes the rules for the 21st century, not China.
- There has been a lot of deliberate talking down of the prospects to get opponents to relax. Note that Trump himself has not said anything since the election, probably because his advisers say it’s not going to happen so he shouldn’t waste political capital on saying he will withdraw from it.
- Trump is a wild card. They might gamble on him not carrying through with his threats. At the least he might seek to renegotiate the deal rather than ditch it altogether.
So what’s my best guess? Despite the rhetoric, including from the USTR, I am not totally ruling out Team Obama trying to get it into the House. If the Speaker Paul Ryan lets them, they stand to lose, although nothing is certain. We will have a better idea next week when the political leaders of the TPPA countries meet on the side of the APEC leaders’ summit in Peru, one of Obama’s last appearances as president on the global stage. There will be lots of brave rhetoric, so we will have to decipher the noise from behind the scenes.
So what to do? First, commiserate with progressive Americans and Trump’s potential victims that they have a racist, sexist, xenophobic narcissist as their new President.
Second, recognise that the groundswell against the TPPA in the US is not the work of Trump, but is the culmination of six years solid campaigning by allies there and across the TPPA countries.
Third, rest on our laurels. Once we put the final nail in the TPPA coffin we need to build from there. In the short term that means stopping other toxic deals that are currently on the table, starting with the TiSA and the RCEP, both of which have negotiating rounds next month. But more importantly seize the momentum and generate debate on what an alternative progressive international trade strategy might look like for a people’s 21st century.