Trans-Pacific Partnership, the trade deal Obama and the GOP both love, explained

http://www.vox.com/2014/11/14/7166849/tpp-trans-pacific-partnership

You’re about to hear a lot about one major trade proposal the Obama administration has been negotiating for years. The Trans-Pacific Partnership has suddenly become one of the hottest topics in Washington, as it appears to be one of the few topics on which President Barack Obama and congressional Republicans might be able to reach any sort of agreement. Of course, what you’re going to read about as a “trade deal” has to do with so much more than trade — like most modern trade agreements, it’s really a broad, sweeping economic agreement that deals in everything from patents to labor rights to geopolitics. Supporters say free trade will boost the economy and curb Chinese dominance. But critics say it’s a massive corporate giveaway that caters to the interests of huge multinationals while killing US jobs. The administration has hinted that a deal is close. Before that happens, read our guide to what it’s all about. 1) What is the Trans-Pacific Partnership? The Trans-Pacific Partnership is a proposed free trade agreement between the US and 11 other countries in Asia and on the Pacific. The point of it is to open up trade between the US and these countries by getting rid of tariffs and other trade barriers. It’s often compared to NAFTA, the 20-year-old massive free-trade agreement. (See a list of the US’s stated objectives in the TPP.) what you’re going to read about as a “trade deal” is about so much more than trade But sending goods from point A to B (and vice versa) is only one of a vast array of areas it deals in, many of which aren’t directly related to the exchange of goods, like labor standards, international investment, telecommunications, and environmental issues. In fact, many of the 29 potential chapters as listed in this Congressional Research Service report deal in issues that are only peripherally trade-related. And it’s big — the US does nearly $2 trillion in trade with these countries each year, according to the US Trade Representative’s office, accounting for nearly 40 percent of the US’s trade. The 12 countries together also account for around 40 percent of global GDP. It’s also a free trade agreement between two of the world’s biggest economies, the US and Japan, which is itself a major milestone. 2) So wait. TPP isn’t really about trade? It is about trade, at least in part, but it’s really about all sorts of different agendas being worked into one big agreement that’s centered around trade agreements. There are chapters on labor rights and environmental practices, as well as financial regulation and government procurement. So the new agreement could benefit US businesses even before any goods change hands. Leaked chapters on intellectual property have seemed to favor patent and copyright holders like pharmaceutical companies and Hollywood movie studios, as Tim Lee has written. tpp is also about china, despite the fact that china isn’t even involved in it And this isn’t just a feature of the TPP. The Transatlantic Trade and Investment Partnership (TTIP), a trade deal being negotiated with European countries, likewise covers broad swaths of economic policy. The reason for some of these broad-ranging agendas, according to US Trade Representative Michael Froman, is that there are non-tariff barriers that need to be broken down. “Through successive rounds of trade negotiations, both bilateral and multilateral tariffs have come down a great deal over the last 50 years,” he says. “but over the same period of time other obstacles to trade have emerged,” like subsidies and regulations designed to keep out other exports. TPP is also about China, which isn’t even a party to the deal. China is growing in power and economic importance, with a huge and fast-growing consumer base. As it becomes a bigger force to be reckoned with in Asia, the US is in a race to make sure it has a good foothold in the region, according to one expert. “They would like to lock up the rules on IT and investment before China becomes a bigger economic force. Hence the TPP excludes China, but it will be welcome to join in the future if it adheres to the roles set forth by others,” writes Barry Bosworth, senior fellow at the Brookings Institution, in an email. “Naturally, China is not very happy.” In part, TPP may be a way to try to pressure China into adopting more market-based economic policies, as Time’s Michael Schuman wrote this week — in addition, of course, to being a way to open up non-Chinese markets in Asia to American companies. 3) Who’s involved? The countries in the TPP include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. The below map from the Congressional Research Service shows trade flows between the 12 countries involved. Source: Federation of American Scientists Of course, one huge Asian economy (China) is not involved. The US has said it’s open to China’s involvement, and China has said it was open to it as well. But many people see TPP as a way to check Chinese influence in the region, as well as a way to try to get China to change its economic policies. Indeed, when the US has in the past pushed TPP, it has in the same breath criticized China, telling it to “play by the rules.” China, meanwhile, has its own free trade pact it’s working on — the Free Trade Area of Asia and the Pacific. This agreement is seen as a rival to the TPP, with both countries fighting to be the major trading partner to countries in this region. At this week’s APEC forum, China succeeded in pushing a study of the FTAAP. Officially both countries are downplaying talk of a rivalry. US Trade Representative Michael Froman even went so far as to say that China’s proposed free trade area is not, in fact, a new free trade area, but instead a “long-term aspiration.” At the same time, it’s clear the US government fears that if TPP doesn’t get off the ground, Asian countries will be more likely to make commitments to China instead. 4) How did the midterms make this into a big deal? Because trade appears to be one of the few areas on which the White House and a newly Republican-controlled Congress might agree in the coming legislative session. After the midterm elections Senate Minority Leader Mitch McConnell (now in line to be the majority leader in the next Congress) emphasized trade agreements as one area on which he thought a new majority-Republican Congress and Obama could agree. “I’ve got a lot of members who believe that international trade agreements are a winner for America,” McConnell said. “And the president and I discussed that right before I came over here, and I think he’s interested in moving forward. I said, ‘Send us trade agreements. We’re anxious to take a look at them.'” “republicans in Congress … must vote to voluntarily give [Obama] large swaths of power” That matters because Congress can give the president something called Trade Promotion Authority, which is often simply called fast-tracking. To help a president to more easily negotiate trade deals, Congress has to periodically grant this authority, which last expired in 2007. The idea of fast track is that a president needs to be able to negotiate a treaty without the fear that Congress will amend it after he and a whole bunch of other countries come to agreement on a deal. When the president has TPA, he consults with Congress, but once a deal is reached, Congress can only vote it up or down — no amendments. Without that authority, it’s not really feasible to reach a credible deal with foreign leaders. The fact that Republicans seem favorable toward trade deals like the TPP creates something of a dilemma for them, as Public Citizen’s Lori Wallach told Al Jazeera. “What would be required is for Republicans in Congress, who have attacked Obama as power-hungry, must vote to voluntarily give him large swaths of power,” she said. “This is an interesting problem for them and their own political base.” 5) So what exactly in the deal? That’s a great question. And the answer is that not a lot of people know the specifics. This has upset a lot of people, including many congressional Democrats. This puts them in alignment with some Tea Party Republicans who say they won’t grant Obama TPA because they haven’t been consulted closely enough on what they call a “secret” deal covering such broad-ranging themes. “as soon as you reveal your position … then it’s much more difficult to modify it and be flexible later.” TPP critic Elizabeth Warren said, “I actually have had supporters of the deal say to me, ‘They have to be secret, because if the American people knew what was actually in them, they would be opposed.'” It’s not that members of Congress have been kept entirely in the dark. Froman says he has had more than 1,500 meetings with members of Congress. The USTR office also provides Congress members with copies of the working text, though while they have input, members cannot directly change the deal. While it’s true that the average American (or Japanese or Vietnamese person) has no access to the talks, the secrecy surrounding TPP has a purpose. Negotiations would be far, far more difficult if undertaken in full public view. “As soon as you reveal your position and put it in print, then it’s much more difficult to modify it and be flexible later,” explains Gary Hufbauer, senior fellow at the Peterson Institute for International Economics. “It’s a negotiation, and everyone has to compromise to some extent.” Though the deals have been behind closed doors, some bits of the deal have come to light, thanks to WikiLeaks, which has obtained and published draft chapters from the deal on intellectual property and the environment. The Citizens’ Trade Commission, which is also opposed to the TPP, has also published a leaked chapter on investment. Those leaked chapters have upset some advocacy groups. The Electronic Frontier Foundation and ACLU have fought against some of the IP proposals, like longer copyright protections and making internet service providers liable for copyright infringement. Likewise, the Sierra Club objects to weaker language about countries’ commitments to environmental agreements. As Mother Jones pointed out, the environmental stipulations in the leaked chapter are voluntary, not binding. 6) Will TPP benefit the US economy? Opening up new free-trade markets could really benefit the US economy. The TPP could particularly benefit American companies by giving US products, like cars and food, more customers — particularly in Japan. The Peterson Institute in 2012 estimated that it could add $78 billion to income for American companies, which is a lot of money, but not a game-changer in a $17 trillion economy. That said, income for US companies doesn’t necessarily mean new income for US workers, says Barry Bosworth, senior fellow at the Brookings Institution. “There often is a conflict between the objectives of ‘American’ companies and workers,” he writes. “For example, business groups are very interested in the expansion and enforcement of intellectual property and liberalization of access to foreign financial markets, but these create very few US jobs, even though they may create income through their effect on profits and stock values.” One expert says the tpp will lead to higher incomes for US companies but “probably a net loss of jobs” In other words, a lot of those provisions that have little to do with goods trade could create lots of value for American companies without creating lots of jobs. Altogether, Bosworth says, he expects higher incomes for US companies but “probably a net loss of jobs.” The TPP could also become a political football again, come 2016 — as The Fix’s Jaime Fuller noted earlier this year, a win on the TPP would be a belated win for former Secretary of State Hillary Clinton, meaning she’d probably tout it in debates and campaign stops if she ran for the presidency. Obama and his fellow world leaders prepare for a long discussion about tariffs. (Getty Images) 7) Why has the TPP taken so long? The US joined TPP negotiations in 2008, and the first TPP deadline was in 2012. That and others have sailed by since then. And that’s because of lots and lots of sticking points. Maybe the biggest one recently is between the US and Japan, regarding Japanese subsidies for its agricultural and auto sectors. However, agreement is looking closer all the time — in a November 10 statement, the leaders of the 12 countries reported “significant progress in recent months … that sets the stage to bring these landmark Trans-Pacific Partnership (TPP) negotiations to conclusion.” Yes, statements after TPP talks have claimed “significant progress” before. But this time, the leaders sound unusually optimistic. New Zealand’s trade minister proclaimed that “the finish line is in sight” after this week’s APEC meeting, and said it could be “a few months” before that line is crossed.

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