The Trans-Pacific Partnership and Fast Track Authority: What’s the Big Deal?

TPP
The United States is partnering with 11 countries in the Trans-Pacific Partnership trade accord. Source: gipj.net

A cornerstone of President Obama’s trade agenda has created a rift between his administration and his Democratic base, who have joined with Tea Party Republicans in an unusual marriage of convenience. The legislation in question, the Trans-Pacific Partnership (TPP), is a colossal proposed trade agreement that involves twelve countries, including Australia, Canada, Japan, Mexico, and Peru. The economies of these twelve partners comprise 40% of the world’s GDP. The deal, if passed, would dramatically lower tariffs, require environmental regulations, strengthen labor standards, and bolster President Obama’s legacy.

Few know what provisions the accord actually contains, because the TPP  is being negotiated behind closed doors by representatives of each partner nation. A few chapters (there are 29 in total) have been leaked to the public, and they have people concerned. A leaked section about intellectual property revealed that the U.S. is pushing for stronger copyright and patent protection, as well as increased regulation for approving genericized pharmaceuticals. This revelation sparked criticism from intellectuals like Columbia University economist Joe Stiglitz, who warned against “restricting access to knowledge.” Still, many more people are concerned not about what has been revealed, but about what hasn’t. Despite the Administration’s assurances that the TPP will make “Made-in-America” goods and services more desirable abroad, labor activists are concerned about rumors that the deal contains provisions that encourage businesses to outsource jobs to low-wage countries. And although the Administration promises “robust environmental standards and commitments from member countries,” environmentalists doubt whether the U.S. will be able to hold the partners to their commitments.

Critics’ questions lie heavily on enforceability: what kind of teeth will the agreement provide to punish those who don’t follow fair labor practices or augment their environmental regulations? Until the final draft of the proposed partnership is released to the public, activists and members of Congress alike are in the dark. While Republican leadership has joined the President in support of TPP and trade promotion authority, Tea Party Republicans and many liberal Democrats are vehemently opposed. Some Republicans and politically conservative groups have voiced concerns about granting President Obama authority over anything; from their perspective, he has usurped legislative authority frequently, with the most recent example being his executive order to shield five million undocumented immigrants from deportation.

Liberals are also hotly opposed, but more due to the secrecy with which the deal is being negotiated. Bernie Sanders, an Independent senator from Vermont, accused TPP of aiming  “to protect the interests of the largest multinational corporations at the expense of workers, consumers, the environment and the foundations of American democracy.” He is not alone in his opposition—about 150 of the 188 Democrats in the House signed a letter vowing to oppose trade promotion authority. Congress isn’t basing its opposition solely on the uncertainty of what the deal contains; their constituents are coming out en masse against the TPP. As an intern for Congresswoman and Democratic Leader Nancy Pelosi (D-CA), I speak with dozens of constituents daily who urge her and her colleagues in Washington to vote against the TPP.

Another point of contention is the issue of currency manipulation. Criticized by every president since Bill Clinton, currency manipulation occurs when a country deliberately devalues its currency against the dollar in order to keep its exports cheaper in the United States, while also inflating the price of American goods in its own markets. That is, they force the prices of domestic products to rise while prices of imports fall. According to C. Fred Bergsten, Director Emeritus of the Peterson Institute for Economics and trade advisor for the Obama Administration, as many as five million jobs were lost in the U.S. because of currency manipulation over the last decade. “Currency manipulation is the No. 1 protectionist issue of the 21st century,” he said in a 2014 report.

A majority in Congress rallied behind a call for a provision against currency manipulation—in 2013, some 230 members of the House of Representatives and 60 senators called for strong and enforceable provisions against the practice. Despite congressional clamor, the Obama Administration is concerned that including language on currency manipulation will open opportunities for trading partners to target policies of the Federal Reserve Board and basic fiscal strategies like stimulus spending during recessions.

However, the practice of currency manipulation is the most important reason why U.S. global trade deficits have not decisively reversed in the past two decades, according to Robert E. Scott, the director of trade and manufacturing policy at the Economic Policy Institute. Scott warns against adopting the TPP as long as it doesn’t contain a protective measure against currency manipulation, particularly because it involves Japan, the world’s second-most active manipulator. Without such a measure, Japan will be free to manipulate its currency at the expense of American interests while the U.S. rewards it with lowered tariffs.This is just a sampling; the Peterson Institute on Economics has published a comprehensive overview of the contentious issues.

With so much conflict surrounding the agreement and a dearth of support from his usual base, it is easy to see why the President is seeking to push the accord through Congress with trade promotion, or “fast track,” authority. Such authority dictates that Congress will vote only once on the bill, either up or down, with a contracted debate period and without the opportunity to amend. However, trade promotion authority has to be granted by Congress, and it seems unlikely that they will do so, considering that Democrats and Republicans alike are teaming up to oppose such a concession of power.

President Obama has found an improbable ally in House Speaker John Boehner (R-OH), and Representative Paul Ryan (R-WI), the Chairman of the Ways and Means Committee, which oversees trade. Ryan, who was the Republican nominee for Vice President in 2012, strongly supports trade promotion authority and the TPP.  Like the President, he asserts that the TPP will boost economic growth, create American jobs, and grow American exports. But this perspective is scarce, and those who hold it face formidable opposition from both sides of the aisle.

The Trans-Pacific Partnership, encompassing 40% of the world’s economic activity, is a true behemoth of a trade deal. Because of the secrecy that surrounds it, it is difficult to know exactly what change the accord would bring. Activists, Congress, and pundits alike are right to be concerned, and to grant trade promotion authority and allow the deal to slide through Congress on a single vote would be a mistake. Although Congress could be consumed by conflict during debate on the deal, it is critical that representatives are allowed to advocate for their constituents’ interests without being forced to reject the accord altogether.