The Wall Street Journal

Feb. 5, 2014

Bill Clinton bucked his own party to get Nafta. Will this president do the same to get agreements with Europe and Asia?

By William Galston

 

 

“We need to work together on tools like bipartisan trade promotion authority to protect our workers, protect our environment, and open new markets to new goods stamped ‘Made in the USA’.”

 

–       President Barack Obama in his State of the Union address, Jan. 28, 2014

“I’m against fast-track. I think everyone would be well-advised just not to push this right now.”

–       Senate Majority Leader Harry Reid, Jan. 29, 2014

 

In September 1991, I found myself in a windowless Washington hotel room helping to plan Bill Clinton’s presidential campaign.  A key question for the group that had gathered was whether the as-yet-undeclared candidate should support the North American Free Trade Agreement that incumbent president George H.W. Bush had negotiated.  After considerable discussion of Nafta, Mr. Clinton looked up at us and said, “I want y’all to understand something: I’m not going to run as an isolationist, and I’m not going to run as a protectionist.”

That ended the debate — for a while.  It started up again not long after he entered the Oval Office, among congressional Democrats and within the White House.  In August 1993, President Clinton ended the internal debate by delivering a ringing defense of Nafta and appointing William Daley to spearhead the drive for its ratification.

Although House Speaker Tom Foley supported the treaty, he said that in view of divisions within his caucus, the Democratic leadership would take no position.  Within two weeks, House Democratic Whip David Bonior had become the floor leader of the Nafta opposition.  A few weeks later, House Majority Leader Richard Gephardt announced that he too was opposed, a decision widely regarded as the death knell for the treaty.

That was Mr. Clinton’s moment of truth, and he did not flinch.  After an all-out White House push in which the president participated extensively, the House approved Nafta, voting 234-200. Democrats were deeply divided: While 102 voted in favor, 156 opposed the treaty.  With the support of a bare majority of Democrats, Nafta passed easily in the Senate.

With Harry Reid’s blunt rebuke last week, Barack Obama’s moment of truth has arrived. His administration is now negotiating two major regional trade deals — the Trans-Pacific Partnership among 12 Asian nations that account for about 40% of global trade, and the Transatlantic Trade and Investment Partnership with the European Union.  Without trade-promotion authority, often called fast-track, granted by Congress to the administration, concluding and ratifying these deals becomes much more difficult.

Our negotiating partners will be much less willing to reach agreements without the assurance that the texts of these agreements are final and not subject to change.  If the authority is not granted, Congress will be free to amend the draft agreements, upsetting the delicate balance among their provisions and scuttling ratification by other governments.

In an interview with the Financial Times after Mr. Reid’s announcement, U.S. Trade Representative Michael Froman argued that once the administration reaches deals of “high standards, ambition, and comprehensiveness,” it can persuade Congress that the proposed agreements will promote growth, job creation and the well-being of the middle class, and congressional support will increase.

It is hard to find anyone outside the administration who gives this strategy much chance of succeeding in the absence of trade-promotion authority.  Many observers believe that without fast-track, progress toward the nearly completed Asian trade deal may stall short of the finish line, and the December 2014 target for completing the deal with the EU will be unattainable.

According to Mr. Froman, “The president . . . is fully committed to a robust trade agenda and doing what’s necessary to execute on that.”  In the coming months, we’ll find out whether he is right.  During Mr. Obama’s first presidential campaign in 2008, he was hardly a full-throated free trader.  He told the Texas Fair Trade Coalition that he “never supported Nafta.”  He told the Iowa Fair Trade Coalition that he wanted to reopen negotiations on the agreement, so alarming our neighbor to the north that Austan Goolsbee, his senior economic adviser, thought it necessary to offer Canadian diplomats back-channel reassurances.  And Mr. Obama told the Wisconsin Fair Trade coalition that he would “replace fast-track with a process that includes criteria determining appropriate negotiating partners that includes an analysis of labor and environmental standards as well as the state of civil society in those countries.”

If Mr. Obama is serious about his trade agenda, he will — at a minimum — address the nation on the advantages of ratifying new regional trade agreements, make it clear that he intends to fight for trade-promotion authority, appoint a high-profile point-person to lead that fight in Congress, and personally lobby wavering lawmakers.

In all probability, he will not be able to rally the support of a majority of Democrats in either the House or the Senate, which means that to get trade-promotion authority, he must be willing to accept truly bipartisan majorities tilted toward Republicans in both chambers.

If Mr. Obama fails to pursue this strategy, our trading partners will draw their own conclusions.

 

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TPP Roundup From the U.S. Business Coalition for TPP 2014

Countries in the Asia-Pacific region spent more than $1 trillion on information and communications technology in 2012, according to IDC Worldwide Black Book data.  Robust digital trade provisions in the TPP will help to boost trade in ICT products and prevent intellectual property rights infringement for software and hardware producers.  To learn more about the TPP, click here.

 

TPP Needs a Comprehensive Investment Chapter

“The United States is the world’s largest capital exporter with over $4 trillion dollars in capital stock invested abroad. U.S. outward foreign direct investment (FDI) is a cornerstone to our international relationships, and it powers our trading relationships. … The investment chapter of the Trans-Pacific Partnership (TPP) is the next opportunity to advance investment policy consistent with U.S. interests.” Read more here.

 

Obama: Open Markets to Goods `Made in the U.S.A.’

“President Barack Obama discusses helping entrepreneurs and small businesses in America. He speaks to the nation in his 2014 State of the Union Address in Washington, D.C.”  Watch the video here.

 

TPP Hovers Behind Canada-Korea Trade Talks

“After years of stalling, there’s a renewed push for Canada and South Korea to ink a free-trade pact, as South Korea eyes an even bigger prize: membership in the Trans-Pacific Partnership. … South Korea’s interest in joining the TPP has stepped up since its exporting rival Japan joined the group last year, and a person familiar with the matter said finally concluding a trade deal with Canada may help Seoul gain Ottawa’s backing. The TPP members account for about one-third of world trade.”  Read more here.

 

The United States is last among developed countries in rankings of merchandise trade (imports and exports) as a percentage of national GDP, according to World Bank data. As well, in ranking it trails such developing countries as Rwanda, Timor-Leste, and the Central African Republic.  A high-standard TPP agreement would lower barriers to U.S. merchandise exports in the fast-growing Asia-Pacific region.  To learn more about TPP, click here.

Free-Trade Deals Such as the Trans-Pacific Partnership Help the United States

“This country has been made more productive by broader international competition and more secure by broader international prosperity. Buoyed by cheap domestic energy supplies, U.S.-based firms and their workers are now poised to prosper anew by meeting the needs of a burgeoning global middle class. If we miss that opportunity, Americans of all income strata will regret it.

Read more here.

 

Trade Negotiations Will Create Jobs: Froman

“U.S. Trade Representative Michael Froman talks about the need for Congress to grant President Barack Obama trade-promotion authority and the outlook for trade negotiations on Bloomberg Television’s ‘In the Loop.’” Watch the interview here.

 

Showtime for the TPP

“The [TPP] agreement, which consists of 29 chapters covering everything from textiles and pharmaceuticals to the treatment of state-owned enterprises, has experienced repeated delays as countries have been forced to make increasingly difficult concessions on the unresolved policies.”  Read more here.

 

Seoul Affirms Interest in Joining TPP, But Says China Deal Comes First

“South Korea’s Trade Ministry made clear Monday that the country will prioritize bilateral free trade negotiations with China this year over the multilateral Trans-Pacific Partnership.  Inaugurating a trade promotion committee, the ministry said in a press release that the government ‘will first push for a South Korea-China FTA as a bridgehead for expanding presence in Chinese markets, while considering joining the Trans-Pacific Partnership.’”  Read more here.

 

TPP Roundup From the U.S. Business Coalition for TPP

TPP Snapshot: The Asia-Pacific region is home to a growing middle class, projected to reach two-thirds of global middle class consumption by 2030 from less than a quarter in 2009, according to the Brookings Institution.

A high-standard TPP agreement can provide an exceptional opportunity for U.S. business to reach new customers in this region. Read more here.

Trading Up: Manufacturers Push for Strong Market-Opening Outcomes and High Standards as Trans-Pacific Partnership Negotiations Move Forward

“A comprehensive and high-standard TPP agreement could create important new opportunities for growing exports, expanding sales and increasing the competitiveness of manufacturers big and small throughout the United States…When completed, a final TPP would encompass a nearly $28 trillion market of almost 800 million consumers – or 40 percent of global trade…Manufacturers can afford nothing less.” Read more here.

Trans-Pacific Partnership Is on Track: Ambassador Carden

U.S. Ambassador to ASEAN David Carden discusses the prospects for the Trans-Pacific Partnership. He speaks with Haslinda Amin on Bloomberg Television’s “On The Move Asia.” Watch the video here.

Recipe for U.S. Jobs Starts With Trade Promotion Authority | Commentary
“The appeal of the TPP is simple. Two billion Asians joined the middle class in the past 20 years, and another 1.2 billion will do so by 2020. That’s a lot of potential customers…However, to make these or any other growth-driving trade agreements a reality, Congress must first approve Trade Promotion Authority. The Constitution gives Congress authority to regulate international trade, but it gives the president authority to negotiate with foreign governments.” Read more here.

TPP: An Opportunity for U.S. Economic Growth and Jobs

“The Trans-Pacific Partnership (TPP) agreement under negotiation between the United States and 11 other countries…will strengthen trade and investment across the Asia-Pacific region. These markets are critical for U.S. goods and services exports, and a high-standard TPP agreement will help to bolster the U.S. economy and support jobs. In 2012, trade with the TPP countries supported an estimated 14.9 million American jobs, and 45 percent of U.S. goods exports went to those countries.” Read more here.

Finding Opportunity in the Trans-Pacific Partnership
“It’s an exciting time for U.S. trade policy…Much of this momentum is spurred by recent remarks Ambassador Michael Froman, President Barack Obama’s newly minted U.S. Trade Representative, made in which he announced the Trans-Pacific Partnership (TPP) was entering the ‘endgame’ following 19 rounds of intense negotiations….The TPP represents one of the most significant market opening opportunities for the U.S. apparel and footwear industry in recent memory.” Read more here.

 

TPP Chief Negotiators To Meet In U.S.; Other Meetings Scheduled

In an effort to achieve more progress before the end of 2013, TPP chief negotiators will meet in Salt Lake City, Utah on Nov. 19 – 24 in one of several “intersessional” meetings. The Office of the U.S. Trade Representative announced that negotiators will meet with various subject-matter experts in the talks.

The rules of origin group is scheduled to meet in Salt Lake City on Nov. 12 – 18, as a follow up to an earlier session that took place in Mexico City. Other meetings include: a session on SOE rules in Santiago, Chile on Nov. 4 – 7; a session on government procurement in Washington, DC on Oct. 30 – Nov. 2; and a session on investment in Washington, DC on Nov. 6 – 9.

Below is the complete list of TPP meetings in coming weeks on specific topics in the negotiations:

USTR will announce telephone briefings for U.S. stakeholders to be held around meetings in Salt Lake City.

 

Launch of the Friends of Trans-Pacific Partnership Caucus in the U.S. House of Representatives, October 29, 3013

The U.S. Business Coalition for TPP launched a bipartisan “Friends of Trans-Pacific Partnership Caucus” in the House of Representatives in late October 2013 to help solicit support for the trade pact. The establishment of the Caucus signals the importance of TPP as negotiations move toward a successful conclusion in early 2014.

Read U.S. Business Coalition for TPP Press Release

Read TPP Embassies' Press Release

Message to Members of TPP Business Coalition

NZ Trade Minister Groser Delivers Major Speech to China Business Summit, October 16, 2013

Read Speech

Business Associations Express Concern with Level of Ambition in TPP Negotiations

Nine business associations sent an open letter (attached) to the chief negotiators of the Trans-Pacific Partnership who are currently meeting in Washington, D.C.   The letter states in part:

“The U.S. business community is concerned that the TPP as negotiated to date has yet to achieve the level of ambition pledged by the governments.  We urge you to redouble your efforts toward the goal of a comprehensive, high-standard, and commercially meaningful agreement that removes barriers to trade and investment and addresses 21^st Century challenges in all sectors. We stand ready to support you in achieving this outcome.”

 

Concluding TPP Talks

The 12 TPP countries will hold a working group meeting on tariffs in Washington on Sept. 18-21, hoping to conclude a deal by the end of this year.

Groser to visit Brunei for regional trade discussions 

Trade Minister Tim Groser will depart tomorrow for Brunei to participate in series of regional trade meetings.

Mr Groser will attend the first Ministerial Meeting for the newly launched Regional Comprehensive Economic Partnership (RCEP) FTA negotiations, an ASEAN Economic Ministers meeting, which will focus on the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), as well as attending an East Asia Summit Economic Ministers Meeting, and holding discussions on the Trans-Pacific Partnership (TPP).

“These meetings provide an opportunity to advance the TPP and RCEP negotiations and to evaluate the progress of existing free trade agreements. As well as negotiating new agreements, the Government is committed to ensuring that New Zealand and its partners fully implement existing FTA commitments so as to make the most of those opportunities.

“Both TPP and RCEP will deepen economic ties by opening up trade in goods and services, boosting investment flows, and promoting closer links across a range of economic policy and regulatory issues.

“New Zealand is working with the other TPP parties to deliver on the commitment reiterated by TPP Leaders in Phnom Penh last year to achieve a comprehensive, high-ambition and 21st century TPP agreement that is consistent with the Honolulu statements endorsed by leaders and ministers in November 2011. The meeting in Brunei will be a critical checkpoint to take stock of progress made and discuss with my counterparts how we can secure an agreement as rapidly as possible,” Mr Groser says.

Notes:

The Regional Comprehensive Economic Partnership (RCEP) is a FTA negotiation that has been developed among 16 countries: the 10 members of ASEAN and the six countries with which ASEAN has existing Free Trade Agreements (FTAs) – Australia, China, India, Japan, Korea, and New Zealand.

The Trans-Pacific Partnership (TPP) will create a regional free trade agreement involving 12 countries: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, the United States, Viet Nam and New Zealand.

 

48 Business and Agriculture Associations Call for Further Liberalization to be Agreed to in TPP Negotiations

Read Letter

 

Malaysia Says 14 TPP Chapters ‘Substantially Closed’, Lists Procurement Objections

The Malaysian government last week revealed that 14 out of 29 chapters being negotiated in the Trans-Pacific Partnership (TPP) are “substantially closed,” while emphasizing that sensitive issues remain in these chapters that will be taken up at a later stage of the negotiations, presumably at a higher political level.

 

Vietnam Ready To Accept All TPP Chapters Except Market Access

A Vietnamese official this week signaled that his country is prepared to accept, with sufficiently long phase-in periods and assistance, U.S. proposals in the Trans-Pacific Partnership (TPP) in such areas as labor rights, environmental protections, state-owned enterprises (SOEs) and intellectual property rights (IPR) provided that Vietnam gets acceptable access for its apparel and footwear exports to the United States.

In a June 19 panel discussion at the Woodrow Wilson Center, Nguyen Vu Tung, deputy chief of mission at the Vietnamese embassy in Washington, said Vietnam is ready to accept all 29 TPP chapters except the one covering market access, which includes apparel and footwear.

 

TPP Market Access Talks with Japan Likely to Begin in Late August

Japan’s participation in the TPP will not get off to an immediate start.  First, the 90-day consultation period (required by U.S. law) between the Administration and Congress does not expire until July 23.  That comes only two days before the next round of TPP talks in Malaysia are scheduled to conclude.  Additionally, the Administration must wait for an economic impact report to be completed by the U.S. International Trade Commission (ITC)  –  followed by interagency and congressional consultations  –  before making any tariff offers.  The ITC study is due on August 21.  Given the August schedule, consultations could stretch into the end of August or early September.  Thus, TPP market access talks with Japan will be delayed for at least two more months.

 

 

Malaysian City Of Kota Kinabalu To Host Upcoming TPP Negotiating Round

The next round of Trans-Pacific Partnership (TPP) negotiations will take place in Kota Kinabalu, Malaysia, at the Sutera Harbour Resort from July 15-25, according to informed sources.

The Malaysian government is expected to hold a stakeholder event on July 20.

 

 

NZ – Japan Talks

Foreign Minister Murray McCully and his Japanese counterpart Fumio Kishida, at talks held in Auckland yesterday, renewed the two countries’ commitment to strengthen their bilateral relationship. They recognized the importance of successfully concluding a Trans Pacific Partnership trade agreement and welcomed the signing of a new double taxation convention and more liberal air services agreement, as well as a proposed memorandum of intent on closer defense cooperation. The two countries are also committed to expanding cooperation in areas such as earthquake engineering, geothermal energy and tsunami protection, as well as Pacific economic development, Antarctic resources conservation and the development of rugby in Japan.

 

 

TPP Update

During the 17th round of Trans-Pacific Partnership (TPP) talks in Peru, negotiators made progress on several outstanding including sanitary and phytosanitary measures, trade remedies, e-commerce, cross-border trade in services, and rules of origin.

It was reported that comprehensive market-access packages are in the works for industrial, agricultural, and textile and apparel products, services and investment, and government procurement.  These packages include tariff and rules of origin issues based on input from various stakeholders in TPP countries.

With Japan hoping to participate in the next round of negotiations (in July), all TPP countries will need to approve Japan’s inclusion in the TPP in the coming weeks.

The 18th round of TPP negotiations will be held in Malaysia from July 15 – 25.  In addition, inter-sessional work will continue to advance specific issues.

–  See statement issued by Peru’s Ministry of Foreign Trade and Tourism

–  See statement issued by USTR

 

United States | New Zealand Council Welcomes Japan’s Decision to Join TPP Talks

March 15, 2013

The United States | New Zealand Council today welcomed Japan’s decision to embrace the goals of a comprehensive, high-standard, and commercially-meaningful Trans-Pacific Partnership (TPP) agreement.

“Japan’s participation will increase interest and support for the TPP among the U.S. and New Zealand business communities, as well as throughout the Asia-Pacific region,” said William Maroni, president of the US | NZ Council.

“After 16 rounds of talks, today’s news will invigorate the TPP and create the needed new momentum to bring the negotiation to a successful competition,” he added.

Japan is the third-largest economy in the world, and the fourth-largest trading partner of both the United States and New Zealand. The US | NZ Council, an independent, non-partisan organization committed to promoting trade and investment liberalization, is a member of the U.S. Business Coalition for TPP.

According to Maroni, the announcement by Japan comes at a critical time in the TPP process when the United States lacks a new U.S. Trade Representative, following this week’s departure of Ambassador Kirk.

“Japan’s decision is favorable news for the TPP as well as for the United States and New Zealand,” said Maroni. “With the addition of Japan as the twelfth TPP member, the agreement has the potential to dramatically expand the flow of trade, investment, ideas and people; create millions of new jobs; and foster a more secure and prosperous Asia-Pacific region. This is a game-changer,” he said.

Maroni pledged the US | NZ Council’s continued commitment to the trade talks and its support for the swift, seamless inclusion of Japan into the process.

About the United States | New Zealand Council

The US | NZ Council, which was established in 1985, is the only independent group dedicated exclusively to advancing shared business, strategic, and cultural interests between the United States and New Zealand and throughout the Asia-Pacific region. The Council promotes mutual objectives in trade, investment, economic growth, and security; provides thought leadership on important Asia-Pacific regional matters; and expands collaboration and understanding in such areas as science and technology, the environment, education, entertainment and the arts. Visit USNZcouncil.org

 

 

TPP Update

The US | NZ Council attended the 15^th Round of TPP talks in Auckland from December 3 – 12, 2012.  This was the first round to include negotiators from Mexico and Canada.

Although several major issues will require both technical and political input throughout 2013, progress was made on a variety of topics in Auckland.  Most notably, there appears to have been a smooth integration of Mexico and Canada into the talks.  Both new TPP members were well prepared and pledged to keep pace with the ongoing negotiations.

The tone set in Auckland reinforced the original vision of establishing a truly regional, high quality, comprehensive, 21st century trade and investment agreement.

The 11 TPP economies make up US$18.3 trillion in GDP and include four of New Zealand’s ten largest trading partners.  The addition of Mexico and Canada brings an additional US$ 1 billion of New Zealand exports under TPP and grows the proportion of New Zealand trade covered by the agreement to almost 40 percent (or US$18 billion).

The 16^th round of the TPP negotiations will take place at the Grand Copthorne Waterfront Hotel in Singapore from March 4 – 13, 2013.  For more information, please visit:  http://www.ustr.gov/tpp

The 5 below links offer additional information from the Auckland Round.

Statement by the Office of the U.S. Trade Representative (USTR)
CLICK HERE

Statement by NZ Ministry of Foreign Affairs and Trade (MFAT)
CLICK HERE

Statement by the US | NZ Council
CLICK HERE

Statement by the U.S. Business Coalition for TPP
CLICK HERE

Statement by business groups in Australia, Canada, New Zealand, and the United States
CLICK HERE