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U.S. Needs New Approaches for TPP Challenges

Sep 20 , 2016
  • Wu Zhenglong

    Senior Research Fellow, China Foundation for Int'l Studies

US Senate Majority Leader Mitch McConnell made it clear recently that the Senate will not put the Trans-Pacific Partnership to a vote this year. And House Speaker Paul Ryan said earlier that the House of Representatives, due to insufficient support from members, would not vote on the TPP this year. When the two influential leaders of the Congress said nay to the TPP, it cast a shadow over the fate of the deal.

At the beginning of this year, President Obama was fully confident that the Congress would approve the TPP, and considered its passage a priority for his administration. To get this done, the big shots of the Obama administration even went the distance to preach the importance of the TPP to win voters’ support. During the ongoing presidential elections, however, anti-globalization and anti-free trade sentiments have been running high. The two presidential candidates tend to disagree on everything, but they share one thing in common: their opposition to the multilateral free-trade agreements.

Donald Trump categorized the TPP as “a horrible deal” and “a deal that is going to lead to nothing but trouble.” He even vowed not to hold any multilateral trade talks. Hillary Clinton, who vigorously promoted the TPP talks when she was the secretary of state, has now changed her tune and disagrees with the current contents of the TPP, saying it fails to meet the high standards for a successful deal: “create good jobs at home, raise wages and be in the national security interest”. Like Trump, she also promised to resolutely oppose the TPP if she is elected president.

As the elections head into the final months, the two candidates showed their opposition to the TPP. The main reason is that special interest or elite groups bask in the benefits brought about by economic globalization while the mass public or wage earners continue to suffer. This triggered strong resentment among voters who are dissatisfied with the slow improvement in the living standards, and consequently their dislike and opposition of trade liberalization.

With support from Republicans, the Congress last year gave President Obama the fast-track authority to complete the trade deal. When it came time for the Congress to approve the TPP, Obama wanted to follow the same approach. However, the situation has changed. In mid-July, the Republican Party adopted a new campaign blueprint, backtracking from its traditions in supporting free trade, proposing a new fair-trade policy in which employment is protected, renegotiating the North America Free Trade Agreement and opposing Congressional approval of the TPP.

In such a changing environment, many Republicans in the Congress also changed their minds, leading to a sharp shrinking of the Republican support for Obama. Probably, this is also the reason why McConnell and Ryan withdrew their support for the deal. If Obama insisted on pressing ahead with a vote, he would likely be doomed to fail. The Congressional leaders hoped that Obama would react soberly to the current difficult situation and leave some leeway for the next administration to “reactivate” the TPP.

Obama’s hope of getting the TPP approved after the presidential elections in November seems even less likely, and there will be four options for the TPP in the future.

One, the US begins to focus on domestic issues, abandons the TPP, and stops making trade rules for the Asia-Pacific region and the world.

Two, the US tries to renegotiate the TPP deal and modify some clauses that the special-interest groups oppose. For instance, the American Federation of Labor and Congress of Industrial Organizations believes that the TPP fails to attach enough attention to labor, environmental protection and public health, and such US industries as pharmaceutical, tobacco, finance and automobile also disagree with some clauses and are asking the government to renegotiate those clauses.

Three, with the main framework and contents remaining unchanged, make minor changes and revisions to the current version of the TPP; and

Four, both candidates could follow the footsteps of Bill Clinton in dealing with the North America Free Trade Agreement: Oppose the deal before the presidential election, and then lobby the Congress to approve it after the elections.

This writer believes that neither the first nor the fourth is an option. The US still wants to lead the world for another 100 years and will surely not abandon its rights and dominance in formulating global trade rules. Based on current opinion polls, Hillary Clinton is likely to be the winner in this year’s election. She has expressly said that she would not support the current version of the TPP if she wins.

The second and the third are possible options for the new government. The fact is, however, the current TPP was a hard-won result after six years of extensive talks, compromises and interest swaps, and if renegotiation is started, it will probably take six more years or even longer to wrap up the new talks. As for the third, it not only depends on the composition of the new Congress but also on the cooperation of other member nations, and it could not be an easy job to reach consensus both on the domestic and international fronts. Whatever the option might be, it is certain that the TPP will be delayed for a long time and the TPP’s future is full of uncertainties.

The TPP is one of the two pillars in Obama’s strategy of rebalancing to the Asia-Pacific region, and also one of the most important political legacies he has tried to build before he exits the White House. Any delay in approving the TPP will deal a heavy blow to the US rebalance to the Asia-Pacific region, and also to the US leadership in the world. The US needs to reassess the Asia-Pacific region, and with an open and inclusive mentality and the spirit of common development and win-win cooperation, work out a new strategy on the TPP.

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