With only three hands from among about 30 attendees going up in the air, Steve Haro must’ve known he had a daunting task ahead.
Visiting the Metro Atlanta Chamber, the Commerce Department assistant secretary in charge of legislative and intergovernmental affairs had asked how many attendees thought the Trans-Pacific Partnership, a controversial free trade deal, would be ratified by Congress this year.
With trade having become a “four-letter word” during the current election cycle, he understood the pessimism among business leaders and economic developers gathered Monday at roundtable put on by Business Forward, a lobbying group in favor of the deal.
Still, Mr. Haro expressed hope in the face of politicians’ use of trade, in his view, as a “straw man” for the perils of globalization and automation, trends that started displacing jobs long before NAFTA’s passage in 1994 yet have been co-opted anew as a source of anti-trade anger animating some political campaigns.
“There really is a sense of urgency,” both in the Obama administration and in the legislature, to pass the deal, he said. “If we do not get it done this year, the earliest I believe we can get this done is the year 2021 — if ever.”
One reason is practical: 25 of the 218 representatives who voted in the House for Trade Promotion Authority are retiring this year.
That legislation, passed by the slimmest of margins in June 2015, gave President Obama the right to conclude negotiations on TPP last October. It will also enable him to send the finished deal to Congress for an up-or-down vote at the time he’s confident it has enough support. The TPA vote, though not a perfect mirror, is often used as a proxy for a potential TPP vote.
Another reason is presidential politics. Precluded by law from talking about candidates, Mr. Haro didn’t mention presumptive Republican nominee Donald Trump, who has made bashing trade deals including TPP a centerpiece of his campaign, or Bernie Sanders, whose losing effort in the Democratic primary didn’t stop him from (unsuccessfully) seeking to introduce anti-TPP language as part of the party’s platform.
Nor did Mr. Haro cite presumptive Democratic nominee Hillary Clinton, who stumped for TPP as a pillar of the Obama administration’s “pivot to Asia” while serving as secretary of state but as a presidential candidate has said she opposes the 7,000-page agreement.
But he did say that even if the next president were to come around to a position supporting TPP, its divisive nature would likely render it a second-term priority — if it ever came up again at all.
Mr. Haro also provided context on trade currents running through Congress, which he indicated are more promising for TPP’s prospects than toxic rhetoric might suggest.
Some legislators are privately in favor of the deal but won’t go public with their support, calculating that they have little to gain and much to lose this year from being seen as trade supporters, he said.
And specifically he called out a few legislators who’ve been holding up the deal. The Senate delegation from North Carolina and other tobacco-producing states have opposed a carveout that left tobacco companies outside deal’s “investor-state dispute settlement” provision, which lets companies appeal before arbitration tribunals government actions they believe are protectionist. A high-profile case where Philip Morris challenged Australia on cigarette packaging rules led to that country pushing for the carveout.
But the linchpin for a TPP vote in the Senate is 82-year-old Sen. Orrin Hatch, the Utah Republican chairing the Senate Finance Committee, who has opposed the TPP over the issue of biologic drugs — complex medicines like vaccines or blood and tissue products used to prevent and treat illnesses.
When selling new drugs, U.S. law grants firms a 12-year period of exclusivity before cheaper generics can be introduced. The rationale is that it enables them to recoup the high cost of drug development, which can run into the billions of dollars.
But some countries in the TPP bloc have no exclusivity and sought to keep it that way; the U.S. was bargained down to an eight-year period (five initially, extendable by three), a disappointing outcome for the pharmaceutical industry, which lobbied to keep the 12-year rule. (Incidentally, the only protests at the Atlanta TPP negotiations were centered around drugs, with some chanting “TPP Death Sentence!” at a rooftop reception at the Metro Atlanta Chamber.)
The administration, meanwhile, pitched eight years as a victory, given the fact that American firms previously had no protection in some of the TPP countries.
Mr. Hatch has said recently he is demanding the U.S. stick to the 12-year rule, but he acknowledged to Politico the administration’s efforts to win him to the TPP fold.
“Once Orrin Hatch is in a good place, that’s when the dominoes begin,” Mr. Haro said, noting that consultations with pharmaceutical firms are underway to ensure palatable outcomes in future trade agreements.
Other sticking points include the failure of TPP to include an enforceable provision on currency manipulation, where countries intentionally devalue their currencies to make their exports cheaper. Mr. Trump, in particular, has called out non-TPP nation China as a manipulator that should face reprisals.
Mr. Haro said the provision was left out on purpose, to keep from tying the hands of monetary policy makers during times of crisis like the 2008 Great Recession. He pointed to a side deal on the issue in which the 12 countries introduced a first-of-its kind “shaming mechanism” whereby a country violating the provision would be called out on their behavior, though critics say that’s an insufficient deterrent.
But he emphasized that negotiations will not be reopened on TPP, which required six years of talks and considerable political capital to get to this point, Mr. Haro said.
“If 12 of us got together after this and said, ‘Where are we going to dinner tonight?’ that would take a long time to figure out,” Mr. Haro said.
Plus, the “21st-century trade deal” sets standards that opponents of previous deals have long sought, like specific provisions on digital data, intellectual property protection and workers’ rights.
For the first time, the TPP includes language that requires countries to adopt International Labour Organization standards — minimum protections that prohibit child labor and allow workers to organize, among others.
That not only helps U.S. firms who must adhere to such standards compete on a more level playing field, but it also creates a greater prosperity for Asian workers, who will be future buyers of American products.
Failure to act on the pact will dent U.S. credibility on future trade deals, and it will hinder U.S. leadership both on security and economic issues in a crucially important region of the world, where China could write the rules of trade if the U.S. doesn’t.
He called on attendees to share stories of how exports have helped their companies hire more people and pay them more — just don’t use the word “trade,” he said.
“To get this done, it’s going to take all of you being advocates on the ground. You are the face of trade; you are the companies on the ground,” he said. “We really need you.”
After answering questions, he asked for a show of hands again. This time, four or five went up in the air — only a slight improvement after some good-natured chiding.
That informal poll reflected the education needed to show how integration with the world benefits consumers and workers, a battle that trade promoters seem to be losing at the moment.
“This is not just about TPP. This is about trade. TPP is the battle; trade is the war,” Mr. Haro said.
The problem is that fear tends to drive political campaigns, and government officials like himself have limited power to influence those who are convinced that trade is responsible for their joblessness, he said.
Those are the very voters being courted by Mr. Trump, who said in a recent trade policy speech that he will back out of TPP and renegotiate NAFTA. Mr. Haro says TPP is essentially a NAFTA update.
“We tend look for the most simplistic ways of explaining certain things, but as you know, there’s nothing simple about the global economy,” Mr. Haro told Global Atlanta.
The TPP includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. All have to ratify the pact before it can go into force. Mr. Haro believes most partner countries are waiting to see what happens in the U.S.
Among the attendees at the chamber roundtable were three winners of the Atlanta Metro Export Challenge, which awarded $5,000 each in matching grants to 35 companies to help expand sales internationally. That first crop of winners will compete for a $25,000 grand prize in the coming weeks.
