The Trans-Pacific Partnership Agreement has become a political football in the US presidential elections and with the public mood so anti-FTA, this trade deal faces the real possibility of being discarded.
IT was signed in February by the 12 countries that spent five years negotiating it, and was widely expected to come into force within two years, after each country ratifies it.
But now there are growing doubts if the controversial Trans-Pacific Partnership Agreement (TPPA) will actually see the light of day.
Ironically, it is the United States, which led the negotiations process, that may in the end be its undoing.
The TPPA has become one of the hottest issues in the US presidential election process. Opposing the TPPA is at the centre of Donald Trump’s campaign.
Bernie Sanders championed the anti-TPP cause, saying: “We shouldn’t re-negotiate the TPP. We should kill this unfettered FTA which would cost us nearly half a million jobs.”
Hillary Clinton also came out against the TPPA, a turnaround from her position when she was Secretary of State.
To counter suspicions that she would again switch positions if she becomes President, Clinton stated: “I am against the TPP, and that means before and after the elections.”
They may all be responding to a popular feeling that trade agreements have caused the loss of millions of manufacturing jobs, stagnation in wages and the unfair distribution of benefits in US society.
Besides the presidential candidates, two other players will decide the TPPA’s fate: President Barack Obama and the US Congress.
Obama has been the main advocate for the TPPA, passionately arguing that it will bring economic benefits, raise environmental and labour standards and place the US ahead of China in Asian geo-politics.
So far, he has not succeeded. Obama must get it ratified by Congress before his term ends, in the lame-duck Congress session after the election on Nov 8 and before mid-January 2017.
It is unclear whether there is enough support to even table a lame-duck TPP Bill, and if tabled, whether it will pass.
Last year, a related fast-track trade authority Bill was passed with only slim majorities. Now, with the concrete TPPA before them, and the swing in mood, some who voted for fast-track have indicated they won’t vote for the TPP.
Most Democrats have indicated they are against the TPPA. They include Clinton’s running mate for vice-president, Senator Tim Kaine, who had voted for fast-track, House Minority Leader Nancy Pelossi and House Ways and Means Committee Member Sandy Levin who said: “It is now increasingly clear that the TPP Agreement will not receive a vote in Congress this year, including in any lame duck session, and if it did, it would fail.”
Congress Republican leaders have also voiced their opposition. Senate Majority Leader Mitch McConnell said that the presidential campaign had produced a political climate that made it virtually impossible to pass the TPP in the lame duck session.
House Speaker Republican Paul D. Ryan, who had helped write the fast-track Bill, said he sees no reason to bring the TPP to the floor for a vote in the lame duck session because “we don’t have the votes”.
Meanwhile, six House Republicans sent a letter to Obama in early August last week urging him not to try to move the TPP in a lame duck session.
Though the picture looks grim for Obama, he should not be underestimated.
He said when the elections are over he will be able to convince Congress to vote for the TPP. He added that many people thought he would be unable to get fast-track through Congress, but he was able to prevail.
To win over Congress, Obama will have to respond to those on the right and left who are upset on specific issues such as the term of monopoly for biologic drugs, or the inclusion of ISDS (investor-state dispute settlement) in the TPP.
To pacify them, Obama will have to convince them that what they want will anyway be achieved, even if these are not legally part of the TPP.
He can try to achieve this through bilateral side agreements on specific issues, or insist that some countries take on extra obligations beyond what is required by the TPP as a condition for obtaining a US certification that they have fulfilled their TPP obligations.
Obama could theoretically also re-negotiate specific clauses of the TPP in order to appease Congress. But this option will be unacceptable to the other TPP countries.
In June, Malaysia rejected any notion of renegotiating the TPPA.
“The question of renegotiating the TPPA does not arise even if there are such indications by US presidential candidates,” said Tan Sri Dr Rebecca Fatima Sta Maria, then the secretary-general of the International Trade and Industry Ministry.
Singapore Prime Minister Lee Hsien Loong, on a recent visit to Washington, dismissed any possibility of re-opening parts of the TPP as some Congress members are seeking.
In January, Canadian Trade Minister Chrystia Freeland said a renegotiation of the TPP is not possible. Japan also rejected renegotiations.
What happens if the US Congress does not adopt the TPP during the lame duck period? The 12 countries that signed the agreement in February are given two years to ratify it.
Theoretically, if the TPP is not ratified this year, a new US president can try to get Congress to adopt it in the next year. But the chances for this happening are very slim.
That’s why the TPP must be passed during the lame duck session. Or it may have to be discarded, probably forever.
That would be a dramatic marker of the changing winds in public opinion on the benefits of free trade agreements, at least in the United States, the land that pioneered modern comprehensive free trade agreements.
Martin Khor (email@example.com) is executive director of the South Centre. The views expressed here are entirely his own.
Did you find this article insightful?