The Trans Pacific
Partnership (TPP) had two developments this week that increase the likelihood
of its completion and passage sooner rather than later. Ironically, these developments come from the
two countries are associated with being in the TPP talks (the US) and not being
in the TPP talks (China).
First, the
Obama Administration’s nominee for US Trade Representative (USTR), Michael
Froman, said during his Senate confirmation hearing that the Administration
would introduce trade promotion authority (TPA) legislation soon. This is a
major development because of the nature of the US constitutional system. In the Westminster parliamentary system, the
executive branch will have a majority in the legislature, such that any trade
agreements negotiated and signed by the executive will have effect. However, in the US system, the executive
branch only has authority to negotiate, but not to bind, the US to trade
agreements. Such agreements need to be
passed by the Congress, and are subject to amendment. TPA represents a pre-authorization of
authority by the Congress to the President so that he or she can negotiate
trade agreements without their being subject to legislative revisions. This is necessary to reassure trading
partners that their negotiated bargains with the US President will not be
revised during the legislative process.
Thus, TPA will reassure
negotiating parties in the TPP and Transatlantic Trade and Investment
Partnership (TTIP) FTA talks (and perhaps, the long-suffering WTO Doha Round
talks) that the US takes the talks seriously and will implement bargains
reached at the negotiating table. Just
as importantly, re-authorization of TPA will formalize the role of Congress in
the process, as TPA legislation usually concentrates oversight and consultation
during the negotiating process with the select committees responsible for
trade. This is no small development, as
without TPA, the USTR can be subject to second-guessing by any member of
Congress.
However, since TPA expired
during the George W. Bush administration,
the President and Congress have had a contentious relationship on
TPA. When Congress last offered to give
the Obama Administration TPA, the Administration shook off the offer. So will the Congress go along this time? The Republican-controlled House of
Representatives may not want to give the Obama Administration policy
victories. On the other hand, the Obama
Administration has been so battered by recent political controversies that the
House may decide to let this one go. In
any event, most Republicans are pro-business and generally pro-TPA. Also, if the agreements become too
politically difficult, the House can always vote to suspend TPA, which the then
Democrat-controlled House did to President Bush with the US-Colombia FTA.
The other major TPP
development is China’s
sotto voce statement that it was
considering joining the TPP talks.
Now I for one do not subscribe to the theory that the TPP is intended as
a trade bloc that would intentionally exclude China. However, any TPP agreement that includes
China must necessarily have sufficiently high standards both to bind China to
its implementation and to secure approval in domestic legislatures that will
view any FTA that includes China with a skeptical eye. Japan’s joining the TPP talks has already
caused enough political indigestion as it stands.
Hence China’s clearing of
its throat on the TPP may motivate the current TPP negotiating parties to
complete their work sooner rather than later.
A completed TPP negotiating text with sufficiently high standards will
either discourage China from attempting to join the talks (and avoid the
diplomatic awkwardness of having to explain why China should not attempt to
join now) or encourage China to accept the completed trade compromises of an
agreement which would be palatable to domestic constituencies in the US and
elsewhere. Of course the latter is the
better outcome but the former is more likely.
Elsewhere
I had opined that the TPP talks would not be completed until the end of the
Obama Administration in 2016. With
these two developments, I might be proven wrong. I hope that I am.
