TPP now, not next year

The world economy could use a major boost; that’s hardly a surprise.   Our U.S. economic growth rate isn’t shabby, but deep concerns elsewhere in the world will eventually have a spillover effect on us.  So the world badly needs someone to step forward with decisive, transformative actions that will stimulate economic growth and job creation.  Only the U.S. can provide that leadership, and we should do so, now!

What might we do?  Fortunately, the answer is right in front of us if we recognize it and take the steps to make it happen.  It is TPP, the TransPacific Partnership negotiations, a 12-country exercise that has been underway since the U.S. signed up in 2008.  Some might find it difficult to attach the words “decisive and transformative” to trade negotiations when such deals are typically phased in over 10 years or more – and when the last major negotiation was the Uruguay Round, concluded more than two decades ago.    

{mosads}But let’s not discard TPP before examining progress that has already been made; let’s not underestimate its transformative potential; and let’s not judge the outcome until we have an outcome.   Too much is at stake, for this is a negotiation that covers 40% of world trade, and a potential second tranche will cover a lot more.  This is a strategic opportunity that should not be ignored or squandered.

Americans should be excited about TPP with its focus is on Asia and Latin America.  The rest of the world is important to us too, and we have a similar negotiation underway with the European Union (the so-called TTIP negotiations).  But the Asia-Pacific is where much of the world’s growth in purchasing power will reside in the decades to come, and it takes purchasing power to buy our goods and services and create U.S. jobs.  

We have long discussed the benefits of a free trade agreement with Japan, and that alone makes TPP worthwhile.   But we’ll gain from boosting exports to countries like Australia, New Zealand, Malaysia and Vietnam as well.   The intangibles of TPP are important too, especially the national security/foreign policy benefits of demonstrating American leadership in that part of the world.  Should we leave a vacuum, China will eagerly fill it.  Better that we do our part to conclude TPP successfully and then invite China to join – on terms established by us and our negotiating partners, and not on terms presented by them.   

So why all the fuss right now?  Because we have a political window of opportunity here in the U.S. that will close soon.  Presidential campaigns typically produce far more demagoguery than wisdom where trade policy is concerned.   Notwithstanding all the good work that has already been done by TPP negotiators, not one of them will wish to subject a TPP agreement to the bombast of our presidential campaigns.  So we need to get this done; the TPP “window” is 2015, not 2016.

Step one is fast track authority so that a final agreement will be submitted, without amendment, to an up or down vote in Congress.  The other 11 TPP participants are not about to submit their best offers to the U.S. until and unless we either have Trade Promotion Authority (TPA or “fast track”) or can persuasively assert that such authority clearly is on the way.  Otherwise there is a risk Congress could change the deal, an outcome the other participating nations would not accept.

Therefore, one of the first bills to emerge from deliberations of the Senate Finance and House Ways & Means Committees should be fast track, and Congress needs to get it to the president’s desk soon.   Those who dislike trade agreements will vehemently oppose fast track, but proponents must win that political battle.   Delaying fast track will simply delay final offers the other 11 TPP countries are prepared to grant to the U.S.; if fast track is not approved we’ll never see those offers.

If the U.S. is able to enact TPA legislation during the first quarter of 2015, negotiators will have a reasonably good chance of quickly wrapping up TPP.   That will not be easy, for time is of the essence.  Once finalized, the agreement will need to be translated into a host of languages, scrubbed by the lawyers, implementing legislation will need to be agreed between the administration and the Congressional trade committees, the U.S. International Trade Commission will need to report to Congress on the probable economic impact of the agreement here in the U.S., and the Congressional trade committees will undoubtedly wish to hold hearings and conduct “mock markups” on an agreement of this importance.  That all takes time, so let’s hope everyone proceeds expeditiously, and gives TPP the fair hearing it deserves – before the political season gets underway.

Some of my Republican colleagues may ask: “Why should we do this, and give President Obama a legacy on trade that he might not otherwise receive?”  The answer is that this will be a splendid legacy for everyone – Republican and Democrat alike – who votes for it.  TPP is vital for American business and American agriculture.  It will create jobs and keep our economy dynamic and growing.  If we postpone until 2017, there may well be no legacy for anyone.  The opportunity will have been squandered and our grandchildren will be playing by China’s rules.   That would be a huge blow to American leadership, to the leadership of both our parties, and to the economic wellbeing of millions of people here and abroad.                

Yeutter served in cabinet and sub-cabinet posts for four U.S. presidents and U.S. Trade Representative from 1985 to 1988. Currently he is a senior advisor at Hogan Lovells to the international trade and investment and the food and agriculture practices.