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Economy

With Trump on the ropes, the TPP could yet triumph

The astonishing and disturbing spectacle of the U.S. presidential election and the rise of Donald Trump has understandably riveted the attention of people in the U.S. and around the world. Fortunately, the world -- other than Russia and North Korea -- can breathe easier now that it has become virtually certain that Hillary Clinton will be the next U.S. president.

Trump's decisive defeat will reassure the world that America has not lost its collective mind. But the moment the election is over, the U.S. will face the choice of whether to approve the Trans-Pacific Partnership agreement through a vote of both houses of Congress in a post-election "lame duck" session. While considerably less dramatic than the presidential campaign, the decision on the TPP will determine America's position in the Asia-Pacific, and its credibility as a trading partner and an ally, for years to come. 

The TPP has been extremely controversial in the U.S. for several years. A formidable anti-trade movement, led by the labor unions and a group of environmental, health and consumer nongovernmental organizations, has been a constant and effective force on the American political landscape since the historic battle over the North American Free Trade Agreement in 1993. The TPP opponents, including some powerful intellects such as Nobel Prize winner Joseph Stiglitz and former Labor Secretary Robert Reich, waged a fierce fight against granting President Barack Obama the negotiating authority -- the so-called Trade Promotion Authority -- needed to complete the TPP.

However, in July 2015, Obama, working in an unusual bipartisan coalition with Republican congressional leaders Mitch McConnell and Paul Ryan, got the TPA through the Senate by a comfortable margin, and then prevailed in the House by the narrowest of margins. With the TPA approved, U.S. Trade Representative Michael Froman was able to work with the trade ministers of the 11 other TPP nations to complete the negotiation successfully in October 2015.

Willing public

While winning approval congressional approval of a trade agreement in an election year is never easy, this presidential campaign season has made trade, and the TPP specifically, an unprecedented focal point of the national political debate. Trump and former Democratic presidential hopeful Bernie Sanders made trade-related job losses a centerpiece of their campaigns. Clinton, who as secretary of state called the TPP "the gold standard" of trade agreements while it was being negotiated, shifted to opposing the agreement that emerged under intense pressure from Sen. Sanders and core Democratic constituencies.

Sen. McConnell and Speaker Ryan, sensing the political winds and responding to the concerns of Republican candidates, curbed their supportive statements about the TPP, and suggested that it would not be considered by Congress this year -- before or after the election. Obama remains steadfastly and vocally committed to the TPP as a cornerstone of U.S. economic policy and his "pivot" toward the Asia-Pacific. At least until Election Day, few other political leaders will join him.

But recent press reports and poll results suggest that the American people may be on his side. In a campaign season that has generally generated much more heat than light, there have been some interesting press reports providing insight on the trade issue. In an article last month titled "Who Hates Free Trade Treaties? Surprisingly, Not Voters," the New York Times reported that a majority of voters favored free trade agreements, including the TPP. The article noted a Washington Post/ABC News poll showing 75% of those questioned wanted the next president to be a supporter of trade agreements, with only 17% believing that she or he should be an opponent. In the Wall Street Journal, columnist Mary Anastasia O'Grady shredded Trump's criticisms of NAFTA, saying, "thanks to free trade, the U.S. auto industry has become globally competitive again" and that NAFTA had been "a boon to American agriculture."

David Autor and his co-authors have shown that manufacturing job losses in America accelerated dramatically after China's entry to the World Trade Organization in 2001. Given this evidence, many commentators have made the point that if China poses the principal trade challenge for the U.S., rejecting the TPP -- an agreement with 11 strong U.S. allies that offers an alternative to China's state capitalism -- would be a gift to China and a blow to the hopes of many nations in the Asia-Pacific.

Nevertheless, in the toxic trade environment created by the heated political campaign in which Trump, Clinton and Sanders all opposed the TPP, the chances of Congress moving quickly to approve the pact in a lame duck session that will last only several weeks would appear to be small. What are the factors that could still lead to a vote? First, USTR Froman and his team have been working intensively with Capitol Hill to resolve the several issues with the TPP that have caused the most objection by Republicans that supported it last year. Froman has successfully addressed the unhappiness of the financial sector about a provision that excluded them from the general rule that companies could not be required to keep data on local servers. They are working hard to resolve the objections of Sen. Orrin Hatch and the pharmaceutical industry, both of which are angry that the U.S. was not able to convince its TPP partners to grant 12 years of data exclusivity for biologics. They are also doing the extensive staff work on the legislation implementing the agreement that would be needed to move rapidly if the opportunity for a vote presents itself.

Second, President Obama remains absolutely committed to the importance of the TPP for America's economic future. He has steadfastly believed that it is in America's national interest to be fully involved in an Asia-Pacific region that is economically integrating, rather than outside, and that it is crucial that America helps write the rules of international trade for the region, rather than ceding leadership to China. And the president's assessment of our national interest is clearly right. It is revealing that in the past eight years -- a period characterized by hyper-partisanship and gridlock -- there has been only one clear case in which the president and the Republican leaders of Congress worked together to accomplish something substantial: the negotiating authority to finish the TPP agreement.

Third, McConnell and Ryan, the leaders of a party greatly damaged by Trump's insurgency, will have a real incentive to begin rebuilding their party and their credibility. Working with Obama to accomplish something of lasting significance could appeal to them as the best way to salvage a disastrous political year. From their standpoint, moving ahead with the TPP has the additional benefit of exacerbating divisions among the Democrats, who overwhelmingly opposed its approval last year.

Fourth, for Clinton, who as secretary of state played a key role in the "pivot to Asia," the TPP poses the first difficult choice that she must make after the election. If the agreement is not considered in the lame duck session, she would face two very unattractive options. If she maintains her stated opposition to the trade agreement upon assuming office, it will kill the agreement, which cannot go into effect without the support of both the U.S. and Japan. Alternatively, she could pledge to take it up during her presidency, presumably by making it a relatively small part of her broader economic program and negotiating some changes that justify moving it ahead.

"Hands off" approach

Viewed in this way, neither option appears attractive, and her best choice becomes clearer. She will not want to kill the agreement, recognizing that would be a stunning blow to U.S. credibility and its position in the Asia-Pacific. Nor will she want to put her new administration through the agonizing process of trying to renegotiate provisions with 11 other countries, which will likely produce marginal changes at best, followed by a divisive trade fight on Capitol Hill. It would be far preferable for Clinton, as president-elect, to take the position that America has one president at a time, and to let Obama and TPP supporters in Congress work together to get the agreement approved, if they can prevail as they did with the TPA last year.

Such a "hands off" position would unquestionably anger some of her core supporters. But those constituencies are likely to be elated by the result of the election, and the good feelings created by having crushed Trump. They will also look ahead, recognizing that they will have many important issues on which to work with President Clinton in the next four years. If defeating Trump is the first step toward restoring a more normal politics in America, working pragmatically in a bipartisan fashion to debate and approve the TPP would be a great second step.

Ira Shapiro is president of Ira Shapiro Global Strategies, a consulting company specializing in trade law and policy and global government relations. He is also chairman of the National Association of Japan-America Societies. He served as general counsel, chief negotiator with Japan and Canada, and ambassador in the Office of the United States Trade Representative during the first administration of President Bill Clinton. He is the author of "The Last Great Senate: Courage and Statesmanship in Times of Crisis."

In an article last month titled: "Who Hates Free Trade Treaties?  Surprisingly, Not Voters," the New York Times reported that a majority of voters favored free trade agreements, including the TPP.  The article noted a Washington Post/ABC News poll showing 75% of those questioned wanted the next president to be a supporter of trade agreements, with only 17% believing that she/he should be an opponent.

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