TPP and Fast Track
Written by Rick Welch on May 28, 2015
The Trans-Pacific Partnership or TPP is a free trade agreement currently being negotiated behind closed doors by trade representatives from the US and 11 other countries - Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. As a group, the 12 countries of TPP may account for as much as 40% of the global economy. Now 6 years old and counting, this trade pact aims to increase commerce and investment by reducing trade barriers among participating countries. As written recently (4/5/2015) by Fordham University Professor Heather Gautney, "such barriers typically include tariffs, but also environmental and labor regulations, known as nontariff barriers to trade or NBTs. Opponents of TPP fear the affects of NBTs - the reduction of regulatory measures, and freeing of market activity, done in the name of standardizing rules and lowering costs." Critics of the proposed pact worry that new standards for environmental and labor laws, the protection of intellectual property and the use and control of the internet may very well level the field, while also impacting American interests overseas.
That all sounds interesting, but, isn't TPP about much more than strengthening economic ties? Probably. History tells us that trade pacts tend to reduce security tensions between members because an agreement signals to the world that we (the agreeing countries) are now on the same team. The message of being teammates can, in certain circumstances, evoke a "we versus them attitude". Teams always have a leader and, as the assumed leader of TPP, the US would gain a new ability to advance its own interests, while preventing China from deciding how the game is played in the Pacific Rim. Together, with the Asian members of TPP (Japan, Malaysia and Vietnam), the US could find itself better positioned to influence how business in done in Asia. As suggested in a recent Charles Schwab Market Perspective (5/22/2015) entitled As the World Turns, "Japan is a unique case where the TPP offers little downside. Japan has almost no tariffs on most manufactured products so those businesses would not lose any protection in domestic markets; but the elimination of tariffs by other countries should lead to higher exports for Japanese manufacturers. US imposed tariffs on Japanese autos (2.5%), electrical machinery (2.0%) and televisions (2.8%) would all be eliminated, allowing Japanese companies to better compete in US markets."
Most Americans were unaware of the ongoing TPP negotiations until the 2015 State of the Union address by President Obama. In her recent article, Professor Gautney wrote this, "Mr. Obama stressed the importance of being economically out front in the Asia Pacific, and promised that the TPP would create more and better jobs, and benefit small business. He also asked both parties for increased executive authority in the form of trade promotion authority (TPA) to protect American workers with new trade deals from Asia to Europe that are not just free, but fair. It is the apparent closed-door nature of the negotiation process that has positioned Congress and the American people as mere passive recipients of public policy, rather than agents of it - and left us out of decision-making processes that will have broad and deep implications in our every day lives."
To understand the rationale for TPA, I refer back to the aforementioned Charles Schwab Market Perspective which offered this, "Trade Promotion Authority (TPA) is a necessary step to passing the Trans-Pacific pact and other trade deals with limited congressional input. TPA is referred to as fast track since it requires Congress to vote on a trade treaty within 60 days without amendment. Without TPA, trade deals could stall under endless amendments and the lack of a timetable under which to consider them. Such TPA approval would allow for a vote on the TPP as soon as June or July."
