Maui: A Good Start Toward Finishing the TPP

Trade ministers from the twelve nations negotiating the Trans-Pacific Partnership (TPP) met last week in Maui.  Some observers had expressed hopes that the Maui ministerial meeting would produce a final TPP agreement.  The “collapse” in Hawaii has caused some commentators to voice fears that it may not be possible to conclude TPP anytime soon.  Those fears are overblown.  My view is that the Maui meeting qualifies as quite a good start toward actually finishing the TPP. 

Bear in mind that the TPP negotiations have been going on for several years.  The United States became an active participant during President Obama’s first term.  However, until recently, U.S. negotiators have been handicapped by lack of Trade Promotion Authority (TPA, also known as “fast track”).  Other countries were understandably reluctant to try to conclude TPP without assurance that Congress would be willing to vote up or down on the agreement, rather than picking it to pieces with amendments.  So all previous negotiating sessions amounted to warm-up rounds, with the most serious discussions being held in abeyance until the United States finally was ready to engage without reservations.

Maui was the first TPP ministerial at which U.S. negotiators actually were in a position to consider closing the deal.  If all other countries had the same perspective on the issues as the Obama administration, the agreement could have been concluded.  Not surprisingly, other countries have various opinions on key topics.  The Maui talks allowed ministers to put those differences clearly on the table. Undoubtedly, negotiators now have a much better idea of the realm of possible outcomes.  They know what they will be expected to give in order to receive what they want in return.  By last Friday afternoon, it was time for ministers to leave Maui and head back to their capitals for high-level consultations.

How long might it take to wrap up the negotiations?  The Obama administration would like to hold a TPP signing ceremony in conjunction with the Nov. 18-19 meeting of the Asia-Pacific Economic Cooperation forum (APEC) in the Philippines.  The TPA statute requires the administration to inform Congress of the president’s intent to enter into a trade agreement 90 days before it is signed.  This would require the TPP agreement to be concluded in August. Japanese Economy Minister Akira Amari has suggested that TPP ministers should meet again on the sidelines of the Aug. 22-25 meeting of the Association of Southeast Asian Nations (ASEAN) in the Philippines. 

Finalizing the pact in August seems quite unlikely.  This is not only because many government officials are accustomed to taking vacations in late summer.  The more important factor is the Oct. 19 election in Canada.  Conservative Prime Minister Stephen Harper is in a very tight three-way race against New Democratic Party (NDP) Leader Tom Mulcair and Liberal Party Leader Justin Trudeau.  There is considerable doubt as to whether Harper will continue as prime minister. 

It seems improbable that other TPP countries would choose to complicate Harper’s re-election bid by pressuring him to make politically difficult concessions on Canada’s dairy and poultry support schemes during the heat of the relatively short campaign.  Pushing to wrap up the negotiation now almost certainly means obtaining less liberalization than might be achieved by waiting.  As trade ministers left Maui, they gave the impression that a deal among the 12 participating governments could be reached reasonably soon.  If a new Canadian government that is less supportive of trade liberalization takes office, the future of TPP could be very much up in the air. 

To those who think that U.S. politics are far more important than those of any other country, the thought of TPP delays relating to Canada’s election may cause a good bit of angst.  Team Obama would like Congress to vote on the TPP relatively early in 2016 before the congressional and presidential campaign season takes center stage.  Postponing final TPP negotiations until after the Canadian election would mean that the agreement wouldn’t be ready for review by the U.S. Congress until sometime next summer, at the earliest.

Those who are anxious about potential political complications relating to TPP delays should step back and take a deep breath.  All is not lost.  There are two quite reasonable scenarios under which Congress could find it feasible to pass TPP in the foreseeable future.  One would be for Congress to deal with it in the lame-duck session following the election on Nov. 8, 2016.  This was how the Uruguay Round WTO agreement was passed in 1994.  A second approach would be to hold the agreement over into 2017, which would allow a new Congress and new president to pass implementing legislation at a time when no election is looming. 

As a matter of strengthening its legacy, the Obama administration may prefer to complete the entire TPP process on its watch.  That concern should be set aside.  History correctly gives credit to President George HW Bush (41) for negotiating NAFTA and to President Clinton for getting it through Congress.  Likewise, history acknowledges the role of President George W Bush (43) in negotiating free-trade agreements with Colombia, Panama, and South Korea, as well as the role played by President Obama in moving them through Congress. 

The most important objective in wrapping up TPP should be to obtain a solid, trade-liberalizing agreement.  That objective should not be sacrificed for the sake of speed.  A somewhat patient approach will serve the nation’s trade agenda well, and President Obama will earn credit for it.