Comments due by Nov. 17, 2014
The Republican party has won majority in the Senate, possibly providing an opening for two pending U.S. free trade agreements. The U.S. is currently engaged in negotiations on two international pacts.
Republicans have traditionally been more supportive of trade agreements because of the potential to increase economic growth and business, while Democrats have been wary that such policies could negatively impact domestic jobs, labor standards and environmental regulation. The Obama administration has negotiated two such agreements – the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership – but the president hasn’t found backing from Senate Democrats, the chamber responsible for approving trade agreements.
Sen. Mitch McConnell of Kentucky, likely the new Senate majority leader, said Wednesday in Louisville that Republicans and President Barack Obama share an agenda on trade.
“I’ve got a lot of members who believe that international trade agreements are a winner for America and the president and I discussed that right before I came over here,” McConnell said. “I think he’s interested in moving forward. I said, ‘Send us trade agreements, we’re anxious to look at them.’”
Obama also made reference to trade agreements Wednesday in his own postelection press conference, saying it was one area in which Democrats have a “real opportunity” cooperate with Republicans.
Current Senate Majority Leader Harry Reid made clear earlier this year he would not support passage of legislation that would fast track free trade agreements through the chamber after a deal has been reached by international partners. The Trade Protection Authority, which expired in 2007, means the Senate votes a simple yes or no on trade deals – no amendments or modifications are allowed.
“That’s what the world’s looking for in terms of America’s ability to negotiate seriously,” says Yukon Huang, a senior associate at the Carnegie Endowment. “They don’t want negotiate something and later on find it’s going to be renegotiated in the context of congressional discussions.”
Reid said in January, "I think everyone would be well-advised just not to push this right now” of pursuing the Trade Protection Authority.
Some took these comments to mean that passing the legislation before Tuesday’s midterm election would be disadvantageous for Democrats, but that Reid could pursue the agenda in the remaining lame duck session.
Miriam Sapiro, a former deputy U.S. trade representative and visiting fellow at the Brookings Institution, said now the election is over she hopes Reid will be open to the possibility of advancing a trade agenda by passing the Trade Protection Authority, also know as fast-track authority, and thus boosting the chances of a successful Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership.
“These can be tough votes for members because there is concern about potential job loss,” Sapiro says. “In the past, trade agreements have led to growth in net number of jobs. But sometimes there can be particular jobs that are no longer as competitive. There is a legitimate concern of how do you help retrain workers that might be effected by a trade agreement?”
The Trans-Pacific Partnership is an agreement being negotiated by the U.S. and 11 other countries in the Pacific, but notably does not include China. The U.S. and the European Commission are negotiating on the Transatlantic Trade and Investment Partnership.
Even if the Senate doesn’t advance a trade agenda in the remainder of 2014, the pending agreements are likely to find support among the Republicans in the next session of Congress. Sen. Orrin Hatch, R-Utah, the likely new chair of the Senate Finance Committee, which is responsible for shepherding trade policy, supports the current agreements.
The fact that the Trans-Pacific Partnership doesn’t include China is also a selling point, says Huang.
“If China were a part of the [Trans-Pacific Partnership], it would probably get much more scrutiny and concern about whether the agreement is in America’s interests. So that removes that element that’s always been very, very contentious,” Huang says.
China isn’t party to the negotiations because when they were initiated, it was unwilling to accept the standards the agreement required on issues like the role of state-run enterprises and intellectual property. Huang says China has since informally requested to join the negotiation process but “essentially was old it was too late.” Negotiations will continue at next week’s Asia-Pacific Economic Cooperation meeting in Beijing, but may not dominate the agenda because of China’s absence.
Negotiations for the Transatlantic Trade and Investment Partnership lag behind those of its Pacific counterpart, because negotiations only began in 2013. Europe and the U.S. have a lot of work to do in terms of reaching complimentary standards that would allow a free-trade agreement to move forward, says Sapiro. Things like how to build automobiles, rules for the export of animal products, and regulations for how goods are produced differ between the continents and complicate imports.
Another potential barrier to passage of both of the agreements is U.S. agricultural policy, which heavily subsidizes farmers. These price controls, also put in place domestically in Europe and Japan, make it difficult to ensure the countries are on an even playing field in the global economy. Countries have a hard time selling cuts to subsidies domestically.
“America does have a problem in terms of protecting its farm belt and it has a cost for everybody,” Huang says. “But the degree of protection and barriers are even more significant in Japan and Europe so that if there is a mutual understanding and agreement America stands to gain in the process rather than lose.” (US News)
Perhaps because it might not be welcomed by public, it is often just a subtly mentioned as a side thing that the agreements often cover issues regarding intellectual property.
ReplyDeleteIntellectual property — linked to issues such as patent and copyright infringement, or regulation of internet — is an issue which is not bounded by geographical borders of a state. For that reason, if governments want to regulate such borderless global issues, linking them to international trade agreements is a way how to do so.
Which might be another reason why China might be hesitant to join such agreements. As potentially production in China could be limited by enforcement of intellectual property laws; goods currently produced in China could then be forbidden to produce except by the monopoly holder of a patent.
Such agreement might be coated by noble words such as “free trade,” though usually it has a little to do with them.
“Another potential barrier to passage of both of the agreements is U.S. agricultural policy, which heavily subsidizes farmers. These price controls, also put in place domestically in Europe and Japan, make it difficult to ensure the countries are on an even playing field in the global economy. Countries have a hard time selling cuts to subsidies domestically.”
Freeing up trade internationally is strictly linked to freeing trade domestically. Freeing up agricultural field through reducing regulations and subsidies, would be a very unpopular decision by policymakers, with a party affiliation making a little difference in general.
S. Franek
The United States and the European Union are negotiating a trade agreement—TTIP,, that is being looked as an answer to the disagreements of transatlantic relationships, a solution to the economic difficulties in Europe and a stepping stone for the relationships with Western countries.
ReplyDeleteThe U.S, on the other hand, is more concern with the domestic implications that the Trade Protection Authority might bring. An issue that may arises is the power the Senate has in amending or modifying the agreement. Congress will have too much power over the trade agreement, which can lead into an unclear view of its influence over the trade agreement.
The idea behind the “fast track authority” is to boost the changes of a successful Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership. The US is concerned with promoting growth and employment, two key benefits that free trade agreements provide. However, increased government regulation can conflict with the goal of the TTIP in helping the international community at large, and can lead into infringing a country’s national sovereignty.
Hence, while the US and the EU (i.e world powers) grow as fast as developing countries like China, having that much power over the world economy could signify a higher growth rate and eventually increase their dominance. China has already revealed their opinion about trade agreement and they oppose the agreement’s standards on issues such as state-run enterprises and intellectual property. China having a mix of economies (i.e. socialist, capitalist, and communist) does not believe in contracts or private property-ownership- intellectual property.)
Until parties involved in the Trade Protection Authorities do not separate their domestic policies with that of the international community, then the true objectives of the trade agreement becomes unclear and countries that fear power will not be distributed equally will not want to be involved in such trade agreement.
The issue highlighted in this article is an issue that has been emphasized in many other articles thus far relating to international trade / trade agreements: the loss of domestic jobs, and the particular impact of trade on certain job fields. I will reinforce the argument that I continually make regarding the changes the inevitably come with globalization and increased trade: While job displacement is devastating, I believe that globalization is inherently a good thing. Increased trade among countries leads to increased specialization, and this can lead to increased efficiency. The problems arise when those being pushed out of their industry cling on for dear life instead of giving way to globalization. International trade will inevitably displace domestic jobs because, unlike what some proud Patriots may tout, America is not the best -at least not at everything. If we were able to domestically produce all goods and services with both a comparative and absolute advantage, there would be no need to trade, all our jobs could remain happily distributed as they currently are, and there would be no threat of losing certain fields or industries to more efficient / productive overseas competitors. However, in the real world, we harm ourselves by insisting on maintaining certain industries in the US when they may be significantly more efficient elsewhere, and where would would save by importing rather than producing. Additionally, while certain domestic industries may be more strongly hit, on the whole the number of jobs increase in response to trade agreements. As former deputy U.S. trade representative Miriam Shapiro said in the article, “'In the past, trade agreements have led to growth in net number of jobs. But sometimes there can be particular jobs that are no longer as competitive.'” In order to remain on top, one must remain competitive by adapting to the ever-evolving industries and market conditions, rather than just resting on the laurels of "having been doing it for a very long time." Unfortunately, doing something for a very long time doesn't always correlate with doing it the best.
ReplyDeleteIt is realized in the article that important issues regarding international business are debated. The cases related to trade agreements are criticized in that article. We see that loss of domestic jobs and effects of these trade agreements to certain job fields are discussed in depth. There may be some drawbacks of globalization but I will still favor it depending on the advantages it brings to the world. I can see that moving the jobs as a result of globalization ds something popular. Many countries make trade agreements and they move their production facilities to low cost countries and we mention about job losses emerging from this case. However, globalization is good for us because the trade and interaction between countries and people have increased. The most well know trade agreement of US is NAFTA and we all know the advantages of it though some economists still debate the disadvantages emerging from job losses. They may be right in their views but the issue should be seen in the general environment. Mexico has becomes an important merging economy thanks to NAFTA and it becomes participative in the world economy. I can understand the points of China in Trans-Pacific Partnership and why the country is not included in it. Negotiations for Transatlantic Trade and Investment Partnership begin in 2013 but USA and EU have a lot to do for reaching complimentary standards. There are some regulations that should be complied with. The US agriculture policy creates problems for the standards as well because it subsidizes farmers.
ReplyDeleteThe United States is in the process of negotiating both the Trans-Pacific Partnership and the TTIP in hopes increasing “free trade” amongst the countries that are included. The article mentions that the US has a better chance of passing these trade agreements now that the Republicans have won majority in the senate due to the fact that the Democrats often believe that such policies could negatively impact domestic jobs, labor standards and environmental regulation. I strongly believe that while these may be an issue that results from such an agreement, the solution is not to abandon the agreement altogether. Like the article states, job loss that may result from such an agreement are jobs that are no longer competitive and truthfully jobs that American citizens should not be doing. What the government should be more concerned with is how we retrain these people who have lost their jobs and create a better environment for job mobility to exist. As we learned from international economic theory, the rule of specificity states that we should target the issue at hand and not try to find a round-about solution like trade barriers or rather disapproving trade agreements for the benefit of protecting certain industries. If our second best world wants to be anything like the theoretical first best world, then we need to allow these diminishing industries to fail instead of trying to protect and save them.
ReplyDeleteThis article seems just like the previous articles on transatlantic trade with political implications thrown in the mix. The Republicans support these agreements because of its potential to increase economic growth. Meanwhile, the Democrats are not in favor of new free trade agreements as they tend to negatively impact domestic jobs, environmental regulations and standards of labor. The point of this article (and previous ones as well) is that trade will always bring about advantages and negative consequences. The goal of trade is to maximize the production of goods and services where nations specialize in what they produce most efficiently and trade with its partners who have advantages in producing other goods and services. The USA produces many goods and services which they have prided themselves on and in some cases, they have historical origins which they try to preserve. With the rise of the BRIC nations, The USA has lost its advantage in the production of goods and services which have led to unemployment. This reminds me of the ‘Furniture Offshoring’ article which talked about the demise of American furniture companies because China and IKEA have lower production costs. While there are negative consequences, policy makers must develop utilitarian agreements that are beneficial in the long run to all trading partners. Even though jobs will be lost, job creation is vital to keep unemployment levels low and redistribute the productivity of a labor force. Pride and tradition will have to be excluded from new agreements if output is to be maximized.
ReplyDeleteThis article addresses some advantages and disadvantages of international trading partnerships. While globalization, particularly international trade, has contributed to much of American wealth, there is still many issues to contemplate, especially for the Democrats. Despite the disadvantages of international trade that the Democratic Party is worried about, I don't think that these issues will be fixed without trading. The American economy relies on trading for economic growth and to be frank, much of the world relies on America for economic growth.
ReplyDeleteWhile trading has led to a tremendous decline of American jobs in the manufacturing sector, there have been plenty of other benefits that compensate for this loss (cheap imports, foreign investment, specialization in the production of goods and services). Unfortunately, the United States is no longer a manufacturing economy, despite its efforts to preserve that. However an even bigger problem is that there are many states whose primary source of income is derived from manufacturing and farming related jobs; a huge contrast from what the United States is extremely efficient in - information technology. This then creates the question of which exercises greater importance, preserving a traditional and value-driven America or investing in training and education of unemployed workers to fully transition into modern America?
While I understand that every country wants to protect their own self-interest and welfare, globalization doesn't always permit that. I believe that the government needs to train workers for better job security. This obviously consumes a lot of time, effort, and funds. While I don't like that some workers will have to depart from their normal jobs, it seems to be the better option given the extent to which globalization is impacting us. I believe we will gain more in the long run, rather than enforcing restrictive trade barriers to maintain our pride.
Republicans are indeed big fans of the TPP, which would drop trade tariffs and regulatory barriers among the participating countries. Rand Paul, a Republican senator from Kentucky, was promoting the TPP in a speck in New York, saying: “Instead of just talking about a so-called ‘pivot to Asia,’ the Obama administration should prioritize negotiating the Trans-Pacific Partnership by year’s end.” Obama supports the TPP but the fact that key Democrats have blocked the pact, opposing fast-tracked trade agreements shows that they are still concerned that the TPP would send more manufacturing jobs overseas, and in particular hurt the auto industry. Republicans are increasingly signaling a willingness to work with Obama to strengthen his negotiating position with partners overseas. The United States stands to gain a greater GDP growth and more jobs from concluding the trade accords, and if either TTP or TTIP are finalized, they will rank among the top accomplishments of the Obama administration. There will definitely be a lot of drawbacks with the coming of the TPP and globalization, as job market in the United States will take a big hit. Manufacturing and farming jobs are the two industries that could be outsourced, which can hurt our economy in many ways. At the same time, we can benefit from receiving cheaper imports and investing in foreign goods. As long as there are more jobs being created than job loss, then I think that the unemployment levels will be able to balance themselves out. No matter how you look at it, trading always has its pros and cons. In the end, the United States wants to better their standpoint in the world by being able to produce goods and services that other nations would desire. The administration will continue to make the case that trade done right will support good-paying jobs and bolster economic growth within the country.
ReplyDeleteThis article is mostly about the impact of republican majority in the senate which is very influential but not a negative aspect. President Obama is actually planning on going through thee trade agreements of TTIP and Trans Pacific Partnerships both which are very crucial to global and american economy. Republicans focus more on the prediction of in crease of jobs and economy globally and democrats are rejecting this idea because they believe there will be a negative effect of this on domestic jobs. In this case, I feel the United States and Europe need to go through the trade agreements and then decide how it will impact America. I feel that one country should not pay a price for a global agreement so clearly this is not a simple yes or no agreement. The only way out of this situation is if these partnerships lead to a way which will actually help all nations grow in the employment section and the expense of the American employees. This is a hard target to achieve and thorough some economic theories we have learned that nations can use each others disadvantages to make a competitive advantage which can help a nation grow. Maybe such an approach can be used but to balance out the economic growth in each country. These are all predictions. The real affects will be based on the decisions made by these partnerships.
ReplyDeleteAfter reading this article it seems that government officials are making an effort to give democrats and republicans a common ground to stand on with the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership. The Transatlantic Trade and Investment Partnership (T-TIP) is an inclusive and high-standard trade and investment agreement being negotiated between the United States and the European Union (EU). T-TIP will help unlock opportunity for American families, workers, businesses, farmers and ranchers through increased access to European markets for Made-in-America goods and services. This will help to promote U.S. international competitiveness, jobs and growth. However, many have displayed concern about how these trade agreements will affect the job market that can most likely result in the loss of jobs for many people. In another article I read, there have been already situations where neither domestic nor international courts determine the outcomes of investor state dispute settlement cases. They take place before three attorneys in private trade tribunals. These cases give a taste of the consequences that the TPP and the TTIP could have both abroad and in the U.S.
ReplyDeleteThis article speaks about the potential advantage in having a Republican senate on trade agreements. The article suggest that Republicans are more supportive of trade agreements while Democrats have been known to be more concerned about the potential job losses and labor standards that come from these treaties. The author mentions how current senate majority leader Harry Reid said he would not support any legislation that would fast track free trade agreements through the chamber after a deal has been reached by international partners. This is concerning because international trade agreements already involve lengthy and difficult negotiations. If the senate is allowed to add amendments and modifications to every trade agreement it makes a long process even longer, potentially upsetting the international community. As Yukon Huang said “They don’t want negotiate something and later on find it’s going to be renegotiated in the context of congressional discussion”. With a Republican senate majority and the exclusion of China in the Trans-Pacific Partnership, the senate should easily support trade agreements. However, there is still the ongoing debate over potential job losses that come from free trade.
ReplyDeleteIn light of the recent election, this article delves into the impact felt from the shift to a Republican senate. In particular, international trade. This article suggests that Democrats tended to reject such trade agreements and policies because, "such policies could negatively impact domestic jobs, labor standards and environmental regulation." The author also suggests that Republicans would be more interested in agreements such as these because of the potential economic and business growth. Sen. Mitch McConnell of Kentucky is also mentioned as an ally in moving these agreements forward, and McConnell also spoke of the backing that is already there in the Republican party.
ReplyDeleteIt does seem that this election has made it more conducive to hammering out an agreement, but as the article also states, there is potential for job loss and international conflict regarding agriculture. We will have to wait and see.
A good article.But i keep thinking is this about stopping China? Or is it simply economics? Considering China's already considerable trade with the U.S., including China in the negotiations would exacerbate the already established trade imbalance.
ReplyDeleteGetting U.S. Senators to "buy in" on this would be nigh impossible. Its hard enough getting these senators to join the rest of the existing parties, much less losing the income from tariff on our largest trading partner.
For me, as an American, its simply not worth it to lower our tariffs with China. Especially seeing what the implications of our current trade imbalance is.
However we might be able to substantiate a partnership with the 3rd largest economy Japan, considering how very complementary our economies already are and how similarly our financial institutions already function.
The article covers a lot of good points, but I was a bit concerned as to why the United States does not want to involve China into the current trade agreements being negotiated. After all,isn't China one of the world's largest producer of goods, so I would have thought that the United States would have been more eager to set up some sort of trade agreement in order to boost economic growth. It is rather concerning as to why Democrats are less obliging to trade agreements, which means there should be a shift now that the Republicans have gained majority of the Senate. This should create a potential advantage for the United States because if implemented in the correct way, the United States should experience economic prosperity under the Republican Party due to their willingness to expand international trade. I think the problems that the Democrats feel would be caused due to the increase in trade can be handled and in the long run prove to be beneficial to the United States as well as foreign nations.
ReplyDelete