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)
