Co-authored with Jonathan Gregory
The passage of the Trade Promotion Authority (TPA) for President Obama paves the way for his signature before the July 4 Congressional recess. More importantly, it paves the way for eventual approval of the Trans-Pacific Partnership (TPP), a 12-nation Pacific Rim trade agreement (exclusive of China) which represents 40 percent of the global economy.
While we would argue that the recent setbacks on trade votes were more than simply procedural snafus, the TPA votes as a means eventually realizing the Trans-Pacific Partnership was crucial. To paraphrase a common expression, the TPA vote was "too important to fail."
There are both domestic and international reasons why TPA had to succeed. The ramifications of failure at home or abroad would have been significant and long lasting, hurting the U.S. economy and political system and undermining our foreign policy and global standing. The approval of TPA does not guarantee TPP or the Transatlantic Trade and Investment Partnership (TTIP), but it does make them easier to approve and bolster the credibility of free trade as a means of domestic and international policy.
Domestically, one of the most important aspects of today's vote was to continue to support exports as a key base of growth for U.S. businesses, U.S. workers and the U.S. economy. During the Great Recession, exports were one of the only elements of the U.S. economy that continued to expand, supporting workers and businesses. A second point is that today's vote maintains the slim pro-trade bipartisan Congressional majority that has existed for decades and that has led U.S. integration into new markets around the world. While labor unions and environmental groups raised were resourceful in dominating an increasingly liberal Democratic caucus to raise valid issues, a defeat of TPA could have changed the dynamics of future trade votes and degraded public support for entering new markets. Finally, President Obama's political standing would have suffered, leading to more partisanship and acrimony as Congress and the President seek bipartisan solutions to upcoming challenges like budget sequestration.
Arguably, the ramifications of TPA failure would be even more disastrous internationally. International order in the post-World War II era has always been supported not only by America's predominate military power, but also increasingly the global economic system whose lifeblood is trade. While statistics vary, it's clear that an open international order facilitated by free trade agreements such as the Trans-Pacific Partnership will benefit America domestically, but it is in the international space that Washington gains the most. Having witnessed China launch its Asian Infrastructure Investment Bank with the help of many of America's transatlantic allies and given that the U.S. heard from its many Asian allies that are concerned about the gravitational pull of China's economy, America's trade agenda has never been more important.
Laying out an economic architecture in the Pacific based on trade that spans Asia and Latin-America builds on America's greatest strength -- and also empowers important allies, Japan being the first among them. Having evolved from the trade wars of the 1990s to the present partnership framework of TPP, the US-Japan alliance is the crown jewel of the TPP, as was on display earlier this year during Prime Minister Abe's visit to Washington in which he invested significant personal capital on securing this deal with President Obama. Having invested so much, had this trade deal fallen short, there would be no saving face in Japan for America. Protecting America's interests in Asia beyond our direct military interests in the form of fair and open trade is also in Asia's long-term interests, including eventually China.
These issues, foreign and domestic, are far too important to leave unaddressed. Maintaining a U.S. trade policy that is at the heart of U.S. economic and foreign policy priorities is critical. In essence - it is too important to fail.
Cross-posted from APCO Blog