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Obama's Asia Trip: TPP Make-or-Break Moment?

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A major goal of President Barack Obama's Asia trip is to revive the Trans-Pacific Partnership (TPP) after four years of negotiations have resulted in talks deadlocked over scores of issues and growing U.S. congressional and public opposition.

Whether or not any real deal is made, some sort of "breakthrough" almost certainly will be announced because the U.S.-Japan summit is viewed as a do-or-die moment to inject momentum into the TPP process. Familiarity with kabuki theatre may be useful in interpreting the summit outcomes on the TPP.

Obama arrives in Asia without trade authority and with TPP partners Japan and Malaysia aware that the U.S Congress, which has exclusive constitutional authority over trade policy, is increasingly skeptical about the TPP. January 2014 legislation to enact Fast Track authority was dead on arrival in the U.S. House of Representatives. Already in late 2013, 180 House members had announced they would never authorize the Fast Track process again; more announced opposition to the specific Fast Track proposal when it was submitted in January 2014.

The prospect that Obama cannot deliver on whatever "compromises" he may make on his Asia trip was heightened on Monday by a bipartisan letter in which 63 members of Congress demanded that the Obama administration secure an agreement for Japan to eliminate its agricultural tariffs.

The letter was mainly signed by those in the dwindling bloc of TPP-supporting U.S. representatives. Major U.S. agribusiness interests have reiterated the call for zeroing of Japanese agricultural tariffs after Japanese press reports suggested that a deal on more modest tariff reductions was imminent. Legislation passed by Japanese Prime Minister Shinzo Abe's ruling Liberal Democratic Party's legislative wing listed five "sacred" agricultural products -- rice, beef and pork, wheat and barley, sugar and dairy -- that must be excluded from the TPP.

But at the same time, there is enormous pressure for Obama and Prime Minister Shinzo Abe to announce a breakthrough. They want news of a U.S.-Japan deal -- whether or not one is made -- to revive TPP talks.

Months of non-stop U.S-Japan bilateral TPP negotiations have failed to overcome sensitive agricultural and auto market access issues -- among the few real, old-fashioned trade issues in the TPP. Without knowing what market access gains they may achieve in return, other TPP nations have been loath to consider high-stakes tradeoffs on the sensitive policy issues at the core of the TPP. This includes U.S. demands on behalf of corporate interests to extend medicine patents and meddle with governments' drug reimbursement rates; limit financial regulation, food safety standards and Internet freedom; and expand investor protections that subject domestic laws to attack by corporations in foreign tribunals.

Despite the unprecedented secrecy surrounding the TPP negotiations, leaks of TPP documents are fueling opposition in many TPP countries as the pact's prospective threats are revealed. As a result, the other TPP nation governments face considerable domestic political liability for acceding to various TPP demands being forwarded by U.S. negotiators on behalf of the 600 official U.S. trade advisors who represent corporate interests. (You can find a checklist of all of the unresolved issues here.)

Finally, the president's Asia trip provides the best possible platform to make arguments that distract from the TPP's merits and shift the focus to broad-brush narratives that connect to congressional and public anxieties about a rising China. As the economic sales pitch for the TPP has faced increasing incredulity in Congress, TPP proponents have shifted to such foreign policy arguments-of-last-resort used to sell flagging trade deals.

A report released last week by Public Citizen reveals that nearly identical foreign policy arguments have consistently proven baseless when used to sell trade deals over the past two decades. The report reviews foreign policy claims made to promote the TPP, ranging from the absurd to the counterfactual, to those that repeatedly have been disproved by the actual outcomes of similar claims made for past pacts. Repeatedly, Congress has approved trade deals based on dire predictions that failure to do so would mean diminished U.S. power, the takeover of important markets by competitors or foreign instability, only to find that many of those predictions came true in spite of, and sometimes even because of, pacts' enactment.

Among the report's findings, echoed last week in a call with members of Congress and Asia policy expert Clyde Prestowitz:

  • Past free trade agreements (FTAs) failed to counter the rising economic influence of China (or Japan): From 2000 to 2011, U.S. FTAs with eight Latin American countries were sold as bulwarks against foreign economic influence in the hemisphere. The U.S. pacts were implemented and China's exports to Latin America soared more than 1,280 percent, from $10.5 billion to more than $145 billion, while the United States saw only modest export growth. The U.S.-produced share of Latin America's imported goods fell 36 percent, while China's share increased 575 percent. Similarly, under the North American Free Trade Agreement's (NAFTA) first 20 years, the U.S.-produced share of Mexico's imported goods dropped from almost 70 percent to less than 50 percent, while China's share rose more than 2,600 percent. Similarly, after hysterical claims that Japan would seize U.S. market share in Latin America by signing its own free trade agreements unless the United States approved NAFTA and other FTAs, such Japanese FTAs were signed anyway.
  • The TPP will not "contain" or isolate China: U.S. officials have repeatedly welcomed China as a prospective TPP member. How can the TPP isolate China if China can become a member? Administration officials note that China could join only if it agreed to the TPP's rules, but those rules would give Chinese products duty-free access to the U.S. market and new foreign investor rights and privileges that would enhance China's relative economic might within the United States. This may explain China's statements of increased interest in joining the TPP. The TPP also will not empower Pacific allies to act as a bulwark against Chinese influence, given that many of those nations see China as a partner. The report cites officials from TPP countries stating that if the TPP were to become a China-containment tool, they would no longer participate in TPP negotiations.
  • The TPP is not a vehicle to impose "our" rules vs. China imposing "theirs": The TPP's actual terms undercut the false, but conveniently scary, dichotomy posed as a choice between using TPP to impose "our" rules internationally or living with rules set by China. This argument presumes that the TPP represents "our" rules, but in fact many of the TPP's terms reflect the narrow special interests of the hundreds of official U.S. corporate trade advisors that have shaped them. TPP investment rules would promote more U.S. job offshoring and further gut the U.S. manufacturing base that is essential for our national security and domestic infrastructure. The study summarizes a recent U.S. Department of Defense report that concludes that U.S. deindustrialization poses a threat to national security and our nation's economic well being. Meanwhile, TPP procurement rules would ban Buy American policies that reinvest our tax dollars to create economic growth and jobs at home. TPP service sector rules would raise our energy prices and undermine our energy independence and financial stability. And TPP drug and copyright terms would raise health care costs and thwart innovation.

Unfortunately, such inconvenient details have not guided the Obama administration's approach to the TPP. So, stand by for trans-Pacific wafts of hot air about the TPP serving as a key component of Obama's "pivot" to Asia, and -- maybe -- news of a "breakthrough" that ain't.