Trans-Pacific trade pact on the slow track

By | May 12, 2014

This was an op-ed piece of mine published on May 9, 2014, in the Financial Post.

Lawrence L. Herman: If a TPA bill is ever passed, Obama’s authority will likely be on a tight leash

The Trans-Pacific Partnership trade negotiations continue to move along, with Japan now intensively involved and the government of South Korea close to jumping in. With the collapse of broader multilateral efforts in the World Trade Organization in Geneva, the TPP is the biggest game on the planet.

The complexity of these talks is daunting. Items on the table go far beyond the kind of border measures that were typically covered by conventional trade agreements like the North American Free Trade Agreement.

Technical complexity is one thing. The other elephant in the room is that the Obama administration still doesn’t have legal negotiating authority – called Trade Promotion Authority (TPA) or “fast track” – something only the Congress can provide. And Congress is so far not moving ahead on this file.

Canadian officials keep saying “Don’t worry. Be happy. It’s just a formality.” The truth of the matter is that it’s more than that. It doesn’t make sense to negotiate with the Americans when they haven’t got the green light from Congress. We don’t even know if the light will be green or orange – or maybe even red.

Official Washington is starting to admit the truth. A recent report from World Trade On-Line posted said that a senior adviser to Obama publicly acknowledged that the administration is in a tough position in the TPP talks because the lack of TPA. At the same time the official confirmed that members of Congress are reluctant to approve a bill without knowing the content of any future trade deals that would be covered. A chicken-end-egg dilemma.

This was confirmed by U.S. Commerce Secretary Pritzker and Agriculture Secretary Vilsack, according to the same report. Those comments contradict previous statements by Obama administration officials about the lack of TPA not being an obstacle in the TPP negotiations.

Even if a TPA bill can be finessed, it will likely not happen until after the mid-term U.S. elections this fall, further delaying the whole TPP exercise.

But it’s far from certain that the bill will ever get through. Organized labour, very influential in the Democratic Party, is generally hostile to trade agreements, putting pressure on Obama’s own party to not approve TPA.

If a TPA bill is ever passed, Obama’s authority will likely be on a tight leash and there will be close Congressional oversight through each step in the negotiations. This would mean Canada and the other TPP countries would, in effect, be negotiating with the Congress and not with the Obama administration.

This whole problem is rooted in the U.S. constitution, full of checks and balances, with the Congress having shared authority with the executive branch over international trade.

The point of fast-track – going back to the 1970s – was to overcome that situation. Fast-track was devised so that Congress would pass the necessary negotiating authority and when the deal was brought back for ratification, all Congress could do would be to vote in favour of the entire package or reject it – but no changes could be insisted on. That gave other governments comfort in trade negotiations with the Americans.

What seems to be happening now is that the TPA concept is being radically altered. The Congress is not content to let the Obama team go ahead without direct Congressional supervision of the talks. This reflects Obama’s apparent inability to manage things with Capitol Hill.

Whether all of this TPA business can be resolved satisfactorily seems uncertain at this point. And that uncertainty could put the globe’s biggest trade game in some jeopardy.

Lawrence L. Herman, founding partner at Herman & Associates is a Senior Fellow of the C.D. Howe Institute in Toronto.