[CTC] TPP uncertainties to dog Obama trip to Asia

[Arthur Stamoulis]

TPP uncertainties to dog Obama trip to Asia
By DOUG PALMER <https://www.politicopro.com/staff/doug-palmer> 
POLITICO

11/16/15 05:00 AM EST
President Barack Obama heads to Asia this week, hoping to build on the momentum of the recently concluded Trans-Pacific Partnership agreement and to reassure allies worried about China’s growing power that the United States will be a strong force in the region.

But concern that Obama may not have the political muscle to get the deal over the finish line in Congress will shadow him on the trip, as new questions arise about the strength of provisions covering financial services and state-owned enterprises.

“If we fail to get the Trans-Pacific Partnership done, if we do not create the architecture for high-standards trade and commerce in this region, then that void will be filled by China, it will be filled by our economic competitors,” Obama said at a meeting on Friday with national security experts. “They will make the rules, and those rules will not be to our advantage.”

Obama began his week-long trip Saturday in Turkey for a meeting of the Group of 20 leading economies. He's expected to arrive in the Philippines Tuesday for the Asia-Pacific Economic Cooperation summit, where the 21 member economies are expected to launch new initiatives to spur both services and digital trade. He heads to Malaysia later this week for the East Asia Summit and the U.S.-ASEAN Summit.

While in Manila, Obama also will hold bilateral meetings with leaders of three TPP countries: newly elected Canadian Prime Minister Justin Trudeau, Australian Prime Minister Malcolm Turnbull and Japanese Prime Minister Shinzo Abe. All 12 TPP leaders will meet on Wednesday for the first time since the deal was struck last month in Atlanta. Obama will meet with two other TPP leaders — Singapore's prime minister, Lee Hsien Loong, and Malaysian Prime Najib Razak — in Kuala Lumpur.

"One of the top themes for the trip will be the Trans-Pacific Partnership agreement,” Daniel Kritenbrink, White House National Security Council Director for Asian Affairs, told reporters on Friday. "TPP is central to our vision of the region's future and our place in it."

But even as Obama touts the significance of the 12-nation agreement, which covers 40 percent of the global economy, it remains unclear whether he can win approval of the deal before leaving office in January 2017. While some agriculture and business groups have endorsed the agreement, which took more than five years to negotiate, others remain on the fence as they continue to dig through the details of 30 chapters of text and dozens of other documents associated with the pact.

The sheer volume of new rules and exceptions makes the TPP "very difficult to try to get a grasp on," said Derek Scissors, a resident scholar at the American Enterprise Institute. "In my opinion, as a free trader, it is not a high standard free trade agreement.”

The pact does benefit the United States in areas like agriculture and intellectual property protections, Scissors said in an interview and a blog post <http://www.aei.org/publication/tpp-a-bronze-standard-free-trade-agreement-go-for-gold/?utm_source=paramount&utm_medium=email&utm_campaign=mediascissorstpp&utm_content=pitch>. But the chapter on financial services has been "neutered" by the number of exceptions that countries are allowed to take, while provisions on state-owned enterprise allows considerable leeway for countries to reorganize operations to avoid the new disciplines, he argued.

However, U.S. Trade Representative Michael Froman and other administration officials describe the deal as a groundbreaking achievement that would anchor the United States firmly in Asia and force China to "up its game" to remain competitive, even though the world's second-largest economy is not a member of the 12-nation pact. The deal breaks new ground in the chapter on state-owned enterprises and more to liberalize services trade than previous pacts, a USTR spokesman said.

"One of the president's top priorities is to secure passage of TPP through Congress and to implement the agreement, which is a critical step towards a high-standard free trade area in Asia and the Pacific, and our goal of revitalizing the open rules-based economic system that the U.S. has led since World War II," National Security Adviser Susan Rice said.

That message especially resonates in the region in light of China's island-building activity in the South China Seas, which has raised concern about both its military intention and commitment to freedom of navigation.

Still, Senate Finance Committee Chairman Orrin Hatch said last week the TPP pact may need to be renegotiated because of weak protections for biologics, a new class of life-saving medicines, and other problematic provisions.

So far, the White House has shrugged off those concerns, arguing the deal is still complex to reopened. It also has stepped up its efforts to sell both the economic and national security benefits of the agreement.

That includes drawing on foreign policy heavyweights like Madeleine Albright and James Baker to counter criticisms that another former occupant of that office — Hillary Clinton — has made about the agreement. Obama met on Friday with both former secretaries of state and other foreign policy experts.

"The successful conclusion of this agreement sends a powerful signal about America's continued global leadership and engagement, while helping ensure that the United States continues to shape the global rules and standards for commerce and trade," Albright said in a statement.

"The TPP will promote deeper regional economic integration, increased political cooperation, and ultimately greater stability in one of the world’s most important regions,” Baker echoed in his own prepared remarks. “This agreement is an important example of the kind of global leadership America should provide and is firmly in our national security interest.”

Obama arrives at the meetings in Asia in a stronger position for having completed the TPP pact. But other TPP leaders still want reassurance he can persuade Congress to pass the bill, analysts said.

"He’ll say, you know, "We’re working it. You’re going to hear a lot of noise, but in the end we’ll get this done,'" Matthew Goodman, senior adviser for Asian economics at the Center for Strategic and International Studies, told reporters earlier this week.

History is on Obama's side in that regard since there are few examples of Congress turning down a trade agreement. However, three deals with South Korea, Colombia and Panama negotiated by the administration of former President George W. Bush were delayed for a number of years before they were approved in 2011 on Obama's watch.

Scissors said his hunch is the TPP will travel a similarly slow path. Next week in Asia, everyone will say "'great job, great job', but when the vote doesn't happen, all that will go away. If you asked me to bet, I'd bet right now, this [agreement] will not be passed as is," Scissors said. "I think over time, you're going to get more and more awareness that this is not that strong an agreement."


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