[CTC] Obama Administration Gives Up on Pacific Trade Deal

[Arthur Stamoulis]

Two articles below...

http://www.wsj.com/articles/obama-administration-gives-up-on-pacific-trade-deal-1478895824 <http://www.wsj.com/articles/obama-administration-gives-up-on-pacific-trade-deal-1478895824>
Obama Administration Gives Up on Pacific Trade Deal

Congressional GOP leaders indicated they wouldn’t consider Trans-Pacific Partnership in lame-duck session, marking bitter defeat for President Obama

William Mauldin
Updated Nov. 11, 2016 3:45 p.m. ET 
The Obama administration on Friday gave up all hope of enacting its sweeping Pacific trade agreement, a pact designed to preserve U.S. economic influence in fast-growing Asia that was buried by a wave of antitrade political sentiment that culminated with Tuesday’s presidential election.

Just days after Donald Trump <http://www.wsj.com/news/author/159> surprise victory, U.S. officials said Republican congressional leaders had made clear that they wouldn’t consider the 12-nation Trans-Pacific Partnership in the remainder of Mr. Obama’s term. The White House had lobbied hard for months in the hope of moving forward on the pact if the Democratic nominee, Hillary Clinton <http://www.wsj.com/news/author/6344>, had won.

The failure to pass what is by far the biggest trade agreement in more than a decade is a bitter defeat for Mr. Obama, whose belated but fervent support for freer trade divided his party and complicated the campaign of Mrs. Clinton.

The TPP’s collapse also dents American prestige in the region at a time when China is flexing its economic and military muscle.

Just over a year ago Republicans were willing to vote overwhelmingly in support of Mr. Obama’s trade policy. But as the political season approached and voters registered their concerns by supporting Mr. Trump, the GOP reacted coolly to the deal Mr. Obama’s team reached with Japan and 10 others countries <http://www.wsj.com/articles/u-s-reaches-trade-deal-with-11-pacific-nations-1444046867> just over a year ago in Atlanta.

Winning a majority of votes for the TPP in the House and Senate would have required both a last-minute deal to address Republican priorities and an election result that didn’t show such broad discontent.

Neither occurred. Since the election, Senate Majority Leader Mitch McConnell (R., Ky.) and Sen. Chuck Schumer (D., N.Y.) have both said no to bringing the TPP to a vote in the lame duck session, despite many senators’ strong support for freer trade.

In the House, Rep. Kevin Brady (R., Texas), the chairman of the House committee that oversees trade, said in a statement Wednesday that “this important agreement is not ready to be considered during the lame duck and will remain on hold until President Trump decides the path forward.”

Matthew McAlvanah, a spokesman for U.S. trade representative Mike Froman, said Friday that despite all the work the administration has done with lawmakers on Capitol Hill “ultimately it is a legislative process, and the final step is for Congress to take.”

White House officials preparing for Mr. Obama’s trip to meet Pacific leaders in Peru acknowledged the defeat on Friday. “In terms of the TPP agreement itself, Leader McConnell has spoken to that, and it’s something that he’s going to work with the president-elect to figure out where they go in terms of trade agreements in the future,” said Wally Adeyemo, deputy national security adviser for international economic affairs.

Chinese officials preparing for the summit of the Asia-Pacific Economic Cooperation summit next week said they had heard the rumblings of protectionism and vowed to push alternative, lower-standard Pacific trade deals that aren’t likely to include the U.S.

President Xi Jinping <http://www.wsj.com/news/author/6475> will seek support for a broad free-trade area in the Asia-Pacific during the APEC summit, a senior Chinese official said.

U.S. officials have long warned that failure to pass the TPP, which doesn’t include China, would help Beijing take the lead <http://www.wsj.com/articles/china-positioned-to-gain-global-sway-after-trump-win-1478862043> with another framework, the Regional Comprehensive Economic Partnership, which could be concluded in coming months and would lower or eliminate tariffs among some Pacific countries but not the U.S.

Neither proposed trade framework would have the TPP’s safeguards for intellectual property, the environment, labor or other U.S. priorities, administration officials say. A tariffs-only trade agreement led by China wouldn’t have the same strategic or economic impact as the TPP.

Recently China has started taking advantage of U.S. hesitation abroad to push its own international financial programs and economic alliances, marking a new phase in the U.S.-led order that has helped provide prosperity and security in the Pacific for decades.

This week’s election is also affecting European ties. The top trade official in Brussels said Friday that Mr. Trump’s election will further delay a big trade deal the Obama administration has been negotiating with the European Union—the Transatlantic Trade and Investment Partnership, or TTIP.

Many American politicians see U.S. trade agreements as complicated and politically fraught deals that can provide a bit of extra economic growth and shore up strategic alliances.

But foreign officials see Washington’s willingness to enter into such deals as a crucial barometer on whether the world’s biggest economy and military power is looking outward toward international engagement and problem-solving or inward toward domestic problems.

The 2016 election season has shown that domestic concerns about globalization, the trade deficit and stagnant wages easily beat out the appetite for international engagement.

The TPP became a symbol Washington pursuing policies that disproportionately favor wealthier Americans over ordinary workers. Mr. Trump blamed the TPP on special interests trying to “rape” the country.

Some lawmakers and officials say the TPP or a similar deal could reappear in the Pacific in the future, perhaps with different countries in the region or even a single partner.

—Viktoria Dendrinou in Brussels contributed.



https://www.washingtonpost.com/news/wonk/wp/2016/11/11/donald-trump-promised-to-rip-up-trade-deals-tpp-is-the-first-casualty/ <https://www.washingtonpost.com/news/wonk/wp/2016/11/11/donald-trump-promised-to-rip-up-trade-deals-tpp-is-the-first-casualty/>
Donald Trump promised to rip up trade deals. TPP is the first casualty.

By David Nakamura <http://www.washingtonpost.com/people/david-nakamura> and Ylan Q. Mui <http://www.washingtonpost.com/people/ylan-q-mui> November 11 at 2:57 PM
 <>President-elect Donald Trump’s pledge to upend U.S. trade policy is claiming its first casualty, as Republican leaders in Congress have closed the door on the Obama administration’s hopes for last-minute ratification of an expansive Pacific Rim trade accord before the president leaves office.

GOP lawmakers had publicly expressed skepticism about the future of the 12-nation Trans-Pacific Partnership (TPP) ahead of a presidential election in which both major candidates opposed the deal. But staff level conversations between the White House and Congress had continued behind the scenes to prepare for a potential vote during the lame duck congressional session that could begin next week.

Those conversations have halted since Trump’s upset victory over Democrat Hillary Clinton, according to officials involved in the process. The prospect of House Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) moving forward over Trump’s objections to the largest regional trade and regulatory deal in history is viewed as a non-starter among free trade proponents.

The TPP’s collapse denies Obama the economic cornerstone of his administration’s attempt to rebalance the nation’s foreign policy attention toward Asia as a hedge to China’s growing economic and military clout. The accord was viewed as a test of U.S. leadership in the region, and Obama will face disappointed leaders of other TPP countries next week at the Asia Pacific Economic Cooperation summit in Peru.

Administration officials said they are not abandoning the deal and emphasized that Obama will continue to talk about the economic and strategic benefit. But Chinese officials are expected to use the Peru forum to tout their own Asian trade deal that does not include the United States.

"We have worked closely with Congress to resolve outstanding issues and are ready to move forward, but this is a legislative process and it's up to Congressional leaders as to whether and when this moves forward," said Matthew McAlvanah, spokesman for U.S. Trade Representative Michael Froman.

White House press secretary Josh Earnest said Obama and McConnell spoke after the election about the priorities for the lame duck session. He did not say whether TPP remained on the table, adding only that Obama “does continue to believe that this is the best opportunity that the Congress has to take advantage of the benefits of a Trans-Pacific Partnership.”

The bigger question is whether the demise of TPP marks the beginning of a radical reinvention of the United States’ positioning in the global economy under Trump. During his campaign, Trump tapped into voters’ economic anxiety and blamed free trade deals for harming American manufacturing workers. He vowed to rip up long-standing accords, including the North American Free Trade Agreement signed in 1994, and impose double-digits tariffs on major U.S. trading partners China and Mexico.

“The electorate that President-elect Trump was able to successfully tap into is one that feels a tremendous amount of economic uncertainty. And much of that they’re blaming on the forces of globalization, fairly or not,” said Chad Bown, senior fellow at the Peterson Institute for International Economic. “TPP got caught up in that.”

In addition, Trump has said he would label China a currency manipulator on his first day in office -- a move that some experts have cautioned could be the first step in igniting a trade war with damaging ramifications for the U.S. economy.

Even a modest increase in duties on Chinese and Mexican imports could have significant consequences. A report issued by Barclays this week estimated that instituting 15 and 7 percent tariffs on China and Mexico, respectively, would shave about half a percentage point from growth next year.

In an interview, Trump economic adviser Judy Shelton, co-director of the Sound Money Project, argued that addressing currency manipulation could actually help facilitate international trade by forcing countries to adhere to the same standards.

“It doesn’t mean you’re a protectionist," she said. “Currency depreciation is not competing. It’s cheating.”

In the weeks leading up to the election, senior Obama administration officials had fanned across the country to tout the benefits of the TPP deal -- and to warn of consequences if it failed to pass. A White House analysis found that if Japan were to enter into a free-trade agreement with China instead, more than $5 billion in U.S. exports and millions of jobs could be threatened.

It is uncertain whether Trump’s administration would continue U.S. involvement in a multilateral trans-Atlantic trade deal with European nations that the Obama White House has been pursuing. Protectionist sentiments among European voters has delayed progress on that agreement, which has not yet been completed.

David Adelman, a former U.S. ambassador to Singapore, a TPP-member nation, said that the United States’ long-standing support for multilateral free trade accords could be tested under Trump.

“The conversation has shifted from the viability of the TPP to whether there will be a disruption of the existing rules governing trans-Pacific trade and investment,” said Adelman, now a business consultant at ReedSmith. He said cited the success of several bilateral U.S. trade deals in Asia and predicted that a pro-trade coalition of business leaders, diplomats, academics and think tank officials “will work to protect the terms of those agreements.”

White House officials noted that Trump could chose to resurrect the TPP down the line. In 2011, the Obama administration resurrected three bilateral trade deals with Korea, Colombia and Panama that had been signed by President George W. Bush. The Obama administration negotiated side agreements with each country to win additional support in Congress and lawmakers ratified all three that year.

“Trump’s trade policy is going to hit up against reality pretty fast,” said Philip Levy, who served as a trade adviser for Sen. John McCain’s unsuccessful 2008 presidential bid. “There’s a disconnect between rhetoric and reality.”
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