What now for the TPP?

Is the TPP in peril?

Probably not. But at the moment, the fate of the Trans-Pacific Partnership (TPP) rests on the shoulders of just 28 House Democrats who voted for Trade Promotion Authority (TPA) on Friday 12 June 2015. Pressure on these 28 Congressmen will be intense – like slabs of hot steel passing through a rolling mill. To explain why, we need to revisit the arcane legislative background.

The TPP talks, which involve the US, Japan, Canada, Mexico and eight other nations, are close to finished. However, Japan and Canada have stated publicly, and other TPP countries have stated privately, that they will not put their best offers on the table until Congress enacts TPA, as this Authority would prevent Congress from picking apart the final bargain. TPA, also known as ‘fast track’, promises that both the House and the Senate will give trade deals negotiated by the president a speedy up-or-down vote, without amendments. TPA also enumerates 19 “priority negotiating objectives”, and sets forth procedural guidelines.

In May 2015, the Senate passed its TPA bill which – at the insistence of Senator Ron Wyden (D-OR), ranking member of the Senate Finance Committee, and other Democrats – also renewed a programme that assists US workers displaced by trade (the Trade Adjustment Assistance programme). The Senate Republicans disdained the adjustment assistance as “just another entitlement”, but they accepted TAA in the TPA bill for the greater good of reaching TPP.

House Republicans hold a more visceral contempt for TAA. To placate this group, House Speaker John Boehner (R-OH) and House Ways and Means Committee Chairman Paul Ryan (R-WI) invoked the unusual procedure of “dividing the question”. Retaining the same language as the Senate TPA bill, they permitted House members to vote separately on the TPA and TAA parts, with the understanding that both parts needed affirmative votes for the bill to reach President Obama’s desk. Realising that many fellow Republicans would vote against TAA, the two leaders counted on Democrats to pass the TAA part. After all, TAA had been part of trade legislation for 50 years at the insistence of Democrats.

Machiavellian manoeuvre

AFL-CIO President Richard Trumka, a determined opponent of TPP, then pulled a manoeuvre worthy of Machiavelli. He called on House Democrats to vote against TAA, knowing that a negative vote would derail TPA and possibly shut down TPP. Even though TAA would benefit their constituents, only 40 House Democrats voted for the TAA part. It was defeated, 126 to 302. Just 86 House Republicans, out of 244 Republican members, voted for TAA.

Of the 40 House Democrats who voted for TAA, 28 voted for the TPA part; together with 191 Republicans, the TPA part passed 219-211. But without the TAA part the entire House bill goes nowhere.

Next steps

Speaker Boehner will call for a “reconsideration” vote on TAA this week. Over the weekend, the US Chamber of Commerce and the Business Roundtable might have succeeded in beating sense into the 150-odd Republicans who voted against TAA. If so, the House bill – identical to the Senate TPA bill – will reach President Obama. Republicans will still savour the sight of Obama ‘humiliated’ by his own party. But the tempest will end, and TPP talks can roll to a conclusion. The stage will be set for the next big Congressional drama: ratification of TPP, probably in October or November, just prior to the APEC Summit in the Philippines.

If Boehner’s “reconsideration” gambit fails, the Speaker will turn to ‘plan B’: a vote on TPA alone, without TAA. This is where the 28 Democrats who voted for TPA will be crucial. Without their votes, TPA will fail, TPP talks will crumble, and the grand Trans-Pacific Partnership, like the Free Trade Agreement of the Americas of the 1990s, will be tossed into the dustbin of history. To recall Winston Churchill, “[n]ever was so much owed by so many to so few”.

This article is published in collaboration with VoxEU. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Gary Clyde Hufbauer is Reginald Jones Senior Fellow at the Peterson Institute for International Economics. 

Image: A ship is loaded with containers. REUTERS/David Gray.