WASHINGTON, DC: This week in Washington, more people than I can count have repeated a quotation attributed to Winston Churchill, “America will do the right thing only when it has tried everything else first.” We are testing this theory right now on the trade front, as Congress grapples with how to undo the various “procedural snafus” that have bedeviled the votes on Trade Promotion Authority (TPA) and Trade Adjustment Assistance (TAA).
Yesterday, I wrote two different blog posts and had to toss them out and start over again this morning as events have been moving swiftly on the ground here in Washington.
After the shock defeat of TPA/TAA in the House of Representatives on Friday, many of the folks in the city that care about trade spent the early part of this week trying to figure out a possible solution.
Congressional leaders have opted for a risky strategy. The House just passed a “clean” TPA resolution by 218-208. This bill splits apart TPA from TAA.
The hope now is that the Senate will re-vote next week on the new House-approved version of TPA. Assuming the two bills match, TPA can quickly be passed along to the President for signature.
But this is a risky strategy because it requires Democrats in both parts of Congress to vote for TPA without TAA. They must count on promises that Trade Adjustment will be up for another vote prior to its expiry in September. Given the low levels of trust in Washington these days and the growing polarization of both parties, this is an interesting gamble.
The goal is to complete the entire process prior to the July 4th recess in Congress.
Most likely, the chief negotiators for the TPP have shifted existing plans to meet until just after July 4. They are likely to need two weeks to complete negotiations. The ministers are likely to be penciled in for mid-July in the hope that they can sign the completed agreement by then (after some furious late nights of bargaining).
If this near-death experience has had any upside, it may be that it has concentrated minds. Partner countries and American negotiators will have to think carefully about any further delays in getting the agreement finished. I believe that officials will be more ready to wrap this deal up than ever before.
Once the agreement is finished, under TPA rules, officials will have 30 days to finish legal scrubbing and any other associated technical details. Fortunately, English is the official language of the TPP, which will reduce the amount of time needed for translations and the legal work on each translated version.
The document will then be published for 60 days before the President and other leaders can sign the agreement. Hence, if all the deadlines line up, it is just barely possible to imagine the TPP finished and signed off in or around the next APEC Leader’s Meeting in Manila in mid-November.
Given the issues around getting trade agreements through Congress, officials across government will be feverishly working to get any necessary implementing legislation worked out during the TPA review window period. This ought to allow a Congressional vote on the TPP—just barely—by the end of this year.
Hence, the TPP can still be completed in 2015. (But note that entry into force will still be some distance away, likely in 2017, as countries will require some time to bring domestic rules and regulations into compliance with TPP rules.)
But what if the agreement is not done this year? I have heard two opposite and distinct arguments about 2017.
First, lots of people here have suggested that approval of TPP should just be postponed until after the next president is in office in January 2017.
I believe this is deeply problematic. For starters, the lineup of participating countries in the TPP could be radically different by January 2017. Canada faces a tough election in October. The Prime Minister of Australia has already narrowly survived one no confidence vote from his Parliament. The Prime Minister of Malaysia is struggling to maintain his office in the wake of a growing scandal over government funds as well as a softening economy.
The Prime Minister of Japan has staked his entire reputation and government policy around radical shifts in the economic space. If TPP does not succeed, he might well not survive either. It is highly unlikely that any successor will be inclined to take the politically difficult steps needed to bring TPP into force in Japan.
The list could go on—Brunei might implement sharia law in a way that is deeply problematic. Malaysia could find additional mass graves. Between now and 19 months from now, all manner of issues could easily derail any agreement and any TPP government.
The assumption by many here seems to be that whoever wins office in Washington at the end of next year will be more enthusiastic about trade and the TPP and will be more able or willing to cajole, arm twist, charm, threaten opponents or reward supporters than the current occupant of the White House. And that the next Congress will be equally keen to take on a big, fraught policy decision right after being seated in the Capitol building. Even if the rest of the world somehow stood still, the picture in Washington is unlikely to be so rosy.
Deciding now to wait until 2017 to get the TPP approved is a poor idea. Wishful thinking is not going to solve the problems of getting a high stakes trade agreement past 535 members of Congress and into the hands of the President for signature.
But this does conflict with a second argument I have heard in Washington regarding timing. If the agreement cannot be ratified by late 2015 or very early in 2016 given the presidential election dynamics, the world will not end if domestic approval inside the U.S. slips slightly.
We have precedent for this as the free trade agreements with Columbia, Panama and South Korea all sat for years waiting to be approved in Washington. All three countries even had to go back to the negotiating table.
It should not be a surprise that I am not at all in favor of this idea. Most of the TPP member countries have put a great deal on the line domestically to get this far. After more than 5 years of negotiations, any further delay can be quite problematic. Businesses are already waiting for implementation and have started making investments and shifting production to account for TPP rules.
The best strategy—by far—is to approve TPA by the end of next week. TPA really ought to have been relatively uncontroversial, although past votes on the topic have also been fraught with challenges. In any case, once TPA is finished, officials can quickly wrap up the TPP and prepare for the final battle over this agreement. Hopefully, voting on TPP will be less nail-biting than the votes over TPA.
***Talking Trade is a blog written by Deborah Elms, Executive Director, Asian Trade Centre, Singapore***