Monthly Article

May 2015 Monthly Article – TPTA and Fast Track

by Jerry Pacheco

For the better part of the last decade, the U.S. has been meeting with other nations tied together by their proximity to the Pacific Ocean in an attempt to craft what is being called the Trans-Pacific Trade Agreement.

A total of twelve nations — the U.S., Mexico, Canada, Chile, Peru, Australia, Brunei, Japan, Malaysia, New Zealand, Singapore and Vietnam — have attended these meetings to negotiate the intricacies of the proposed trade agreement. Collectively, these countries account for nearly 40 percent of the world’s economy. Negotiations are focusing on tariff reductions and eliminating barriers to trade among the potential trade partners.

Other allies of the U.S., such as South Korea and the Philippines, have expressed interest in joining the TPTA but have not been active in the negotiations. A major powerhouse that has not participated is China, which appears to want to form its own strategic trading partnerships in Asia.

TPTA has repercussions beyond a basic trade agreement. The U.S. can extend its political influence through trade, via TPTA, to Latin American and Asia. If the negotiations to form TPTA fail, it leaves the path wide open for China to increase its influence in Asia by forging its own agreements. At stake is the leadership of the U.S. in the region.

The complications of creating a free-trade agreement of this scale are enormous and require a lot of time and human resources to put together. However, TPTA also is having repercussions domestically in the U.S.

Traditionally, U.S. presidents have been granted Trade Promotion Authority — often called “Fast Track Authority” — to negotiate trade agreements with foreign countries. The U.S. trade negotiation team negotiates with their counterparts, and a final agreement is presented to Congress, which must either vote yes or no on what is presented to it.

The logic of this system is simple. It is impossible for 435 members of the U.S. House of Representatives and 100 U.S. senators to attempt to negotiate and micromanage a free trade agreement. Every state’s special interests would prejudice the negotiations, and the welfare of the nation might take a back seat to local politics. Furthermore, frank discussions during the negotiations probably would not occur with so many people involved.

The North American Free Trade Agreement, which has been so successful in increasing trade between the U.S., Mexico and Canada, would never have occurred if Fast-Track Authority had not been granted to President George H.W. Bush.

During the negotiations, the president’s team has been consulting with the leadership in Congress because it doesn’t want the final agreement to run into major problems by ignoring the concerns of the legislative branch. If this occured, the agreement would arrive at Congress “dead on arrival.”

In order for NAFTA to pass, it was made known that special provisions protecting workers in industries such as agriculture, in states such as California with its avocado producers, and Florida with its tomato growers, would need to be included. An environmental remediation component was also included in the agreement.

The granting of Fast-Track Authority to the president from Congress is essential if TPTA is to become a reality.

During his tenure, Obama has had major difficulties communicating and getting his agenda through Congress. The hiccups on Fast-Track Authority have been evidence of this rocky relationship. Not being able to rally his own party behind him is a serious issue. The world is watching the U.S., the bastion of the world’s trade and capitalism, to see what direction we will take on promoting trade and exerting influence in a region that has tremendous economic and political importance.

It is true that some legislators have been trying to foil Fast-Track in order to kill TPTA. This would preclude the ability of a deal to be negotiated — a deal that Congress will be privy to during the negotiations, and the approval of which it will have final say on.

Tripping out of the gate on a technicality such as Fast-Track Authority would signal to China that the U.S. is incapable of organizing itself at home in order to exert influence in what has traditionally been a region where the U.S. has enjoyed good trade and political relationships. China, an opportunist country that has shown an unwillingness to let a vacuum exist in such matters, will be provided a green light to cement its own trade agreements.