'Major opportunity could be lost for NZ' – Groser as Obama clashes with own party over TPP

Trade Minister Tim Groser says a political setback for President Obama in the US is a "rock in the road" that puts the Trans-Pacific Partnership (TPP) trade agreement at risk.

Yesterday New Zealand time, the US House of Representatives defeated a key trade-related bill that was an essential step to passing President Barack Obama's long-sought trade authority.

The White House had planned to use trade promotion authority (TPA) to pass a deal on the TPP, a Pacific Rim trade deal covering 40% of the world's economy. TPA authority would allow the president to put a trade deal like the TPP to the senate for a straight yes-or-no vote on ratification, with no opportunity for senators to add special-interest amendments that could derail the trade pact.

However, trade adjustment assistance (TAA) – a move to clear the way for TPA by bringing separate Senate and House bills into alignment on measures to help those with jobs affected by trade deals – was voted down in the House after President Obama failed to rally support from his own party. And US media reports say the more Democrats learn about the TPP, the more their resolve against it hardens. While most Republicans support the TPP, some joined Democrats in voting down the TAA, if for different motivations (Democrats were trying to torpedo the TPP as a whole; some Republicans saw the TAA as too much of a sop to unions).

If the House of Representatives can’t negotiate and pass a revised bill next week (as President Obama has requested), “We will not do TPP any time soon. It’s as simple as that. And that will be a major opportunity lost for New Zealand," Mr Groser says.

If the president's deadlock with Congress is not broken, negotiations will be on hold until late 2017, the trade minister says.

"Well, according to the negative view, it's not going to happen in the next two years," he adds. The next US presidential election is in November 2016, with President Obama's successor due to take office in early 2017.
 
Mr Groser says it’s a “very strange situation” that Congress could be opting out of a deal, “leaving the US high and dry on the beach."

"The US, unfortunately, is in a position where the lack of support for a pro-trade agenda could see them watching as bystanders. I mean, it's an unbelievable situation," he says.
 
International trade expert Stephen Jacobi says on TPP: “You could say the ship's taking water but it's not yet on the rocks.”

“With a lot of fancy footwork,” a vote may yet pass next week, he says.

RAW DATA: TV3/The Nation transcript: Lisa Owen interviews Tim Groser & Stephen Jacobi

Lisa Owen: Now, we're starting this morning with breaking news out of the United States. Barack Obama has failed to win fast-track approval for the Trans-Pacific Partnership — a blow that could scupper plans for the world's biggest-ever trade deal. Now, Democrats voted against their own president, and without fast-track, other countries, such as Japan, have said hopes for a deal are slim. Supporters are hoping for a reverse and another vote next week. But the Greens’ Russel Norman told us this morning that the deal is in real trouble. Former diplomat Stephen Jacobi is the executive director of the International Business Forum and has been close to the negotiations. Good morning.
Stephen Jacobi:  Good morning.
How big a blow is this to the trade deal?
Jacobi: Well, this is a setback on the US side of the equation. Of course, it's not the end of the story. I think you could say the ship's taking water but it's not yet on the rocks.
Yeah, when you say it's not the end of the story, there are still options, aren't there, because there was this second vote that basically keeps it on life support for another vote next week. Do you think there is actually hope that Obama can turn that around?
Jacobi:  Yes, I think that the important thing to remember is that the fast-track legislation itself was actually passed, and it's a supporting piece of legislation around assistance for workers and companies that is in doubt. And I think there are procedural things that can be done next week to try to get this whole package through, but it's going to take a lot of fancy footwork on the part of the leadership of the House of Representatives.
OK, well, we're actually being joined by Tim Groser now who's live on the phone. Mr Groser, how much is a blow of a blow is this?
Tim Groser:  Well, I think it depends on whether they can find a procedural fix, and you'd have to be a world expert on congressional procedures, which I'm decidedly not, to try and make an assessment of their chances. All we know, and I agree with Stephen's analysis, is that there will be massive efforts made by the White House and congressional leadership to try and pull this together. But the fundamental problem is that there is extreme weak support inside the US Democratic Party for trade, and whether or not there is a procedural way round this, that's the rock in the road.
If there isn't, what happens, if you can't get around that rock in the road?
Groser:  Assume they can't get around the rock in the road, obviously, we're not going to sign off on this until we know what the answer to that is. But let's assume for the sake of the discussion that's the case, well, we will not do TPP any time soon. It's as simple as that. And that will be a major opportunity lost for New Zealand, unfortunately, if that proves to be the case.
Well, you say any time soon, but any time at all?
Groser:  That would remain to be seen. I'm quite pessimistic, personally, about the timetable in that negative scenario. You could rule out any possibility of the negotiation taking place, at least according to my analysis, prior to the presidential election at the end of 2016. You then start 2017. The President has a long period of time before he or she puts in place their key appointments, cos nothing can happen until that's done. You know, I don't think you'd be looking at starting a re-negotiation again until late 2017. That's my analysis.
Well, given the pessimism you're expressing there, this could be it. It could be sunk, couldn't it?
Groser:  Well, according to the negative view, it's not going to happen in the next two years. Whether it happens beyond that time, that's more speculative. The basic point is this: the United States, unfortunately, is in a position where the lack of support for a pro-trade agenda could see them watching as bystanders. I mean, it's an unbelievable situation. And there is a parallel we've just seen on this new Chinese-led Asian infrastructure investment bank where, again, the Chinese, growing in power, come along to the United States and say, 'We want more say in the World Bank and the IMF,' and then to cut it to simple terms, the Congress stops the quota expansion that would be necessary to do this. So what do the Chinese do? They set up their own institution, so the United States... And then first New Zealand, it was the first OECD country to say, 'We will go with this new bank,' and then later the Brits, the Germans, the other big Euros join, leaving the United States high and dry on the beach. So, I mean, this is not a theoretical issue here, and it's a very strange situation for the world's number-one economy, but that's the sort of calculation... By the way, what I'm saying is understood by a lot of people in the US Congress, cos I know cos I've talked to them, but not enough of them.
All right. I want to bring Stephen Jacobi back in the conversation here. The Minister is expressing pessimistic view on whether it's possible to get this deal up, saying not in the next two years if it continues... if this is the end of the road for fast-track. I'm wondering, do you agree with that?
Jacobi:  Well, certainly, I think if fast-track can't be got through, then the outlook for a successful conclusion to the TPP is very much in doubt. The Minister is quite right in that. Clearly, we think, and we hope, there are things that can be done in the interim to get it back on track, and we encourage everybody to put efforts to that end.
So where do we go from here, then?
Jacobi:  Well, I think we have to wait and see what happens over the next few days. The reality is that there are smart minds in Washington being applied to this at the present time. It's a huge repudiation for President Obama, of course. It has all sorts of implications for the continuation of his presidency. These are very high stake games, so we have to hope that some way will be found around this. If that can be found, then negotiators can get back together and we can do what is necessary to complete this negotiation. If it can't, then it's back to the drawing board looking for other ways to promote the idea of better rules for trade and investment in the Asia-Pacific region and growth and jobs back home.
All right. We're going to have to leave it there. Thank you very much for joining me this morning, Stephen Jacobi. And thanks very much to Tim Groser for joining me — the Trade Minister from down the line, on the phone. Thank you so much.