Trade expert sees US Congress hardening against TPP

Protectionist Republican presidential candidates Donald Trump and Ted Cruz are boosting their rhetoric to new heights on trade – and House and Senate candidates are taking note, putting the Trans-Pacific Partnership Agreement in further peril.

NBR has previously canvassed how the anti-TPP stance of leading Republican candidates Donald Trump and Ted Cruz, and leading Democrats Hillary Clinton and Bernie Sanders, threatens the trade deal.

To quickly recap, the TPP signing ceremony in Auckland next week is merely a photo op.

Lawmakers in each of the 12 signatory countries still have to ratify the agreement.

And as trade expert Stephen Jacobi notes, for the deal to come into force, TPP rules require ratification by parties representing at least 85% of the GDP of original signatories.  Effectively, that means no US ratification, no TPP.

There is an extended, four-step, 285 working day process to get the TPP to a ratification by Congress (both the Senate and the House have to vote yes). Experts say that means the vote will likely take place in December, at the earliest, during the so-called “lame duck” session (where both President Barack Obama and voted-out members of Congress will still be sitting ahead of their formal departure January 20).

Post-January 20, the TPP could be dead in the water.

The only two serious Democrat candidates, Mrs Clinton and Mr Sanders, oppose the deal for the usual centre-left reasons over concern for local jobs.

On the Republican side, Mr Trump says China (not a TPP signatory, but never mind) will use the TPP to trick and undermine America while Mr Cruz says it will undermine US sovereignty (yes, he’s channeling Jane Kelsey; we're through the looking-glass).

Like all term-expired presidents, Mr Obama is losing sway and relevance. But he’ll still be pushing for a vote as early as possible. The TPP is one of his legacy projects. But that’s also part of the rub. On paper, Republicans should support any free-trade agreement (and especially one that will have a straight yes/no vote with no opportunity for home-state pork provisions). But it could become too closely associated with the outgoing Democrat.

More, Messrs Trump and Cruz are just surging and surging with their protectionist mantra (and you would have to say the TPP, not that widely discussed, is just collateral damage in broader fear-mongering over trade, immigration etc).

Marco Rubio, the leading orthodox, pro-free trade Republican heap, is a distant third.

They might seem like Dumb and Dumber from where most New Zealanders stand, but Messrs Trump and Cruz are getting rock star status in large parts of the US media (though intriguingly not at Fox News, which has been snubbed by Trump, setting up a fascinating ego clash with Rupert Murdoch). Their momentum is incredible.

Members of Congress and the Senate up for re-election are taking note (all 433 members of the House are up for re-election plus 32 of 100 senators).

They can see Mr Trump is getting tens of thousands along to rallies. And that by aping Mr Trump's populism and protectionism, Mr Cruz (formerly pro-free trade) has zoomed into second place. He may even beat Trump in the first primary, in Iowa.

They're dithering. By one count, the TPP is now dozens of votes short of ratification.

That means, even if Mr Obama manages to squeeze in a TPP vote during the lame duck session, the TPP could still go down in flames. 

Dr Deborah Elms, Executive Director, of the Asian Trade Centre, sums up:

This election cycle has seen increasing tensions in the Republican party.  A rise of protectionism appears to have led many candidates to push back against free-trade and free-market ideas.  Perceptions matter and many potential voters on the campaign trail seem convinced that global trade has caused them to suffer significant economic harm with limited benefits.

For candidates running for the House or the Senate, the message seems clear — many primary voters seem to be responding better to messages about closing off America from foreigners than to traditional language about the benefits of greater engagement with the outside world.

This puts TPP approval, especially, into a very peculiar place.  Many are arguing that the agreement is most likely to be approved in the lame-duck session (after the general election is finished on November 8 but before the new President and Congress are seated in January 2017).

However, if protectionist enthusiasm continues to build, it could be increasingly difficult to mobilize a winning coalition around getting the TPP ratified.

What is new for 2016 is that Republicans are also not wildly excited about trade this cycle.  In the past, the party was generally willing to vote for trade deals.  For example, while contentious, voting just seven months ago produced support for the Trade Promotion Authority (TPA) to allow the conclusion of the TPP negotiations (and other trade deals).

The vote count was 60-37 in the Senate, with the support of 13 Democrats and the opposition of 5 Republicans (including 2 running for President).  In the House, the vote count was 218-208 (28 Democrats voting yes while 50 Republicans opposed).

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