The TPP and the Trade Lobby: Half a Loaf.

by Venu Katta

September 26, 2016

Cover Photo Credits

During President Obama’s recent trip to Asia, he again signaled strong political support for the Trans Pacific Partnership and a desire to fight for domestic ratification in the U.S. Congress after the November elections. This likely sets the scene for the last major legislative battle of the Obama years, and its outcome may hinge on the lackluster support many of the purported benefactors of the pact have demonstrated.

Supporters of the trade deal form an interesting array of strange political bedfellows: the White House, Paul Ryan, Senate Democrats, major tech companies, the agricultural lobby, and manufacturers, among many others. Opponents of the TPP constitute a by no means less eclectic group: Donald Trump, Bernie Sanders, the AFL-CIO and other labor groups, members of the House Freedom Caucus, and various environmental groups – again among many others. These two cross-cutting pro-TPP and anti-TPP armies may well have exchanged volleys against each other, but the true battle remains until after November, as both sides scramble to win the ultimate legislative victory.

For clues as to how that conflict might play out, however, it is useful to look at the last major legislative hurdle the TPP needed to clear: last year’s Trade Promotion Authority fight. Under the language of the TPA legislation which Congress (with heavy backing from the Administration) passed in June of last year, the Senate and House will be forced to vote up or down (with no ability to offer amendments) on the TPP after ratifying legislation is introduced. This precludes opponents of the agreement from attempting to bury it in legislative stalling or to offer so-called “poison pill” amendments.  While this procedural outline certainly makes the President’s battle to pass the TPP into law easier than it otherwise would have been, it will still require a sustained legislative push to secure enough supporters.

Interestingly, though, Republican leadership – which supplied the vast majority of necessary votes to pass TPA – routinely espoused their frustrations with pro-trade lobbying groups throughout the effort. Groups like the National Association of Manufacturers, the U.S. Chamber of Commerce and others were, in the words of a senior GOP aide, “abysmal” in their advocacy. Between failing to influence public opinion, a lack of meeting with skeptical Republican and Democratic Congressman, and a general minimalist operation by the trade lobby, much of the burden on shouldering passage of TPA fell on the White House and the Speaker’s office.

This is seemingly strange, given the political Left’s strong insistence that the TPP is, essentially, a corporate giveaway to these very groups who seemed lukewarm at best to the issue.

So what gives? It would appear that, in its balancing act, the Obama Administration may have arrived at the worst of both worlds: adopting too many regulatory protections for the tastes of pro-trade groups while not winning enough concessions for the likes of anti-trade groups.

For example, Article 29.3 of the TPP allows members nations to implement capital controls in the event of “serious difficulties for macroeconomic management.” In effect, this aides developing economies’ ability to regulate massive influxes of foreign investment and manage excessive volatility. This is a notable first in U.S. trade deals, and reflects a greater economic shift away from deregulatory policy since the 2008 recession. As Scott Morris of the Center for Global Development notes though, “[u]nfortunately, by allowing for appropriate uses of controls on “hot money,” the TPP may have created new enemies within the powerful US financial services lobby.”

In addition to watering down the potential profits of Wall St., other industries have taken issue with the protections within the TPP. The pharmaceutical lobbying group PhRMA has expressed distaste over the fact that the deal offers data protection on drug development for five years, as opposed to their preferred plan of 12 years (which, likely, represents a reduction in the profits companies such as Pfizer and Merck stand to make over the passage of the deal). These misgivings may explain the lackluster performance of these groups in the legislative fight.

All this calls into question the very notion of the “gold standard” that then-Secretary of State Hillary Clinton used to describe the TPP in its initial stages of negotiation. Concessions on one hand to interest groups seem to have done little to earn their support while doing much to earn the pro-trade lobby’s apathy.

With heightened public awareness (and opposition) to the TPP and trade in general, it remains unclear if the deal would secure final passage if the same amount of legislative lobbying force by industry groups were to be applied on this go-around as was during the TPA fight. One question of pertinent policy significance to future Administrations and American trade diplomats, though, will be whether it is possible to effectively balance concerns on both sides when negotiating trade deals or whether it is true that the only thing in the middle of the road is roadkill. One way or another, it seems like the final legislative effort between pro-TPP and anti-TPP groups will answer that question.

Venu Katta is a 2nd year MPP Student at the College of William & Mary and the Student Editor of the William & Mary Policy Review.