When House Democrats wrote to the White House last month to voice concerns about talks over a Pacific Rim trade accord, they pointed to familiar issues: labor and environmental standards and the risks of weakening “Buy America” laws that help U.S. manufacturers win government contracts.
But they spent far more time focused on seemingly arcane matters such as “investor- state privileges” and “regulatory convergence.”
The letter reflected liberal unease with not only the Trans-Pacific Partnership (TPP) — the centerpiece of the Obama administration’s international trade agenda — but also the changing nature of global commerce.
Although manufactured goods and farm commodities still get most of the public attention, U.S. financial institutions and other services sector companies have been playing a growing role in influencing U.S. trade policy, particularly since the creation of the North American Free Trade Agreement in 1994.
And perhaps more than in any other trade negotiations, the TPP is focused on a wide range of what are regarded as “21st century” issues: investor rights; regulations on cross-border financial transactions; state-owned enterprises in Vietnam and other nations; and intellectual property rights for engineers and pharmaceutical researchers alike.
Such sectors have opened up new opportunities for corporations and unions, and new opportunities among countries — as well as new areas for dispute. “This is the kind of stuff that you need to break ground on,” said Charles W. Dittrich, vice president of regional trade initiatives at the National Foreign Trade Council. “We all recognize that stuff isn’t easy.”
It’s one reason the TPP talks are so complex and slow-moving. On Tuesday in San Diego, negotiators from the nine member countries will wrap up their 13th round of negotiations since March 2010. And the White House formally notified Congress on Monday that the members are bringing Mexico into the talks. A similar notification is expected soon for Canada.
The White House hopes a deal can be cut this year, but that is unlikely to happen, particularly given election year politics in the United States.
Moreover, it remains unclear whether Japan will seek to join the talks amid opposition from its domestic farm lobby or whether the United States would even allow Tokyo in, given opposition by U.S. automakers such as Ford Motor Co.
Because previous rounds of global trade negotiations wiped away many tariffs and quotas, companies are now focused more on domestic laws. And accelerating globalization has more tightly integrated trade laws and financial regulations, government procurement policies and a host of related matters. Corporations have been eager to use the TPP as a way to streamline their supply chains in the Pacific and make it easier and cheaper to move goods, services and financial data across borders.
In many cases, these issues are of importance to the services sector, which employs the majority of workers in the modern U.S. economy.
Several major business groups, for example, wrote to negotiators in late June pushing for provisions that help companies such as Citi and Google avoid restrictions on data flows.