The New Congress Can Change Asia-Pacific Trade | Commentary

Posted November 20, 2014 at 12:56pm

The recent APEC Summit in Beijing was an impressive photo opportunity for President Barack Obama and a cast of Asia-Pacific leaders. But the midterms are of more importance to the forum’s original mandate of Asia-Pacific economic cooperation.

A new Republican-dominated Congress provides the opportunity for new trade agreements to be struck between the US and other countries. The most significant of these is the Trans Pacific Partnership Agreement between the U.S. and 12 other nations. It was announced by President Obama and former Australian Prime Minister Julia Gillard in Australia in 2011.

Why is the new Congress significant for trade? There are two reasons.

First, the U.S.’s major trade agreements have only been struck when the administration has been given a negotiating mandate by Congress in the form of “fast track” legislation. This enables acceptance or rejection of the entire agreement, avoiding cherry-picking of what’s in and what’s out.

The previous incarnations of fast-track gave rise to a raft of trade agreements through the Bush administration. The Clinton administration was able to ratify the WTO Uruguay round with congressional approval signed seven years earlier under Reagan.

The second is simpler: The GOP has a better record on trade. Democratic opposition runs deep. Organized labor, protectionist, environmental campaign groups and the public health lobby have made their dislike of free trade agreements clear and lobbied Democrat lawmakers accordingly. The last fast-track bill in 2002 was passed along narrow partisan lines.

The newest incarnation of fast-track — the Bipartisan Congressional Trade Priorities Act drafted earlier this year and currently before three committees — is different to its predecessors.

The bill gives USTR a mandate to turn trade agreements into a tool for something else, namely enforcement of non-trade regulations favored by Democrats close to these issues, such as environmental policies, labor conditions and public health.

At the heart of this is a campaign waged against investor-state dispute settlement. ISDS is a standard feature in most U.S. trade agreements. ISDS gives businesses in TPP countries the right to appeal if other TPP governments fail to remove investment barriers, as promised. This is a vital protection for U.S. businesses wishing to invest overseas.

The Republican sponsors of the original TPA reached a compromise with Democrat (read environmental, labor and protectionist) interests in order to achieve a worthy goal: more open trade. But there is no longer a need to attract this support, particularly when these interests are for the most part anti-trade.

What the TPA does provide is increased oversight for Congress throughout the negotiating process and a final vote on the package. It does not, as one group of Republicans claimed late last year, give the White House carte blanche to “unilaterally negotiat[e] with foreign nations and impos[e] trade policies that Congress would deem to be against the national interest.”

Revisiting the TPA — and taking both non-trade interests and possible congressional amendments off the table — will do two things: it will streamline the negotiation process; and it will increase the confidence of trade negotiators in other countries that the U.S. position will not be altered in Congress. The benchmark for environmental, health or labor provisions could simply be those contained in the fast-track Bill of 2002.

The economic benefits of a finalized TPP Agreement go without saying. But in pushing a revised TPA, Republican lawmakers now have the opportunity to test President Obama’s commitment to free trade — rather than non-trade — interests.

Alan Oxley is chair of the APEC Study Centre, former Australian ambassador to the GATT (the predecessor to the World Trade Organization), and former head of a business coalition in support of the Australia-U.S. Trade Agreement.