On Trade, Step 1 Comes First | Guest Observer
By Christopher A. Padilla Many nights at the dinner table, my kids ask for ice cream. Every time my reply is the same: finish your dinner first. While this answer is rarely popular, it is now understood that eating dinner is the prerequisite for dessert.
This family ritual comes to mind when some members of Congress tell me they support the Trans Pacific Partnership trade agreement, but oppose Trade Promotion Authority “for this president.” That is a bit like asking for the Creamsicle before finishing the peas and carrots — there simply will not be a TPP without Congress first passing TPA.
Why? Because our prospective TPP partners will not finalize a trade agreement until they know that the deal they cut with the administration will not be rewritten by Congress. That assurance comes through TPA: Congress sets negotiating objectives, ensures that it is consulted, gives a mandate for negotiations, and gets the final say on trade agreements negotiated by the executive — yes or no, but without amendments.
Conclusion of TPP now awaits this essential congressional action. While much progress has been made to advance the TPP over the past seven years, the toughest and most sensitive final deals have yet to be made. Absent the TPA assurance that an agreement made with America’s trade negotiators will be the agreement voted on by Congress, foreign leaders have not tabled their best and final offers.
It is not hard to understand why. Imagine you are buying a car, and have negotiated everything you want: color, model, a moderate options package, delivery date and a price. You shake hands with the salesperson, and even sign a contract. But before handing over the check, you say you’ve consulted your spouse and now you demand a higher-end model, fully loaded with the best options — and you expect to pay a lower price. The dealer will not only think you are nuts, she may refuse ever to negotiate with you again.
In global trade negotiations, such a scenario is not hypothetical. In 1967, at the conclusion of the Kennedy Round of negotiations of the General Agreement on Tariffs and Trade (GATT), Congress decided to make significant changes to the agreement negotiated by President Lyndon B. Johnson and, in the process, nearly wrecked the global trading system. By 1974, when Congress authorized a new round of GATT negotiations, the Senate Finance Committee issued a report recognizing that “our negotiators cannot be expected to accomplish the negotiating goals … if there are no reasonable assurances that negotiated agreements would be voted up-or-down on their merits.” Forty-one years later, this wisdom still holds true.
Trade politics are not just difficult in the United States. In Japan, the powerful agricultural lobby may be disappointed if a final TPP allows greater access to the domestic farm market. In Malaysia, TPP might require changes to longstanding preferences given to businesses owned by ethnic Malays. Indeed, every TPP leader has to consider a careful balance of domestic political and economic imperatives. Few will sign a deal with U.S. Trade Representative Michael Froman if they believe that 535 additional trade representatives in Congress can later tinker with that balance of interests.
A prospective TPP agreement would be an economic boon to American businesses, farmers, ranchers, workers and consumers. According to the Peterson Institute for International Economics, TPP could mean an additional $123 billion in annual U.S. exports, and a $77 billion boost in annual real U.S. income by 2025. The 12 nations of the TPP constitute a growing market of nearly 800 million consumers, accounting for 40 percent of the global economy and 37 percent of U.S. trade.
These benefits are clear — but so is the need for Trade Promotion Authority if we hope to achieve them. TPA is never an easy vote; it authorizes a process, not a final trade agreement that can be quantified. Yet it would be pointless to declare support for TPP and then vote against TPA, because decades of experience show that the former simply will not happen without the latter. When it comes to trade, if we want the ice cream let’s eat our vegetables. They’re good for us.
Christopher A. Padilla is vice president of Government and Regulatory Affairs at IBM. From 2002 to 2005 he served as an assistant U.S. trade representative, and from 2007 to 2008 he was under secretary of commerce for international trade.
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