Keen to reach a trade deal with 11 other countries along the Pacific Rim, the Obama administration is actively engaged in intense negotiations. But the proposed deal, the Trans-Pacific Partnership trade deal (TPP) — the largest such accord since the North American Free Trade Agreement (NAFTA) — is facing stiff opposition in Congress, primarily from Democrats.
The trade deal would involve Canada, Mexico, Chile, Peru, Japan, Brunei, Vietnam, Malaysia, Singapore, Australia and New Zealand.
The administration’s plans are to follow TPP with a similar pact currently under negotiation with the European Union.
The administration is facing broad resistance in Congress to renewing the Trade Promotion Authority (TPA, previously known as Fast Track), which expired in July 2007. TPA is a prerequisite for reaching a deal, as under it Congress grants the president authority to enter into reciprocal trade agreements and, while it sets negotiation objectives and consultation requirements, Congress agrees not to amend the bill implementing the agreement and with limited discussion to simply approve or reject it by an up-or-down vote.
This is to ensure trading partners that the negotiated pact will not be rewritten by Congress. Because of this resistance, Congress has yet to act on the president’s request to renew TPA.
Proponents of the agreement point out the importance to the U.S. of trade that has increased, in part by liberalized trade agreements. The TPA countries, they assert, account for 40 percent of the world’s economy and 30 percent of global trade. Nearly 40 million U.S. jobs are linked to trade, which supports creation and retention of jobs and promotes economic development. Nearly every U.S. state, they note, has benefited in gaining jobs.
Take, for example, Colorado. International trade supports more than one in five Colorado jobs, for a total of 710,000. Colorado exports more than $9 billion in goods and more than $3.5 billion in services to almost every country in the world, with top markets being Canada, Mexico, and China. Those supporting the TPP say that more than 43 percent of Colorado goods are exported to free trade agreement partners, while foreign-owned companies invest and build facilities and employ 84,000 workers in Colorado.
The state ranks among the top 15 state exporters in 14 industries and is America’s 26th largest exporter of agricultural products. Supporters also contend that Colorado’s exports to Canada and Mexico have increased by almost 300 percent, nearly $2.5 billion since NAFTA went into effect 20 years ago. TPP will benefit Colorado’s biotech companies, which already employs more than 27,000 residents, as well as other industries.
The opposition to TPP cuts across political party lines and includes beyond the traditional left, labor groups, the environmental movement, and immigrant and public health groups. Such agreements, they assert, promote the interests of multinationals and elites over the vast majority of people, thus causing increased inequality. NAFTA, which was passed using Fast Track legislation, has resulted in putting downward pressure on the wages of American workers, they argue.
Many Republican lawmakers are critical as well, some claiming that it would diminish U.S. sovereignty, and others, that it gives too much authority to the president.
A major drawback of the Fast Track authority is its lack of transparency. Senator Elizabeth Warren, D-Mass., has also criticized a provision, known as Investor-State Dispute Settlement, under which investors can seek compensation when foreign governments impose regulations that investors consider in violation of a trade agreement or when investors allege they are being treated unfairly by governments or when governments expropriate their property. Under this process corporations have challenged governments’ safety and environmental regulations.
The Obama administration has indicated that it has been closing loopholes and will not permit provisions to gut U.S. rules and legal standards on safety and environmental protection. It is imperative that trade agreements be negotiated in such a way that foreign trade barriers are reduced, foreign countries’ health and safety regulations are enhanced, and America’s workers and middle class reap the benefits.
Ved Nanda (vnanda@law.du.edu) is Thompson G. Marsh Professor of Law and Director of the Nanda Center for International and Comparative Law at the University of Denver Sturm College of Law.
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