The White House is gambling America's global standing on a trade deal with Asia. Don't bet on Congress to get it done.
- By James TraubJames Traub is a fellow of the Center on International Cooperation. "Terms of Engagement," his column for ForeignPolicy.com, runs weekly. Follow his Twitter feed at @JamesTraub1.
This week, your columnist is rebalancing to Asia. He has been preoccupied for far too long with countries like Syria, Libya, and Egypt, whose chief product is mayhem. Meanwhile, South Korea and Malaysia and … all those other countries make inexpensive refrigerators that work perfectly well, and no one gives them the time of day. Ignore them any longer and some of those terrific countries just might get married to China.
That might be a slightly reductive account of the "pivot" to Asia first announced by Secretary of State Hillary Clinton in October 2011 (in — please take a bow — Foreign Policy). But over the last several years, even as it is pulled back into the morass of the Middle East, the Obama administration has labored mightily to persuade Asian leaders that it hears their call for help on global trade, regional security, and China’s increasingly domineering role. Secretary of State John Kerry is at this very moment in South Korea.
It’s hard, in fact, to think of any other recent foreign-policy shift that has been quite so bluntly marketed. President Barack Obama delivered a speech on the subject a month after Clinton’s article, while in early 2013 National Security Advisor Tom Donilon gave a heavily publicized address in which he re-christened the policy a "rebalance" in order to avoid hurt feelings in regions feeling pivoted away from (Europe, the Middle East). The speeches were directed less to Americans than to skeptical Asian leaders. "In the Asia-Pacific in the 21st century," as Obama said to the Australian parliament, "the United States of America is all in."
Is it, though? The region certainly seems like an afterthought to Kerry, who has devoted himself heart and soul to sorting out Middle East crises. The proof of the pudding will come with the Trans-Pacific Partnership (TPP), a giant trade pact that promises to open major Asian and South American markets to U.S. commodities as well as financial and other services (and open some American markets to those nations as well). That deal, however, is now in very serious jeopardy of being scuttled, not by Republicans who can’t bear to hand the president a win, but by Democrats whose constituents don’t like trade deals. If Obama doesn’t get the TPP, says Gary Hufbauer, a trade expert at the Peterson Institute for International Economics, "the pivot will look like a bad joke."
The other deliverables on the rebalance are less dramatic and less endangered. The administration promised to reassure coastal nations who fear Chinese territorial claims by shifting naval and aerial assets into the region, deploying an outpost of Marines in Australia and operationalizing the new "Air-Sea Battle" doctrine, which focuses on countering the Chinese military build-up. In his Australia speech, Obama delivered a specific pledge that deep Pentagon budget cuts would not impinge on these plans. On the diplomatic front, Obama is the first president to attend the East Asian summit, a regional forum established in 2005, and has promised to attend annually. It was all too telling that he had to cancel an Asia trip during the government shutdown last fall, though he has scheduled a new trip for April. The administration has also paid much more attention to ASEAN, the principal Asian regional body.
Each of these efforts has demonstrated that the administration’s commitment is not merely rhetorical, even if the rhetoric has often seemed to eclipse the substance. The TPP, though, is big. Inherited from the Bush administration as a pact with six or seven countries, it now includes Canada, Mexico, and Japan — three of America’s four biggest trading partners — as well as Chile, Peru, Australia, New Zealand, Brunei, Vietnam, Singapore, and Malaysia. Those economies account for 40 percent of global GDP. An analysis by the Peterson Institute predicts that the United States would gain $77.5 billion in net annual income from planned reductions in tariffs and regulations.
The TPP does not look like a conventional trade pact. First, it will eliminate tariffs not just in commodities like beef and textiles, but also in services, including banking, insurance, e-commerce, and the like. Second, most of its provisions concern "non-tariff barriers" including rules on copyright and patent infringement, the enforcement of investor rights, Internet security, "Buy American" standards, and access to medicines — as well as the labor and environmental regulations that have now become standard elements of trade deals. The TPP is not only the biggest proposed trade pact in the world, but the most ambitious. Donilon, to whom I spoke earlier this week, envisions the pact, as well as another planned for Europe, as alternative models to both protectionism and to statist autocracy. "It would have a magnetic effect," he predicts, for non-members, above all for China, which currently views the rebalance as a thinly veiled campaign to curb its power. That seems a trifle aspirational.
The immense reach of the deal, whose terms have remained largely secret, has made negotiations extremely protracted. The last round of discussions in December ended with trade officials still said to be at odds over Japanese car and agricultural markets, as well as such broad issues as foreign access to government contracts. The biggest stumbling block, however, is the United States. The other partners to the deal are parliamentary governments (except for Vietnam, a dictatorship). If the head of state approves the deal, it’s done. That is not true, of course, here in the United States.
I don’t have space to list all the reasons why labor, environmental groups, Internet activists, and good-government types object to the deal, but it is important to understand that the comprehensiveness of the TPP cuts both ways. All trade deals create losers, as well as people who fear that they will be losers. But a trade deal that seeks to re-write fundamental economic rules is going to magnify opposition from those real and would-be losers, as well as support from beneficiaries. Such a pact, negotiated in secret as trade agreements usually are, will arouse profound suspicion. (See Massachusetts Democrat Sen. Elizabeth Warren’s letter on the subject.) In his State of the Union speech in January, Obama asked for what is known as "fast-track authority," through which Congress agrees to limit debate and vote up or down, with no amendments. It’s not surprising that legislative leaders have been under pressure to refuse.
That’s where we are now. Senate Majority Leader Harry Reid (D-Nev.) has said that he will not bring up such a measure. Rep. Nancy Pelosi (D-Calif.), the House minority leader, says that she will support only a version of fast-track that contains provisions on labor and environmental rules (which Republicans are certain to oppose). In a meeting last week with Reid, Obama reportedly did not even raise the issue, presumably because he knew that it would be a waste of time. According to Hufbauer of the Peterson Institute, none of the other parties to the treaty will make painful concessions unless and until Congress votes for fast-track. So where we are right now is nowhere.
The pivot to Asia represents Obama’s affirmative vision for foreign policy — an "opportunity," as Donilon puts it, rather than "managing a threat." The TPP is the crown jewel of the policy, the Big Thing that Changes the World. Both to establish his own legacy and to position the United States for a post-9/11 world, Obama needs the trade deal. Why, then, has he come up shy? He may have decided to put off the issue until after the midterm elections, when Pelosi and Reid can afford to take an unpopular stand. If so, he will have to demonstrate gifts of persuasion, or ruthlessness, he hasn’t often showed in the past.
In my conversation with Donilon, he kept repeating the idea that the trade pact is a "critical strategic leadership initiative" for the United States. I finally realized that this was his message, and, presumably, the president’s, to Reid and Pelosi. The world, and not just Asia, has begun to lose faith in Obama’s leadership, and in America’s. The TPP, if it passes, will be an unarguable demonstration of American leadership, and its indispensable role in the world. If it fails, it will confirm their worst fears. The White House will be asking congressional leaders to put aside their political calculus and, perhaps, their own views in the name of America’s global standing. That’s a big ask, even after the election. I wouldn’t want to handicap the outcome.