Shadow Government

The President’s Trade Deals Are Wildly Popular. So Why Don’t They Pass?

These are daunting times for those pursuing megaregional trade deals. Although the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP) lie at the heart of both commercial and foreign policy, each has encountered troubling obstacles this week.   The TTIP is teetering. The European Union’s top trade official said yesterday that the TTIP ...

Win McNamee/Getty Images
Win McNamee/Getty Images

These are daunting times for those pursuing megaregional trade deals. Although the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP) lie at the heart of both commercial and foreign policy, each has encountered troubling obstacles this week.  

The TTIP is teetering. The European Union’s top trade official said yesterday that the TTIP is in danger of never concluding. The agreement was initially supposed to wrap up around now, as we are within a month of a changeover in EU leadership. There is no chance of that, and European Commissioner for Trade Karel De Gucht, who will step down with the change, warned that if no deal is reached in 2015 it could fall prey to the U.S. presidential election. He blamed a lack of political leadership in the United States and Europe.

The TPP had an equally rough week. According to reports in Inside U.S. Trade (paywall-protected), the prime minister of Singapore, Lee Hsien Loong, issued a similar, but earlier, deadline for its conclusion. "We have promised to conclude about three years in a row, so I think this is our last chance to fulfill our promise. … And if you don’t fulfill your promise this year, you’ll be running into the American presidential elections in two years’ time. And I think that’s further delays of an indefinite nature." This fit uncomfortably with a recent report that Senate Majority Leader Harry Reid (D-Nev.) had no plans for legislation to provide President Obama with greater trade negotiating powers — called trade promotion authority (TPA), it would fast track negotiations by preventing Congress from amending any deal — in the lame duck session after the elections. Then, to make matters worse, a ministerial meeting between the United States and Japan this week reportedly failed to break the negotiating stalemate between the two on TPP issues.

There are multiple reasons for this woeful state of play. The negotiations are highly ambitious; to conclude successfully, they would need internal agreement within each of the participating countries (two in the case of TTIP, 12 for TPP) as well as negotiated agreement among the participants. But last week brought some interesting — even positive — news on one key front: U.S. public opinion. Major new opinion polls were released by the Pew Research Center and by my institution, The Chicago Council on Global Affairs. Each was filled with fascinating information, including public views on trade.

Pew interpreted its trade results with caution. It noted that support for trade in the United States in 2014 was down from its 2002 level and that Americans were more skeptical than respondents in many other countries. It reported that strikingly few Americans in 2014 believe that trade creates jobs or raises wages. Bruce Stokes, of Pew, warned, "This undercurrent of distrust could complicate government efforts to further deepen and broaden global markets."

The Chicago Council survey asked both views of globalization and about the pending trade agreements. It found that 64 percent of the American public supported agreements to lower trade barriers (with some split between those who would or would not condition this on assistance for those who lose jobs). This number is not far from Pew’s 2014 U.S. finding that 68 percent of respondents agreed, "Growing trade and business ties with other countries are a good thing" (down from 78 percent in 2002). 

The specific trade agreement numbers from the Chicago Council survey were particularly striking. On TTIP, respondents were 62 percent in favor, 29 percent opposed. On TPP, the numbers were similar: 63 percent in favor, 31 percent opposed. This represents a stunning degree of support, given that the survey was fielded in May. Neither then nor now have the details of either agreement been set, much less made public. An entirely reasonable response, even among free traders, might have been: "Let me read the fine print; then I’ll tell you whether I support it." Yet over 60 percent of those surveyed did not feel the need for details; they were sufficiently confident of the agreements’ virtue that they offered their unconditional support.

This has some interesting ramifications for how best to approach TPA in the United States. Traditionally, trade negotiating authority has preceded trade negotiations. Some reasons for this are obvious — it helps negotiators if they know in advance what Congress will or will not support. Other reasons are subtler. The TPA legislation is intended to protect against killer amendments and delays in Congress. If people approve of agreements in principle, but have qualms about some specifics, it makes sense as a strategy to lock in favorable rules on the basis of positive expectations, then use those rules to move the specific package through later.

The Obama administration has taken the opposite approach. It has spurned offers of trade promotion authority in both the fall of 2011 and when a bipartisan deal emerged at the beginning of this year. There have been rumors that it might attempt to conclude TPP first (the president set a November target), then use that agreement to win backing for retroactive TPA. This strategy might make sense if the public were basically skeptical of TPP but might be persuaded by the specifics of a good agreement. It would still face the problem of a Congress that has demanded a greater voice in trade now being presented with a fait accompli agreement.  Yet the Chicago Council survey findings cast doubt on the basic premise of the strategy — the public is just not that skeptical.

Of course, trade policy in the United States is not determined by national referendum. Congress has the final say and there are important interactions between organized interest groups and legislators. Narrow political interests should not be dismissed lightly; the United States has maintained protectionist regimes in shipping (the Jones Act) and sugar for decades, despite a very limited set of beneficiaries. Yet, amidst the gathering dark clouds over the trade agenda, last week’s survey results shine through as a rare silver lining.

Phil Levy is Senior Fellow on the Global Economy, The Chicago Council on Global Affairs, and teaches strategy at Northwestern University’s Kellogg Schoool of Management.
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