Shadow Government

Is This the TPP’s Make-or-Break Moment?

In the dwindling hours of negotiation in Atlanta, there are four ways that the deal could go.

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On Thursday in Atlanta, trade ministers from 12 countries are trying to wrap up the final details of the Trans-Pacific Partnership (TPP). To recap from the previous episode: In June, the Obama administration finally won negotiating authority, and in July, there was a big failed push to conclude the agreement in Maui. Since then, trade minions have been working away to bridge differences over specific issues, without any obvious success.

The current talks are being cast as “make or break.” Brinksmanship is not uncommon in trade talks, since negotiators usually need some special inspiration to make difficult tradeoffs. The Atlanta ministerial happens to be the 33rd such round of high-level talks. But those who see tremendous economic and geopolitical promise in the TPP should still be cheering hard for a successful conclusion of the talks, right?

Maybe.

As something of a real-time viewer’s guide, here are four possible outcomes to the talks, ranked from most to least desirable.

1. An Atlanta agreement that sails through Congress. There would be ample benefits to concluding a TPP agreement, both as a spur to economic growth and reform and as a statement about U.S. commitment to the Asia-Pacific region and to opening global markets. It is important to keep in mind that the Congress ultimately determines U.S. trade policy. The negotiating authority won by Congress in June nominally guaranteed the administration a vote free of amendments and free of eternal delay. The United States will only reap the positive benefits when both houses of Congress approve.

2. A failure of the Atlanta talks. This is the tricky part — how can Atlanta failure come in at number two? If the talks fail in Atlanta, we are likely to see a replay of the reaction to the Maui talks: negotiators will discuss how significant progress was made, how it is never too late, and how they plan to reconvene soon to finish it off. But in reality it would get ever harder to imagine the TPP talks concluding under the Obama administration, given the impending political season. Still, there are more troubling potential outcomes.

3. A success in Atlanta and tabling in Congress. One might think that this outcome was ruled out by the agreed-upon negotiating authority in June, with its ban on endless delay. Yet this was exactly what then-Speaker Nancy Pelosi (D-Calif.) did in 2008 to negotiated trade agreements with Colombia, Panama, and South Korea. The Bush administration had concluded the agreements under 2002 Trade Promotion Authority (TPA). Under Pelosi’s guidance, the House Rules Committee suspended the TPA clock and the three agreements languished. They were ultimately passed in the fall of 2011.

4. A success in Atlanta and rejection by Congress. This is the outcome that could make tabling look relatively appealing. The best recent indicators we have on Congressional trade sentiment are the late spring votes on TPA. In both the House and the Senate, the votes initially failed. Now that TPA is in effect, the Senate is less of a concern, since filibuster is disallowed. But the House passed TPA with a very narrow coalition of 191 Republicans and only 28 Democrats (curiously, the president concluded from this that the real threat is growing isolationism among Republicans). That support could erode for a number of reasons, from the pressure of the election season to unwelcome compromises on key issues. Outright rejection would mark a disastrous failure for negotiators and for U.S. foreign policy.

How serious is the concern about Congressional passage? That remains to be seen. Top Republican and Democratic trade policymakers in Congress sent a warning letter yesterday, urging the administration to go slow and consult with Congress. There have been intermittent demands from key interest groups that the administration shift its stance, lest those groups withhold their support. This is hard to read. There is nothing novel about last-minute demands to have concerns addressed; that is standard trade negotiation procedure. Those demands do not always come in the context of such a narrow coalition, however.

Normally, an administration would not submit such a deal without knowing the support is there. Normally, though, one would not have seen the failed TPA votes that we saw in May and June. U.S. Trade Representative Mike Froman seems to be aware of the danger and actively at work lowering expectations: “The substance of the negotiations will drive the timeline for completion, not the other way around.”

It would be extraordinarily disappointing if the Atlanta talks were to fail. But it could be worse.

SAUL LOEB/AFP/Getty Images

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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