The TPP Train Could Still Get Derailed

There's a long way to go before the United States passes real trade legislation — and it may not end up being what the American people want.

Demonstrators protesting against the Trans-Pacific Partnership (TPP) are seen on Pennsylvania Avenue, near the White House, on September 24, 2013 in Washington, DC. The TPP is a proposed free trade agreement being negotiated by  Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. AFP PHOTO/Mandel NGAN        (Photo credit should read MANDEL NGAN/AFP/Getty Images)
Demonstrators protesting against the Trans-Pacific Partnership (TPP) are seen on Pennsylvania Avenue, near the White House, on September 24, 2013 in Washington, DC. The TPP is a proposed free trade agreement being negotiated by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. AFP PHOTO/Mandel NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)

Three months ago, trade negotiators pulled an all-nighter and wrapped up discussions on the Trans-Pacific Partnership (TPP) in Atlanta. There was much rejoicing, as it had been just over seven years since then-U.S. Trade Representative Susan Schwab announced the U.S. intention to participate in the talks. After such a long race, who wouldn’t celebrate when crossing the finish line?

Of course, that wasn’t really the finish line; it was merely a waypoint. Trade agreements only mean something in the United States if Congress passes implementing legislation. And that means grappling with domestic trade politics, which have become increasingly contentious. Trade votes, if they pass at all, frequently move with hardly a vote to spare. Why is it so tough to advance a trade agenda through Congress? Let’s consider two potential explanations and then bring some public opinion data to bear as we assess the obstacles to TPP completion.

Possibility No. 1: The American public has soured on globalization. With stagnating wages and growing inequality, the public blames cheap labor from abroad. There is no appetite for doing more.

Possibility No. 2: Interest groups have become particularly adept at rallying opposition to trade bills. Although they represent a minority of voters, they have disproportionate weight with politicians.

Recently released data from a 2015 survey on public opinion and foreign policy by the Chicago Council on Global Affairs strongly point to Possibility No. 2. Among other questions, respondents were asked:

“As you may know, the United States is now negotiating a free trade agreement with twelve Pacific nations called the Trans-Pacific Partnership (or TPP). Based on what you know, do you strongly support, somewhat support, somewhat oppose or strongly oppose this free trade agreement?”

Supporters accounted for 64 percent while opponents constituted only 29 percent. These responses came well before the details of TPP were known, though the broad outlines of the agreement had been publicly discussed. Contrast this strong public support with the exceedingly narrow congressional backing for Trade Promotion Authority (TPA) at roughly the same time the survey was taken. In the House of Representatives on June 12, TPA passed on its second try:

Screen Shot 2016-01-05 at 6.42.54 PM If we were to suppose that the House faithfully represented public sentiment, we might guess that Democrats were trade skeptics while Republicans were enthusiasts, perhaps reflecting a split between the putative party of workers and the party of business.

That’s the interesting part — the data show just the reverse. When survey respondents were asked to self-identify as Republican or Democrat, it was the Democrats who backed TPP 72 percent to 23 percent. Republican support was 60 percent to 32 percent. So Republican congressmen were substantially more enthusiastic about trade than their Republican constituents, while Democratic congressmen were dramatically less enthusiastic than their Democratic voters.

One doesn’t have to look far for an explanation. The leading labor organization, the AFL-CIO, by its own account, has worked with other trade deal opponents to hold hundreds of rallies in opposition to TPA, make millions of phone calls, and target members of Congress with district advertising. According to Politico, the AFL-CIO warned one San Diego Democrat in Congress that if he supported TPA and TPP, the organization would spend a million dollars to beat him in the next primary election. If he survived that, they promised another million in opposition in the general election.

So both anecdotal evidence and systematic data point to interest group politics (Possibility No. 2) over public sentiment (Possibility No. 1). Before turning to the implications for TPP passage, consider two other interesting findings from the survey.

One line of attack against TPP has stressed the gap between the traditional free trade removal of border barriers (tariffs and quotas) and the more intricate measures of the agreement. Distinguished economist Jeff Sachs recently wrote that TPP was too complex to support.

“The agreement, with its 30 chapters, is really four complex deals in one. The first is a free-trade deal among the signatories. That part could be signed today…. The second is a set of regulatory standards for trade…. The third is a set of regulations governing investor rights, intellectual property, and regulations in key service sectors, including financial services, telecommunications, e-commerce, and pharmaceuticals…. The fourth is a set of standards on labor and the environment that purport to advance the cause of social fairness and environmental sustainability.”

What would the public think about a more generic approach to open trade, something comparable to what Sachs characterizes as the “first part” of TPP? When the Chicago Council survey asked about the importance for U.S. competitiveness of “supporting open trade around the world,” 80 percent considered it important versus 18 percent which considered it not important. In this case, results were almost identical across party affiliations. While stronger support for “generic” liberalization could indicate some unease with the particular features of TPP, the specific agreement still drew roughly two-thirds backing, as noted above. One has to be somewhat cautious comparing these answers, however, since the TPP question asked about support and the “open trade” question asked about its importance for U.S. competitiveness.

Of course, there are more reasons to support a trade agreement than just its economic effects. TPP proponents stress its foreign-policy significance, particularly as an essential element of the Obama administration’s rebalance to Asia. This, too, could help account for the gap between greater support for generic trade and the more modest (but still substantial) support for TPP.

Survey respondents were also asked to assess how important signing free trade agreements (FTAs) with other countries is to achieving the foreign-policy goals of the United States. FTAs were deemed effective by 64 percent while 34 percent judged them “not effective.” Here there was sharper partisan divide. Democrats were much more enthused about foreign-policy effectiveness (77 percent to 22 percent) than Republicans (56 percent to 42 percent).

This may prove a particularly challenging point for Democratic presidential front-runner Hillary Clinton. A foundation of her candidacy is that she is well-equipped to handle foreign affairs. As secretary of state, she publicly backed TPP 45 times. But in October of last year, before the TPP text was released, she declared her opposition. This puts her at odds with broad public opinion as reflected in the survey. Richard Trumka, president of the AFL-CIO, however, had said that Clinton would need to oppose TPP to earn organized labor’s support.

So what do the public opinion results imply for TPP? For one thing, they help explain U.S. President Barack Obama’s curiously conflicted approach to selling the trade agreement. He has tried to appeal to the special interest opponents by denigrating past trade agreements. But he has tried to push TPP by claiming that it is radically different. He, thereby, seems to forsake the chance to draw on the high existing level of public support for trade agreements.

The weak support among congressional Democrats means that the fate of the agreement is very much in Republican hands. Had U.S. trade negotiators focused on this point, TPP’s prospects might be brighter. The White House trumpeted TPP as “the most progressive trade agreement ever,” spurned Senate Finance Chairman Orrin Hatch (R-Utah) on intellectual property protections, and jabbed Senate Majority Leader Mitch McConnell (R-Ky.) and others with a tobacco carve-out from investment protections. If support for TPP in Congress were as broad as it is among the American public, such idiosyncratic objections might not matter as much (though it is always problematic to snub a congressional chairman with jurisdiction). But with congressional support dramatically narrower and more partisan than that found in the survey, each vote counts.

Where will those votes come from and will they be numerous enough to pass TPP? It is unlikely that the number of congressional Democrats supporting TPP will expand much above TPA levels, particularly as election pressures intensify. That would mean Republican support, at least in the House, would need to hold or expand. Could congressional Republicans credibly oppose TPP? After all, even Republican survey respondents supported TPP by 2-1.

One more blast of Chicago Council survey data on this point: Republican support varied significantly across different regions of the country. In the Northeast, Republicans supported TPP 74 percent to 24 percent; in the South, 63 percent to 32 percent; in the West, 55 percent to 33 percent; and in the Midwest, 52 percent to 39 percent. Members of Congress, of course, do not represent national opinion but rather the views in their respective districts. For a significant minority of Republicans, opposition to TPP may be politically incentive-compatible. Note also that Republican congressmen are not evenly distributed around the country. There are currently two Republican House members from all of staunchly pro-trade New England. This makes it all the more remarkable that large Republican majorities delivered TPA victories to Obama in late spring.

If congressional stances accurately reflected American public sentiment on trade, TPP’s journey from signing to implementation would be a mere formality. As things stand, it will be anything but.

Photo credit: Mandel Ngan/AFP/Getty Images

Corrections, Jan. 6, 2016: Trans-Pacific Partnership negotiations wrapped up three months ago in October 2015 in Atlanta. A previous version of this article mistakenly said that TPP discussions wrapped up one month ago. Also, Hillary Clinton declared her opposition to TPP in October 2015; a previous version of this article said that she declared her opposition last month.  

Phil Levy is the chief economist at Flexport and a former senior economist for trade on the Council of Economic Advisers in the George W. Bush administration. Twitter: @philipilevy

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