Shadow Government

The TPP and Its Ticking Clocks

After nearly eight years of negotiations, the trade deal was signed this week — but it still has a long road ahead of it.

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At last! The Trans-Pacific Partnership (TPP) was actually signed, down in New Zealand, on Wednesday afternoon in the United States, Thursday in New Zealand. Almost eight years after President George W. Bush launched U.S. involvement, it’s a significant step forward — but still just one in a long series. And it isn’t time to start celebrating just yet.

In October, the successful conclusion of negotiations was heralded as bringing us an awesome new agreement. In fact, that was the first step in a prolonged process. In early November, the text was released to the public. That November release started the first official clock ticking. There are a number of timelines governing this trade negotiation process. In the United States, the president is operating under Trade Promotion Authority (TPA), passed last summer. The timelines of that bill dictated the lag from the public release in November to the signing this week.

The signing this week starts two different clocks ticking. Under the TPP agreement itself, it kicks off a two-year stretch in which all of the 12 countries are supposed to take care of “their applicable legal procedures.” Article 30.5 says that the TPP will enter into force 60 days after they’ve all done so. That means that for this two-year stretch, any country that fails to ratify the agreement can hold up entry into force. At the moment, the two most likely candidate countries to hold things up appear to be Canada and the United States. We’ll return to U.S. prospects in a moment.

The second clock that starts ticking is from TPA. It says the Obama administration can submit implementing legislation reflecting the final signed text to Congress along with a statement of administrative action no sooner than 30 days from the signing. So that will be early March. In theory, Congress could vote on the TPP right then, in early March, as soon as the administration submits the implementing legislation. And the administration has been expressing its enthusiasm about the idea of an early vote.

But the White House has taken a very odd approach to congressional relations in its pursuit of this trade deal. When negotiating the deal itself, the U.S. negotiators seemed more interested in pleasing House Ways and Means Ranking Member Sandy Levin (D-Mich.) than in pleasing top House Republicans. The administration spoke of the remarkable labor and environmental achievements in the deal. That would all be fine, except there are no indications that Rep. Levin has any intention of supporting the TPP.

For those who had supported the president on TPA — our best indicator of the coalition available to back TPP — the negotiators seemed to have little time. There were relatively weak results on dairy market access (Speaker Paul Ryan is from Wisconsin). There was a special exclusion of tobacco from investor protections (House Majority Leader Mitch McConnell is from Kentucky). Negotiators explicitly dropped a mandate from Senate Finance Chairman Orrin Hatch (R-Utah) for strong intellectual property protection for biologics.

Since the public release, as these congressional principals have made their displeasure known, the administration has had several possible avenues it could pursue.

1. It could try to stir up more Democratic votes to replace lost Republican ones (only 28 House Democrats voted for TPA, which passed by the slimmest of margins).

2. It could try to alter the agreement to meet Republican concerns, through either side agreements or implementation plans.

3. It could try to pressure Republicans to give in.

4. It could “call their bluff” and submit the TPP when it liked, thereby forcing congressional action.

There seems to be little appetite for the first option. The TPP seems no more popular than before among Democrats. Sen. Elizabeth Warren (D-Mass.) just renewed her call for rejection. On the campaign trail, Sen. Bernie Sanders (Vt.) has been using his more fervent opposition to the TPP as a means to distinguish himself from Hillary Clinton. And when the president sat down with Democratic Congressional leadership to discuss the year’s agenda, trade seemed to play little role. Further, Democrats who dared to support trade have been punished.

Altering the agreement is a possibility (though not, at the moment) through renegotiation. So far, however, Republicans do not seem satisfied with whatever progress has been made.

The White House has tried to pressure Republicans, both in direct meetings, and through the business community, as on Feb. 1 when White House spokesman Josh Earnest said, “This is a priority and I’m confident that the strongest political allies of Leader McConnell here in Washington are excited about the prospect of the Trans-Pacific Partnership being ratified as soon as possible.” The problem is that it is unclear that Republicans have the votes to do it on their own. Nor are Republicans in Congress — or their business allies — likely to feel any great compulsion to set aside their concerns just to do the president a favor.

The final possibility is that the president could just submit the TPP in early March. He would be too late to force a final vote on the agreement, but he could force interim votes in the Ways and Means Committee and on the House Floor. That could lead to two bad outcomes, though — the less bad would be a Congressional finding that the negotiated TPP does not meet the requirements of TPA, so the timelines don’t bind. The very bad would be that the agreement comes to a vote and fails.

Early indications are that the administration will be smart enough not to start this TPA clock prematurely. Dave Reichert (R-Wash.), chairman of the House Ways and Means Subcommittee on Trade, said “So far, the White House has said to us that they don’t plan on presenting it to the Hill until we’re ready.”

Thus, while this week’s TPP signing in New Zealand marks an advance, the deal still faces a perilous time head.

Olivier Douliery/Getty Images

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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