TPP has many hurdles to cross

An ambitious Trans-Pacific Partnership (TPP) that brings 12 nations together, and accounts for 40 percent of the global economy, faces enormous challenges in terms of ratification in the US Congress, and rejection by the presidential candidates. Donald Trump, the presumptive Republican presidential nominee, has outrightly rejected the TPP though a number of Republicans more Democrats back the agreement. Democratic candidate Hillary Clinton, who supported the TPP as President Barack Obama’s secretary of state, has since said the final deal “doesn’t meet standards” because it won’t increase wages for middle-class Americans. She might have done so to avoid the wrath of the Trade Unions, who constitute a wide base for the Democrats.
It is a deal that wouldn’t be snubbed. But as anti-globalisation influences the US elections, the prospect that US lawmakers seek to amend the TPP has increased. Albeit, this will hit another snag as other countries, including Japan, have said they wouldn’t accept a modified pact.
The Republican and Democrat tones on TPP differ. The Republican messages have been directed towards specific provisions like biologics or tobacco carve-outs from investor protection mechanisms. Republican calls to dismiss the agreement entirely usually come from the same members who voted against Trade Promotion Authority (TPA) and it makes sense that if they didn’t vote for TPA, they wouldn’t vote for TPP either.
But critical comments from Mitch McConnell, Orrin Hatch, Paul Ryan, and others in the Republican leadership shouldn’t be interpreted as unequivocal opposition, or even opposition. For the Democrats, there is a huge challenge from the trade unions, which see the partnership taking away jobs.
There are doubts whether the TPP would be passed by the US Congress after the November presidential election. Yet, things may be clear when the election campaign trail subsides.
Doubts are also cast on the pact, which excludes Asian economic giants China and India. No one exactly speculates why these two major economies were left in the cold.
Nonetheless, they have what it takes to counterbalance the TPP. For instance, China is already developing its own systems of trading, notably the Asian Infrastructure Investment (AIIB), while India is the growth engine for the world’s fastest-expanding region, which is difficult to ignore.
Indeed, the TPP has been a centerpiece of Obama’s economic and military rebalancing to Asia. The World Bank estimates the pact could raise gross domestic product by an average 1.1 percent in member countries by 2030.
The agreement goes beyond typical trade deals that mostly focus on reducing tariffs and highlights stricter safeguards for patents and a more level playing field for companies that compete with government-backed businesses.
If the White House wants TPP to be a legacy issue for Obama’s presidency, it has to push harder for the deal which still enjoys a bipartisan support. The White House should work with members of both parties to resolve outstanding issues and deliver Democratic votes to provide cover for Republican votes.
Despite the rhetoric of the election campaign trail seen by many international observers as an obstacle to the TPP and would lead to its doom, there is still a chance that the administration can work together with willing Republicans and Democrats to ensure that the agreement is passed before Obama leaves office. At the end, the US will put its interest first!