Shifting trade winds

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The trade situation has been quickly shifting and changing during the first weeks of 2014.

No sooner had President Obama indicated his position had shifted to favor trade and asked for Trade Promotion Authority (TPA) than Sen. Majority Leader Harry Reid, in essence, told him not to be thinking about TPA, at least for now. TPA gives the administration authority to negotiate trade deals along general guidelines, subject to the approval of Congress. Meanwhile, the Trans-Pacific Partnership (TPP) indicated it was getting close to an agreement.

So how is this likely to play out?

More than a few folks figure that despite the president's call for TPA, Sen. Reid is going to be much busier trying to preserve his power as master of the Senate than heeding the president's shift in policy. The Democrats are going to have a tough time keeping their majority in the Senate this fall, and Sen. Reid is going to do everything he can between now and November to get his troops in line, especially his base sources of votes and money. That means not upsetting the labor unions who reflexively oppose trade most of the time because they fear losing jobs to lower-wage, lower-benefit economies elsewhere.

Never mind that many Americans work for foreign-owned countries here (more than 6 million most years) and that less than 1 percent of jobs lost each quarter are due to outsourcing jobs to other countries.* In addition, the U.S. Bureau of Economic Analysis in 2012 noted that the value of foreign investment in the United States exceeds the value of U.S. investment in other countries by over $4 trillion.**

Environmental groups are another key source of Democratic support. They see trade as a mechanism for spreading and mandating environmental rules and restrictions regarding "manmade" global warming to other countries. They see it as missionary work for their green religion, without leaving the country.

All of which indicates TPA will not happen until after the election. Sen. Reid is nothing if not political. It won't bother him a bit if he has to change horses and head the other direction after Nov. 4. 

Here's Sen. Reid in 2011:

"We have an opportunity through the Trans-Pacific Partnership negotiations to make significant improvements to international trade and investment rules that would help level the playing field for our companies and workers..." He told the White House ("Why Trade Talks Are Still on Track, Really," Wall Street Journal, 2/16/14). 

Yep, that's the same guy. The story points out that he could have obstructed the last three free trade agreements (with South Korea, Colombia and Panama) but didn't. So he could easily cite the need for economic growth by November and flip back again. That's if he's still the gatekeeper.

So how could things go down over the next eight months or so?

One veteran of international trade intrigue told me there is lots of work yet to do on the TPP agreement, despite the "almost there" rhetoric of the participants.

There are tough access issues and the problem of Japan's lengthy exemption list to deal with.

How things work out could depend on how they're handled. If U.S. Trade Representative Michael Froman helps keep the negotiators busy on the tough issues like market access this summer so the agreement is nearly ready but not finished before the election, the timing issues can be handled. But Ambassador Froman needs to tackle the tough things in a low profile manner and get the other countries to do likewise. Meetings away from the limelight of the U.S. political frenzy in other countries would be the smart route.

All the countries involved need this trade deal but they can't get it done too soon because of the American political factors. Japan needs the assurance of an eventual U.S. TPA law because they will not sign off on major domestic agricultural reforms if Congress can tinker with the agreement. And those reforms are of major importance to American agriculture and export groups. So Japan needs TPA before it will sign the TPP.

Along similar lines, Ambassador Froman can't have the TPP done before the election and a TPA agreement, as politicians like Sen. Reid and others will feel too left out of the negotiations and get bent out of shape. That could harm the prospects for either a TPA bill or the TPP.

So keeping the TPP negotiations moving but low key and out of sight and the finish timed right, could see TPA early in 2015 with TPP several months after.

Of course, the key to all this is getting Trade Promotion Authority. And that is where the American voter comes in. Voting in a Republican Senate (subtracting Harry Reid from the equation and bringing in economic growth and trade senators) and TPA, trade deals like TPP and other economic boosts could happen.

The opinions expressed in this commentary are solely those of Steve Dittmer, a veteran in agricultural policy and commentator.

* "Myths About Jobs and Outsourcing," Indystar.com, Heritage Foundation research, 2004.

** "New Report Shows Outsourcing Fears Are Misplaced," The Foundry (Heritage Foundation, 6/27/2012.


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