Why America Should Have Pushed for TTIP—Not TPP—First
On Wednesday, the U.S. Senate voted to give the Obama administration “fast-track” trade promotion authority. This gives the president the power to negotiate the Trans-Pacific Partnership (TPP) and other potential trade deals that could stretch well into the next administration.
There are still hurdles, including president Barack Obama’s threat to veto the trade promotion authority bill unless the U.S. House passes auxiliary “trade adjustment assistance” legislation to boost workers whose jobs are endangered by or lost to international trade. Those all seem surmountable, however, and the successful conclusion of the Obama administration’s fight for fast-track authority salvages its trade policy, which was in real jeopardy just a week ago. Most importantly for the Obama administration, the fact that TPP has become centerpiece of its “Pivot to Asia” made the fight paramount to its foreign policy as well.
Nevertheless, the TPP fight reflects a glaring strategic error for the Obama administration that split the Democratic Party just months before party members choose its nominee for the 2016 election. By letting the TPP shape almost the entire debate over “fast-track,” the smarter strategic bet all along would have been to highlight trade promotion authority for the TPP after (or at least adjacent to) the Transatlantic Trade and Investment Partnership (TTIP), which aims to be the first major bilateral free-trade deal between the United States and the European Union. Though it may be a victory that the Obama administration has rescued TPP from the jaws of defeat, failure to win “fast-track” negotiation for TPP could have permanently derailed TTIP as well. As it stands, the difficult fights over TPP will reduce the political capital and goodwill in both the United States and Europe to accomplish what’s arguably an even more consequential trade agreement than the TPP. Opponents still smoldering over the fast-track defeat will now be sure to redouble their efforts to stop TTIP, notwithstanding even more tangible benefits from the trans-Atlantic deal.
TTIP, like any major trade deal, has its share of legislative difficulties. Martin Schulz, the president of the European Parliament, postponed a key vote in the EU’s chief legislative body on June 9, with his center-left “Socialists and Democrats” bloc of Members of the European Parliament (MEPs) divided over supporting the the transatlantic trade deal. Now, as the same MEPs watch organized labor and Congressional Democrats attempting to block efforts to advance the TPP, there’s a chance the European Parliament could shelve its debate on TTIP altogether.
If that were to happen, it would be a disastrous result for the Obama trade agenda. Its near-fatal setback on TPP (via the current debate on “fast-track”) has already put TTIP at risk, with TTIP’s most resilient European supporters, including German chancellor Angela Merkel, British prime minister David Cameron and the Swedish European commissioner for trade Cecilia Malmström, having doubts. Winning support first for the low-hanging fruit of TTIP would have established at least some trust to pursue a later TPP victory. Though the Obama administration might have been forced to share the credit with Hillary Clinton, Jeb Bush, Marco Rubio or Scott Walker, no likely successor would be expected to abandon U.S. interests in the Pacific Rim.
TTIP would have been an easier sell than TPP for at least three reasons.
First, from the U.S. perspective, TTIP might easily launch a regulatory “race to the top,” not a “race to the bottom.” Unlike most major bilateral and multilateral trade deals of the past two decades, TTIP would bring U.S. standards in international trade arguably higher on many issues. Given that the European Union’s laws and regulations on matters like consumer protection, environmental safeguards and labor standards are often slightly higher than those in the United States, TTIP could have been a unicorn among U.S. trade agreements—one that labor unions and leftists might have embraced as a means of raising the bar for the United States. When Vermont senator and Democratic presidential candidate Bernie Sanders argues that U.S. policy should look more like Scandinavia’s, TTIP is precisely the kind of tool that could make that happen. Instead of working with labor unions to use TTIP as an opportunity to strengthen workers’ rights, however, the Obama administration has been met with news reports detailing hidden jungle graves of smuggled migrant workers. Even where U.S. regulatory standards are now higher than in the European Union, such as in the financial services industry, U.S. negotiators have held the line, despite appetite for liberalization from financial service firms in both the United States and Europe.