Business

U.S. faces loss of credibility if TPP not ratified by end of year

by Ayako Mie

Staff Writer

The United States will lose its credibility in the Asia-Pacific region if Congress does not ratify the Trans-Pacific Partnership trade pact by the end of the year, a former senior U.S. trade official said.

The new U.S. president will be sworn in on Jan. 20.

“If you ask me what this means without TPP, it’s really a loss of credibility for the U.S. in the region. And that really troubles me,” Wendy Cutler, former acting deputy U.S. trade representative, said in an interview in Tokyo on Thursday.

Cutler, who is now vice president and managing director of the Asia Society’s Policy Institute in Washington, said she expects Congress to vote on the issue by year’s end and warned that renegotiation will not be possible.

“I am hopeful that TPP will be approved by our Congress this year. The president has put a high priority on this and he is undertaking a government-wide effort to gain support for TPP,” Cutler said of the free trade pact.

Cutler was one of the key negotiators on the deal, which U.S. President Barack Obama sees as an important economic pillar of America’s rebalancing policy in Asia, where a resurgent China is changing the geopolitical and economic landscape.

Outstanding issues remain among TPP stakeholders in the United States, including pork farmers, the tobacco industry, the financial services sector and the pharmaceutical industry. But Cutler said renegotiation is not possible because the agreement rests on a delicate balance comprising the priorities and sensitivities of the TPP member countries.

“If any country seeks to change that balance, it’s hard for me to see how the agreement would stick together,” said Cutler. “But I do believe there are ways to address the outstanding issues in a manner that would not require renegotiations. If the political will is there, I think creative minds can find a way forward on this issue.”

Despite Cutler’s hope, Obama is facing an uphill battle.

U.S. Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan, both Republicans, have said there will be no vote on the trade pact during the lame duck session after the presidential election on Nov. 8.

The Republicans want to avoid any attacks from their presidential candidate Donald Trump, who has described TPP as “the rape of our country.”

While Republicans are historically strong proponents of free trade, members who even voted for granting the Trade Promotion Authority that prevents Congress from amending the trade agreement have withdrawn their support for the trade framework.

Obama also wants to avoid making the TPP a stumbling block for Democratic nominee Hillary Clinton, who flip-flopped partly to pander to supporters of a former Democratic presidential candidate Bernie Sanders, who said the trade deal will harm Americans.

Some studies say the U.S. will not benefit much economically from the TPP. But Cutler said a lot of America’s economic woes, such as job loss and the decline of the middle class, should not be attributed to the potential impact of the TPP but rather to advances in technology and insufficient policy responses.

“I do not think the appropriate policy response is to walk away from one of the most important trade agreements we’ve ever negotiated, which reflects the overwhelming majority of our priorities,” Cutler said.

The TPP is also a highly charged political issue in Japan.

Prime Minister Shinzo Abe, who sees the trade pact as part of his growth strategy, has expended much political energy convincing Japan’s heavily protected farmers, a reliable source of votes for his Liberal Democratic Party, of the benefits.

Despite this, LDP candidates who chose to back the TPP in five of the six prefectures that make up the agriculture-heavy Tohoku region lost their seats in the Upper House election in July.

In the extraordinary Diet session scheduled to open later this month, TPP-related bills will be a priority. But some lawmakers have voiced concerns about the possibility of the TPP coming into effect.

The ratification rules require that at least six countries representing 85 percent of combined gross domestic production of the 12 member nations approve the deal within two years for it to enter into force. And ratification by major players Japan and the U.S. is crucial.

“We hope very much that Japan can get this into effect and I think that would be an important signal to the U.S. and other countries to keep moving ahead,” said Cutler.

Coronavirus banner