The road ahead for the TPP is going to be rough. But the early reports of the demise of the TPP are exaggerated.
1. The Canadian Election.
One reason critics advance for the supposed demise of the TPP is that the Conservatives have staked some of their economic credibility on the success and importance of the TPP. The problem for the Conservatives is that, as of today, the election campaign hasn't gone particularly well, and the resurgent Liberal Party led by Justin Trudeau is inching closer to a majority in Parliament. The TPP hasn't been unimportant to the Canadian campaign. Mr. Harper would undoubtedly have preferred to see the TPP negotiations brought to a conclusion last July, prior to dropping the writ. However, those "final talks" were scuttled, in part, by a series of sensitive issues specific to Canada; namely Canada's politically sensitive (in vote-rich Ontario and Quebec) supply management system.
That the talks lingered, and focused on what appeared to some as Canadian recalcitrance in the face of electoral imperatives, provided some fodder to the opposition that Mr. Harper's economic management skills were not as sharp as claimed. Yet, the TPP does not depend on Mr. Harper's ability to win another majority government:
a) Mr. Trudeau Supports. Liberal Leader Justin Trudeau has offered tepid support for Canadian engagement in, and openness to, the global trading regime generally, and Canada's membership in the TPP specifically. The NDP's Tom Mulcair is opposed (note he is among dairy farmers).
Should Mr. Trudeau form a government (and no small thanks to party discipline), there will undoubtedly be enough votes among Liberals and Conservatives (who would be unlikely to suddenly vote against a deal they just campaigned on) to ensure passage.
b) Outside Looking In? If the 11 other TPP members continue moving forward, Canada can hardly afford to sit outside. Even the most ardent neo-mercantilists would acknowledge that Canada's standard of living depends mightily on the nation's ability to sell its excess production to foreigners and that market access abroad means foreign market access at home. How countries balance the creation of winners and losers in the context of trade liberalization is always a public policy challenge, but Canada is a trading nation.
c) It's an American Show. For good or for ill, the survival of the TPP depends almost entirely on what happens in the United States.
2. American Trade Politics Re-visited.
I've spilled a fair bit of ink in this blog on the politics of U.S. trade policy (here too). It tends to be an ugly affair that blends the normal controversies of trade liberalization with a complex political system that isn't well understood. A good example of this misunderstanding occured last week when Hillary Clinton publicly voiced her opposition to the TPP.
Her opposition to the TPP struck many as hypocritical and a shamelessly political maneuver (it is... more on that below). The text is not public, so she seems to be reacting to details that none of us have seen. More importantly, she was the nation's chief diplomat as the TPP was being negotiated and, in theory, supported the details. Now we are asked to accept that she was simply being a good soldier as Secretary of State and supporting a negotiation she didn't believe in? Okay. Equally important is the belief by some that Secretary Clinton's opposition to the TPP amounts to a death sentence for the TPP should she become president.
Hold your horses....
a) Populism is easy. Hillary Clinton is in good company and among those who are too lazy as candidates to make an intellectual case they will eventually make when they hold national office. For another example, look no further than Clinton's former boss, President Obama. In the 2008 campaign for the Democratic presidential nomination, Obama and Clinton did their best to out-Luddite one another on trade, pandering to some of the basest, near xenophobic tendencies among populist critics of trade liberalization; Obama making it clear he opposed the NAFTA in the 1990s, Clinton calling for a "trade time-out" to fix the NAFTA. As a refresher:
So what happens to candidates when they get into office? How is it that they find religion on trade policy? Why do they gravitate to the basest of arguments when they so obviously know better? The answer is simple, and admittedly not entirely about being lazy. Once in national office, the "winners" from trade liberalization become part of a national constituency that you now represent, and trade policy a useful mechanism for pursuing the broadly based benefits for that constituency. When you are still a candidate, you mainly face the concentrated "losers" from economic sectors under pressure from trade liberalization (see my post on the distributional politics of trade. It's a good one, but didn't get many hits).
Hence, Hillary Clinton's public opposition to TPP shouldn't be all that worrisome for backers of the Agreement. My prediction is that by April or May of 2016, Secretary Clinton will have secured the Democratic nomination and start the process of singing a very different tune on trade policy. Since no legislative time-line has been set for Congress to consider the TPP, and some are saying it might not happen until after the election in November 2016, my bet is that you'll see another President Clinton leading the charge on Capitol Hill to get passage of another major regional trade agreement.
The same holds for Donald Trump and the GOP field. For Trump, America is run by incompetent idiots who have sold the working classes out in badly negotiated trade deals with foreigners. This kind of populism should embarrass both sides, but is to be expected in what President Obama has repeatedly termed "the silly season" of presidential campaigns.
b) Trade Policy is Foreign Policy. Simply put, the TPP is a major component of the Obama Administration's "pivot to Asia." The TPP will become one of the primary vehicles through which the United States engages with, and is engaged by, many Pacific Rim nations. While TPP countries make up nearly 40% of global GDP, the United States is remains relatively immune to the vagaries of international trade. Indeed, only a bit over 30% of U.S. GDP is connected to trade. That's not insignificant, but far less than Canada's 70% of GDP. The point here is that trade policy for the U.S. is at least as much about strategic issues as it is the economic gains from trade. In the case of the TPP, there are several strategic elephants in the room. China is conspicuously out and Japan, Australia, Singapore, New Zealand are in; all nations nervous about China's growing clout in the region. Also in are countries like Peru and Chile, nations on a continent often ignored by the United States and where China's influence was also growing. The TPP reasserts American influence in the Pacific and allows nervous allies to reaffirm their affinity to Washington's way of doing things rather than Beijing's.
More generally, American presidents tend to embrace trade policy as an important set of policy tools in an otherwise skimpy foreign policy tool chest. Article II of the U.S. Constitution is limited in terms of the powers assigned to the president. In many ways, they were intentionally ceremonial. Hence, they are always hungry for more. The U.S. Constitution gives Congress the power to regulate commerce with foreign nations (Article I, Sec. 8), but the collective action problems of 435 Members of Congress actually doing so have necessitated the delegation of that authority to the president. See my blog post on Trade Promotion Authority, and my piece in Diplomatic History detailing the uniqueness and function of American trade policy institutions).
Bottom line: The TPP's geo-strategic benefits are too great to squander.
c) Cry-and-Sigh Re-visited. This brings us to the prospects for TPP surviving the Congressional approval process. If you have a look at my Diplomatic History piece, you'll understand why the TPP will be presented to Congress for an "up or down" vote. In short, it's a practical measure in which the U.S. terms of those negotiations are worked out between the White House and Congress, after which the concluded Agreement is considered by Congress in an all-or-nothing manner; in other words, none of the 435 Members can offer amendments to what the president has negotiated. The result looks like a high-stakes game of chicken over the TPP when it is eventually considered. And, without the benefit of the kind of party discipline enjoyed in the Canadian system, Congressional consideration of the TPP may also look to many like a high-stakes free for all. But is it?
The institutional reality of American foreign policy, including trade policy, is that Congress isn't very good at collectively managing foreign affairs, nor do they necessarily want responsibility for doing so. Rather than repeat some of the reasons why, I'll suggest you see my blog post on the subject. However, suffice it to say that Congress would rather complain loudly about the management of trade policy than actually direct it themselves. The conditions of the Trade Promotion Authority Obama won from Congress earlier this year to complete the TPP included both limits on what Obama could do and strict rules on consultation with Congress about the negotiations along the way. By all accounts, there has been more ongoing White House-Congressional consultation over the TPP than any other agreement in history. When the TPP is brought to a vote, it should surprise no one on the Hill.
Nevertheless, getting the TPP passed will be tough. On paper, it will probably look as though the Agreement's future hinges on one or two votes. And, there is good reason to postpone consideration of TPP until the lame duck session in late 2016 when individual members won't be so vulnerable to constituent criticism over the deal. Moreover, the president-elect can help lead the charge as they undergo a metamorphosis that takes them from anti-trade candidates to pro-trade holders of national office.
None of this is to suggest that the TPPs supporters can assume approval is in the bag. When it is considered, there will be great theater. BUT,.... it will be important to sort out the theater from the substance, in a process is at this point essentially stacked in favor of approval.
So, is the TPP DOA?... the report of its death is an exaggeration.
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