Obama administration gives up on Pacific trade deal
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Wall Street Journal | 11 November 2016
Obama administration gives up on Pacific trade deal
by William Mauldin
The Obama administration on Friday gave up all hope of enacting its sweeping Pacific trade agreement, a pact designed to preserve U.S. economic influence in fast-growing Asia that was buried by a wave of antitrade political sentiment that culminated with Tuesday’s presidential election.
Just days after Donald Trump surprise victory, U.S. officials said Republican congressional leaders had made clear that they wouldn’t consider the 12-nation Trans-Pacific Partnership in the remainder of Mr. Obama’s term. The White House had lobbied hard for months in the hope of moving forward on the pact if the Democratic nominee, Hillary Clinton, had won.
The failure to pass what is by far the biggest trade agreement in more than a decade is a bitter defeat for Mr. Obama, whose belated but fervent support for freer trade divided his party and complicated the campaign of Mrs. Clinton.
The TPP’s collapse also dents American prestige in the region at a time when China is flexing its economic and military muscle.
Just over a year ago Republicans were willing to vote overwhelmingly in support of Mr. Obama’s trade policy. But as the political season approached and voters registered their concerns by supporting Mr. Trump, the GOP reacted coolly to the deal Mr. Obama’s team reached with Japan and 10 others countries just over a year ago in Atlanta.
Winning a majority of votes for the TPP in the House and Senate would have required both a last-minute deal to address Republican priorities and an election result that didn’t show such broad discontent.
Neither occurred. Since the election, Senate Majority Leader Mitch McConnell (R., Ky.) and Sen. Chuck Schumer (D., N.Y.) have both said no to bringing the TPP to a vote in the lame duck session, despite many senators’ strong support for freer trade.
In the House, Rep. Kevin Brady (R., Texas), the chairman of the House committee that oversees trade, said in a statement Wednesday that “this important agreement is not ready to be considered during the lame duck and will remain on hold until President Trump decides the path forward.”
Matthew McAlvanah, a spokesman for U.S. trade representative Mike Froman, said Friday that despite all the work the administration has done with lawmakers on Capitol Hill “ultimately it is a legislative process, and the final step is for Congress to take.”
White House officials preparing for Mr. Obama’s trip to meet Pacific leaders in Peru acknowledged the defeat on Friday. “In terms of the TPP agreement itself, Leader McConnell has spoken to that, and it’s something that he’s going to work with the president-elect to figure out where they go in terms of trade agreements in the future,” said Wally Adeyemo, deputy national security adviser for international economic affairs.
Chinese officials preparing for the summit of the Asia-Pacific Economic Cooperation summit next week said they had heard the rumblings of protectionism and vowed to push alternative, lower-standard Pacific trade deals that aren’t likely to include the U.S.
President Xi Jinping will seek support for a broad free-trade area in the Asia-Pacific during the APEC summit, a senior Chinese official said.
U.S. officials have long warned that failure to pass the TPP, which doesn’t include China, would help Beijing take the lead with another framework, the Regional Comprehensive Economic Partnership, which could be concluded in coming months and would lower or eliminate tariffs among some Pacific countries but not the U.S.
Neither proposed trade framework would have the TPP’s safeguards for intellectual property, the environment, labor or other U.S. priorities, administration officials say. A tariffs-only trade agreement led by China wouldn’t have the same strategic or economic impact as the TPP.
Recently China has started taking advantage of U.S. hesitation abroad to push its own international financial programs and economic alliances, marking a new phase in the U.S.-led order that has helped provide prosperity and security in the Pacific for decades.
This week’s election is also affecting European ties. The top trade official in Brussels said Friday that Mr. Trump’s election will further delay a big trade deal the Obama administration has been negotiating with the European Union—the Transatlantic Trade and Investment Partnership, or TTIP.
Many American politicians see U.S. trade agreements as complicated and politically fraught deals that can provide a bit of extra economic growth and shore up strategic alliances.
But foreign officials see Washington’s willingness to enter into such deals as a crucial barometer on whether the world’s biggest economy and military power is looking outward toward international engagement and problem-solving or inward toward domestic problems.
The 2016 election season has shown that domestic concerns about globalization, the trade deficit and stagnant wages easily beat out the appetite for international engagement.
The TPP became a symbol Washington pursuing policies that disproportionately favor wealthier Americans over ordinary workers. Mr. Trump blamed the TPP on special interests trying to “rape” the country.
Some lawmakers and officials say the TPP or a similar deal could reappear in the Pacific in the future, perhaps with different countries in the region or even a single partner.
