Why Barack Obama and Elizabeth Warren are fighting: The strange world of trade, the TPP and TPA

The two most significant icons in American progressive politics are fighting. Over the past few months, President Obama has lobbied Congress and the public to support the Trans-Pacific Partnership (TPP) in increasingly strident terms, while Senator Elizabeth Warren has taken to making alarming speeches on the Senate floor about how the TPP will destroy America. Along the way, each has amassed some strange allies: President Obama’s strongest ally in the House of Representatives is Ways and Means Chair Paul Ryan, and Senator Warren is in agreement with the Koch-funded Cato Institute.

How did such a strange arrangement come to be in a city where left-right polarization seems destined to stop any productive action? To find an answer and develop a well-considered opinion on the trade deal which promises to dominate the non-electoral political news for months to come, a quick review is in order.

What is the Trans-Pacific Partnership (TPP)?

In brief, the TPP is the largest free-trade agreement in history, currently in the final stages of negotiation among twelve countries in the Pacific Rim region.

Such a description, while omnipresent in news coverage, is not terribly useful, as is gives no indications of the impact of the deal and, by extension, why the public should care.

A more thorough investigation reveals that the TPP was conceived at the 2002 Asia-Pacific Economic Cooperation meeting as the Pacific Three Closer Economic Partnership among New Zealand, Singapore, and Chile. Brunei joined during negotiations, leading to a new name: the Trans-Pacific Strategic Economic Partnership (TPSEP), which took effect in 2005–2006. The TPSEP includes an “accession clause” which encourages other countries to join the agreement, even after its initial implementation. Accordingly, in 2008 the Bush Administration announced an intention to enter negotiations to join the pact, renamed as the more familiar Trans-Pacific Partnership. Negotiations have stretched on ever since.

The primary reason negotiations have lasted so long is because more countries have since joined. Three are particularly notable. Canada and Mexico, with whom the US is party to the ever-contentious North American Free Trade Agreement (NAFTA) joined, leading to questions of the impact of the TPP relative to the NAFTA. The Obama Administration has since come to present the TPP as a higher-standard successor to the NAFTA. As North American trade relations are already quite liberalized, the TPP is unlikely to result in the less-desirable impacts of the NAFTA that have already occurred, such as the loss of American manufacturing jobs to Mexican maquiladoras.

Japan was the latest country to join the TPP. As the third-largest economy in the world, Japan accounts for roughly $300 billion of trade in goods and services each year and is America’s fourth largest trading partner after Canada, China and Mexico. It is also notoriously protectionist, particularly of Japanese auto and agricultural markets, maintaining a prohibitive 778% tariff on imported rice beyond a small quota. Thus, a high-standard trade agreement between the US and Japan has potential to significantly reshape both economies. Potential beneficiaries include American farmers, American auto manufacturers and consumers in both countries; Japanese farmers would stand to be the biggest losers. As both countries are highly developed, the results are more likely to resemble post-NAFTA trade between the US and Canada more than that between the US and Mexico.

Map of TPP countries

Countries currently negotiating the TPP
CartoDB attribution © OpenStreetMap contributors © CartoDB. Interactive version available here.

Other current members of the TPP include Australia, Malaysia, New Zealand, Peru and Vietnam. More importantly, though, the TPP retains the TPSEP’s openness to future members, which may in time come to include China. Negotiations are thus very forward-looking; the US in particular is using the TPP as an opportunity to set a very high standard from which to negotiate such a future agreement, commonly referred to as a Free Trade Area of the Asia-Pacific (FTAAP). Standards for the environment, labor, currency manipulation and government interference in industry set now will thus have a much larger impact in the future. China is pursuing a similar strategy in negotiations for the Regional Comprehensive Economic Partnership (RCEP), another free trade agreement organized by ASEAN in earlier stages of negotiations.

The TPP is big. As of 2013, the countries currently negotiating make up 37% of global output—$28 trillion. Should China join, those numbers would be 49% of  global output and $37 trillion. It encompasses 41% of US trade in goods, (55% with China), and 24% of the rapidly growing trade in services.*

The TPP is far-reaching, containing chapters on everything from customs and technical barriers to trade to environmental and labor protections. While some information has been made public by the US Trade Representative (USTR), who is responsible for negotiations, the TPP is negotiated in secret so that negotiators can take positions and make compromises that could otherwise be undermined by domestic public pressure. Nonetheless, negotiating drafts of the environment and intellectual property chapters have been leaked by WikiLeaks, leading to outcry from the Sierra Club and Electronic Frontier Foundation that the language was problematic.

The final language will not be revealed until the trade agreement is sent to Congress for approval, when it will be publicly available for 60 days before a vote. Prior to the waiting period, only members of Congress and approved industry and nonprofit stakeholders may view the text – and even then, they are not allowed to take notes. Thus, most critiques are highly speculative.

What is Congress talking about?

News coverage of the TPP has increased lately due to activity in Congress. Congress is not, however, voting on the TPP. At least not yet. Instead, a proxy battle is taking place over Trade Promotion Authority (TPA), also called “fast-track”, which is a procedural law that temporarily gives the president authority to present trade agreements to Congress for an up-or-down vote. The primary direct impact of the law is that an agreement sent to Congress under TPA cannot be amended.

Anti-TPP yard sign, via

Anti-TPP yard sign, via GlobalTradeWatch / Flickr

TPA is essential to passing any trade agreement, as without it, the countries the administration is negotiating with have no assurances that Congress will not remove parts of the agreement unpleasant to the US. In such a situation, the administration would have very little ability to negotiate any agreement, as other countries would have to reach every compromise not just with the president, but with every voting member of Congress.

TPA expired in 2007, but the TPP has been negotiated as if it were in effect. For the US to ratify the TPP, TPA must be renewed; otherwise, the agreement will likely languish through election cycles until a Congress more friendly to TPA is elected. Depending how many years that takes, the TPP may need to be renegotiated, and the China-centric RCEP may take its place.

Is the TPP/TPA stuck in Congress?

After a temporary failure to bring the bill to the floor and strong opposition from Senator Elizabeth Warren, TPA has passed the Senate 62-37, with 14 Democrats supporting, and 5 Republicans opposed.

The bill faces a tougher challenge in the House of Representatives. Again, the White House does not have support from Democratic leadership, with Minority Leader Nancy Pelosi fighting with Speaker Boehner to kill the bill before it reaches a vote. While its future is far from certain, Republican leadership is determined to find a way to get the bill to the floor, preferably without changes necessitating re-approval by the Senate.

Last week, the House officially passed TPA, but the bill was unable to move forward due to it being linked to a sister bill, Trade Adjustment Assistance (TAA), that failed. Both bills needed to pass in order to advance. The TAA will be back up for a vote this week in what has essentially become a proxy TPA vote. House Minority Leader Nancy Pelosi has signaled that she will deliver enough Democratic votes to ensure passage of “fast track” in exchange for a highway bill. POLITICO has an in-depth rundown of the tangled political maneuverings taking place on Capitol Hill here.

For his part, President Obama has held meetings with the New Democrat Coalition, a caucus of moderate Democrats whose members will likely form the core group of Democratic supporters for the bill. Exactly how many House Democrats will support TPA is uncertain.

House Republicans face a challenge to hold their caucus together. Only four Republicans opposed the bill in the Senate — most notably Senator Rand Paul — but the House GOP caucus contains a stronger Tea Party contingency, which opposes TPA on the basis that it transfers power from Congress to the President.

Speaker Boehner and Ways and Means Chair Paul Ryan are whipping the Republican conference hard to keep enough GOP votes such that Obama’s efforts to win over Democrats are sufficient to bring the total back to 217. Debate and lobbying are already fierce, with Obama’s OFA 4.0 and business lobbies pushing for and the Sierra Club and the AFL-CIO against. Should TPA fail in the House, US engagement in the TPP is not necessarily over, but it will be further delayed until TPA can be passed, whether that takes weeks or years.

Why are Democrats fighting each other?

The fight is usually framed as between the progressive wing and moderate, business-friendly Democrats, but the full picture is considerably more complicated.

President Obama supports the TPP because he is negotiating it, and thus can control the priorities therein. In his public lobbying, he has presented the TPP as the most progressive trade deal in history, with strong, enforceable labor and environmental protections in an effort to differentiate it from the NAFTA and that agreement’s deleterious effects. Lately, the administration has also begun to push the TPP as a foreign-policy tool to keep American industry competitive with China and maintain American influence in the Pacific region.

President Obama and Elizabeth Warren, via DonkeyHotey / Flickr

President Obama and Elizabeth Warren, via DonkeyHotey / Flickr

Senator Elizabeth Warren, the most vocal opponent of the TPP, opposes it because corporations will profit, potentially at the expense of workers if the TPP plays out in ways similar to the NAFTA. She has also called attention to the Investor-State Dispute Settlement (ISDS) mechanism, which allows foreign investors who lose their investment due to government intervention to sue for damages in an international tribunal, claiming that the process would allow corporations to sue the US government in order to defang environmental law. The White House, which insists on an ISDS mechanism in all trade agreements USTR negotiates, dismisses Warren’s claims, as the US has yet to lose an ISDS case because USTR has always negotiated favorable terms. Even should the US lose, the tribunal could not change American law.

Various coalitions of Democrats support the TPP for a variety of reasons. The Congressional Black Caucus has been the focus of lobbying due to their strong support of the president. Democrats with large ports who stand to benefit in their states proved much more supportive in the Senate. The agricultural lobby is pushing strongly for the TPP, offering political cover to rural Democrats. The entertainment industry is supportive due to intellectual property provisions which promise to crack down on piracy. And so on; the reasons for supporting the TPP are as diverse as Congress.

On the other hand, Democratic opposition of the TPP is clearly focused on the labor and environmental movements. Unions and environmental groups are opposing the trade agreement in the fear that, like the NAFTA, it will cost jobs to outsourcing and allow corporations to dodge American environmental and labor laws due to weak enforcement mechanisms. Support for TPA will cost pro-trade Democrats campaign donations from labor and leave them vulnerable to a primary challenge from the left.

Should progressives support TPA and the TPP?

The calculation is decidedly more complicated for Members of Congress worried about fundraising, but for the public not concerned about such things, the calculations are simple. Aside from those currently shielded from trade by remaining protectionist measures, e.g. the remaining American unskilled labor or Japanese farmers, there are few reasons to oppose TPA, which will allow the public to see the full text of the TPP and judge its merits accordingly. Arguments against TPA on the basis that Congress should get a say in trade agreements are unrealistic, as the TPP will never reach Congress unless TPA is passed.

Coming to a reasonable position on the TPP as a whole (or making remotely accurate impact projections) requires seeing the currently secret and not-yet-finalized text. If TPA is passed and the finalized text is revealed, expect a hearty debate of its merits and weaknesses. Any judgment prior to the revelation of the text is blindly agreeing with either Obama’s claims that the TPP is a different, more progressive trade agreement, or the assumptions of the American blue-green alliance that the TPP will be no different from the NAFTA.

 

* GDPs in current USD from the World Bank WDI dataset. US trade data from the United States International Trade Commission and a publicized Congressional Research Service report from 20 March 2015 hosted by the Federation of American Scientists.


Edward is interested in economics, foreign affairs, and American and Democratic identity. He lives on Capitol Hill and is a graduate of Pomona College.

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  • Spring Texan

    can’t believe this is even on firedoglake. The TPP is designed to RAISE the price of pharmaceuticals worldwide. It’s a disaster (as even the American generic drugs industry is pointing out). Pathetic.
    People who want to find out about these issues and don’t know should read David Dayen.

  • Forgot to add, while 37% of GDP sounds impressive, the US and Japan, who have tariffs of around 1%.

    28½% of world GDP is the US and Japan.

    The delta of the trade deal is minimal.

  • How the f%$# is Barack Obama a progressive icon?

    His health plan is a wet kiss for the insurance companies, his drones terrorize the skies over the Arabian Peninsula and South Asia, and he has done everything he could to protect the criminal Bankster class.

  • 2karmanot

    “or if you prefer to say it in Italian, Bologna!” Or sausage from the South end of a bull!

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  • emjayay

    Well, you know, it seems like some people’s glasses seem to be permanently half empty. So, smash ’em I guess.

    “Zero accountability for the war criminals…” not to mention Wall Streeter criminals. All a part of the No Drama policy, plus who knows…daddy issues?

  • Completely agree Sis . I recall what Martin Luther King said while he was “visiting” the Birmingham jail ; “Remember , everything that Hitler did , was legal. ‘

  • Bill_Perdue

    Obama is not a progressive. Period. Full Stop. End of discussion.

    Like the Clintons and Bushes, he and most Democrats are right wing frauds on political and economic questions and on social questions like a cleansed ENDA or a CRA. Marriage equality is a fine thing and if things go our way with the Supremes it will be a formidable victory for us and a huge slap in the face for the cults and the politicians who pander to them. But we still desperately need robust protections in employment, housing and public access.

    Both right wing parties refuse to enact them.

  • Bill_Perdue

    Why would you care? Next time, don’t vote for Democrats or Republicans. Organize against them.

  • emjayay

    Maybe Ralph Nader will run again.

  • Indigo

    That’s a reasonably clear explanation but I have two quibbles / concerns about it. First, since when is Obama a “progressive”? He spun that line during the election but set it down with casual contempt once he was elected. He hasn’t picked back up and just because he hosts a concert with Prince and has the general appearance of a nice guy, a good husband, and loving father, doesn’t make him a progressive in any sense other than electioneering. He’s a Wall Street lackey. That’s it.

    And secondly, it strikes me that this essay makes the TPP sound wondrous good. No, it is not. It’s a piece of Toilet Paper Productions, intended to smooth the way for corporate globalism to

    on the public and wipe it away. Thus TP.

  • Indigo

    Boggles the imagination, doesn’t it?

  • Indigo

    Speaking of the “corporate whore crowd,” what was that line of Jon’s about Obama being a progressive? When did that happen?

  • Indigo

    Just say no. In fact, we should repeal NAFTA. It has ruined Mexican farmers, Midwestern US farmers, and thrown away jobs that should have stayed in the US. There’s nothing equitable about this whole global trade snafu of a treaty, it’s a crypto-continuation of the fiasco that Bush, Sr. foisted on us with the label New World Order. Baloney! or if you prefer to say it in Italian, Bologna!

  • The administration is trying to ram through the ratification of a treaty without Senators actually reading it. There shouldn’t be a single one willing to vote for anything under those terms. Zero. They need time to read, discuss, debate and hear from constituents before any such vote. Anything less is irresponsible at best. And frankly if it was something we’d all like, why would anyone want to do it this way.

  • Bill_Perdue

    Next time, don’t vote for Democrats or Republicans. Organize against them.

  • Bill_Perdue

    TPP is another gift by right wing Democrats to the rich. Right-wingers like Obama and many Congressional Democrats will be amply rewarded after they leave office. They have only to look at the Clintons corruption and follow their lead to determine their politics. Bill Clinton, the worst president since Hoover, elbowed NAFTA through Congress, did the same with the deregulation bills of 1999 (Financial Services Modernization Act of 1999) and 2000 (Commodity Futures Modernization Act of 2000). Clinton did more than anyone else to create the current levels of high unemployment, underemployment and low wages. Pouring salt on those wounds, Clinton gutted welfare and other social parachutes and hired 200,000 more cops (and even managed to push DADT and DOMA through Congress in his spare time.)

    The wealth of the Clintons, aside from their corrupt dealings with the Clinton Family Foundation, is in excess of $100,000,000.00. ““Is Hillary our Mitt Romney?” asked MSNBC’s Krystal Ball in a recent segment of her TV show. Ball’s statement came on the heels of several comments by Clinton that made her seem completely out of touch with ordinary Americans — that she is not “truly well off,” that she and her husband were compelled to give speeches for six figures apiece because they were “dead broke” upon leaving the White House.

    Indeed, considering that Bill and Hillary Clinton have made more than $100 million since leaving the White House in 2000, it’s not surprising that many Americans see the former first couple as hopelessly detached from the problems of ordinary Americans despite presenting themselves as going through the very same struggles as other Americans.” http://america.aljazeera.com/opinions/2014/6/hillary-bill-clintonwealthspeakerfees.html

  • kladinvt

    TPP is the global-version of “Citizens United”, which hands over even more power to the global-corpocracy. If you believe TPP is about anything more than insatiable greed, I have a bridge to sell you.

  • Hue-Man

    I used the word monopoly loosely – I meant corporate concentration leading to protected profits. I’ll use a current example: U.S. beef producers lobbied to implement country of origin labels. Canada and Mexico took action at the WTO and won on the basis that this was a barrier to free trade. (Live cattle have to be physically separated and handled separately through to the store shelf in order to track country of origin, making foreign cattle more expensive to process than U.S. cattle. Mexico and Canada lose markets and U.S. consumers pay more for beef because there’s no competition.) http://www.theglobeandmail.com/report-on-business/international-business/us-business/wto-upholds-canada-mexico-meat-labelling-complaint/article24477893/

    The indication is that TPP will make highly concentrated industries even more powerful, e.g. Big Pharma, by allowing them to sue governments if they don’t like those governments’ policies. On a practical basis, fighting one of these trade disputes runs into many millions of dollars, a luxury that not all industries – or governments – can afford.

    Bottom line – Big Business makes super-profits, consumers get screwed, all in the name of “Free Trade”. They may not have a monopoly but the result is the same.

  • nicho

    They were “dead broke.” They had to get a payday loan to pay for Chelsea’s five-million-dollar wedding.

  • Andrew Zimmerman

    I agree, that the government shouldn’t be blocking the ferry terminal, if it isn’t using US Steel.
    I do not agree, that free trade simply leads to “monopoly profits.” Indeed, monopolies are put in place, a majority of the time by corrupt government policies.
    This fact does not in anyway lead me to believe that the problem is free trade, but are the governmental policies put in place.

  • Political positions and public policy are not dichotomous positions. It is never as simple as “Left vs Right” or “Liberal vs Conservative.”

    There are scales and spectra and different categories.

    I’ll grant this much: On social issues, Obama and the bulk of the Democratic leadership are mostly progressive (although they hedged on that a lot and were often political cowards when it came time to put up or shut up).

    On military issues, Obama and the Dems are pretty much war hawks. However, they can seem almost sensible to some because they’re not quite the rabid foaming-at-the-mouth “violence is the solution to every problem” radicals their predecessors were. Nevertheless, Obama Administration military policies aren’t progressive at all. Proof? Zero accountability for the war criminals, and continued ‘only slightly softer’ versions of the same. Yeah, supposedly the torture has stopped…but the extrajudicial international death-from-on-high drone bombings have only accelerated.

    On economic issues, we’re stuck with what the Dems became in the 1990s, which was (and is) a party firmly in the pockets of the plutocrats and their corporations. When a corporation says it wants something — whether it’s no public health insurance option, zero accountability for the banksters who crashed the economy, or sovereignty-destroying free trade agreements — Obama and the Dems don’t even stop to ask how high to jump.

  • uniquename72

    Secret deals with foreign governments and captians of industry — what could possibly go wrong?

  • emjayay

    ummmm…..OK…..I Get It…..well Sort Of.

  • Hue-Man

    There is nothing free about free trade. The only freedom is for American corporations to make monopoly profits by leveraging their economic power against foreign governments. I’ll reference only one of the most egregious examples.

    “The state of Alaska on Wednesday cancelled bids for a ferry terminal update that the Canadian government threatened to block because of a dispute over the use of American steel.” http://news.nationalpost.com/news/alaska-brings-buy-america-fight-with-canada-to-an-abrupt-end-kills-b-c-ferry-project

    *SPOILER ALERT* – the ferry terminal is in Prince Rupert, BC, Canada!

  • emjayay

    Thanks for a clear explanation of the mind-numbing legislative complexities. I understand the reasons for closed negotiations and even no amendments, and really don’t see why finally seeing the damn thing is such a problem, except of course how most of Congress is to one degree (necessarily somewhat) or another (total) corporate whores. But that’s true of everything, and as usual everything goes back to our absurd essentially uncontrolled campaigns and lobbying.

    No doubt the environmental and job parts are a joke. Right now Europe and the US are just offshoring pollution. So, vote no and let them renegotiate for a while. I’m guessing the progressives are just worried that the total corporate whore crowd will win.

  • 2karmanot

    Well done Edward! What is the TPP? For starters, another brick in the trans world destruction of domestic democracy ,nation state legal autonomy and the continuing trans global
    take-over by corporate entities. It is also Obama’s golden umbrella to insure the wealth of the family for future generations. Unlike the poor Clinton’s he will not leave office broke.

  • Buford2k11

    as to being More Progressive, is purely subjective…NAFTA was an experiment that was/is not really working out for the working folks, like promised…We should assume China is the real target here…And China is feeling the pressure, hence the Hack of WWIII…….Can the Military of the Pacific Regions be persuaded to not shoot, and trade equally? nope…greed is at the center of all this…Corporate greed to be specific…these corporations really don’t care how many of our kids die in combat, as long as their bottom lines are protected…That is the reason we need to keep these billionaires and ceo’s out of our government…TPP is just one of the many travesties we will hear of in the coming days…

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