Obama’s trade agenda hits rough waters

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Election-year politics have complicated President Obama’s trade agenda, which is in danger of being punted into the second half of his final term.

Congress is unlikely to move trade promotion authority (TPA) legislation before the midterm elections with Democrats unwilling to take the political risk of crossing unions and liberal groups opposed to expanded trade, several business leaders acknowledged.

That is hampering negotiations on the cornerstone agreement of Obama’s presidency, the Trans-Pacific Partnership (TPP) with 12 countries including Japan and Vietnam.

“Unfortunately I think the entire business community is grinding slowly to a halt because it sees the window closing or quite honestly closed on getting TPA done this year,” said Steve Biegun, Ford’s vice president of international government relations.

“The approach of the elections doesn’t make a controversial trade vote easier for members to take or more desirable,” Beigun said.
Jim Fatheree, president of the U.S.-Japan Business Council at the U.S. Chamber of Commerce, agreed that “Democrats would love to be able to wait until after the midterms” to deal with the prickly issue.

American and Japanese trade officials have been unable to reach a market-access agreement aimed at opening Tokyo’s agricultural and automobile markets to more imports despite recent talks between Obama and Prime Minister Shinzo Abe.

Winning concessions from Japan was considered a heavy lift and some, including Business Roundtable President John Engler, warned that Tokyo’s entry could derail or at least slow the talks.

But negotiations between two of the world’s largest economies are even harder without a TPA fast-track deal, which would allow the pact to be sent to Congress for an up-or-down vote.

Without it, Japan and other trade partners worry that the administration could buckle to congressional pressure and amend a signed deal, forcing a whole new round of talks.

U.S. Trade Representative Michael FromanMichael FromanUS confirms China has ended tax breaks for domestic airplanes House lawmakers call on Obama administration to oppose Iran joining global trade body Overnight Finance: Trump spurs tax reform talk | Feds release banks' revised 'living wills' MORE has argued that the administration’s best strategy is to present Congress with a comprehensive TPP deal to gain leverage for fast-track authority.

But Biegun said that strategy is unlikely to succeed, especially if negotiations veer away from free trade principles and the TPP becomes too watered down to sway Congress into considering trade promotion authority legislation.

“A bad TPP won’t sell TPA,” he said.

He suggested instead that the White House focus on top congressional priorities like adding rules on currency manipulation into the trade deal, which could “tap into substantial reservoir of congressional support for trade.”

Lawmakers have repeatedly signaled they’re in no mood to take action before the elections.

In February, Senate Majority Leader Harry ReidHarry ReidHeck's rejection of Trump imperils Nevada Senate race Pelosi blasts GOP leaders for silence on Trump Latinos build a wall between Trump and White House in new ad MORE (D-Nev.) said the White House would be “well advised” to not push for fast-track legislation.

And last week, Senate Finance Committee Chairman Ron WydenRon WydenSenators urge resolution of US, Canada softwood lumber deal What the 'Bernie Sanders wing of the GOP' can teach Congress Wyden seeks IRS info on firms linked to Panama Papers MORE (D-Ore.) said while he would like to move quickly, he was still mulling how to approach such a bill.

Some trade experts believe that to move TPA forward this year, Wyden will need to release his specific proposals in the coming weeks and move quickly to schedule a committee markup this summer.

Some K Street supporters of the TPP agree with the White House strategy and say the key is to complete those negotiations to pressure Congress.

They argue that the lack of fast-track authority isn’t preventing the TPP from being finalized.

“I don’t think TPA, or its absence, is driving the train,” said Bill Reinsch, president of the National Foreign Trade Council. He said without that deal, there’s no pressure to schedule a vote on fast-track authority.

“TPP is the action-forcing event. If that is concluded, then Congress will know it’s going to have to vote on a trade agreement, and it will turn to TPA to set the stage for that,” he said.

The problem with the TPP, he said, is the lack of agreement between the U.S. and Japan.

He said it’s not clear how much progress the two sides made last month in Japan, though “they clearly didn’t get all the way to the end.”

Still, Fatheree said he thinks there was more progress made in the Abe-Obama summit and that details from it are likely to emerge within the next couple of weeks that could accelerate the negotiations.

Reinsch also said action during a lame-duck session of Congress is possible on the trade agenda.