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BLOCKED! What’s next for TPP?

— May 13, 2015
Courtesy of the European Pressphoto Agency
Courtesy of the European Pressphoto Agency


What happened?

When 8 pro-trade Democrat Senators left a strategy meeting on Tuesday and announced their opposition to continuing the Trans-Pacific Partnership (TPP) “fast-track” debate at 1pm, it marked the strongest rebuke of President Obama by his own party in his tenure. The resulting 52-45 vote, although technically gaining a majority of votes, will not withstand a procedural filibuster, essentially placing the legislation DOA. The effort to prevent the debate was spearheaded in large part by rising star, Senator Elizabeth Warren (D-MA), who has been involved in a media-fueled feud with the president over a lack of transparency regarding the specific details of the bill. Among the 8 pro-trade Senators was a formerly vocal supporter, Ron Wyden (D-OR), who although wanting to ultimately pass a deal, said that the known measures offer “a lack of a commitment to trade enforcement.” The vote puts the future of TPP in doubt, as major concessions will likely be needed in order to bring it back to another vote.

The TPP issue has been unlike anything seen during the Obama administration, with most Republicans agreeing with the president and usually loyal Democrats standing tall in opposition to the deal. For his part, President Obama has steadfastly supported the bill, and the fast-track authority for him to single-handedly negotiate with the other 11 nations on behalf of the U.S. The vote puts the responsibility of negotiating a solution within his own party on the president if he is to salvage another opportunity. As Senate Majority Whip John Cornyn (R-TX) said after the vote, “Does the president of the United States have enough clout with members of his own political party?” The president spent the past week scolding fellow Democrats, especially in the squabble with Senator Warren; it remains to be seen the degree of fallout that stems from their disagreement. As a technicality, Senate Majority Leader Mitch McConnell (R-KY) was the only Republican to vote no on the bill, but only for procedural purposes as a requirement to bring the legislation back up for another vote. McConnell has been a strong supporter of the bill, one of the few points of agreement between the president and himself over the past 6 years.

Now What?

In addition to being averse to trade deals in general, Democrats, especially Senate Democrats objected to specific provisions in the TPP legislation, as well as the general lack of transparency. Senate Minority Leader Harry Reid (D-NV) helped to hold the pack together, demanding that 3 additional measures be included in the bill. The first, uncontroversial item was the extension of trade protections for Sub-Saharan Africa. The other two, however, will likely be key sticking points needing to be unglued before another vote could possibly occur. The second measure called for Trade Adjustment Assistance, federal aid provided to workers facing hardship due to trade agreements. Although Republicans do not like this measure, they have generally acquiesced to this demand as a bargaining chip. The third and most important obstacle that the Democrats cite is a lack of measures against currency manipulation. Senators Chuck Schumer (D-NY) and Rob Portman (D-OH) want protections included in TPP to prevent countries such as Japan and Malaysia from stockpiling U.S. dollars in order to reduce the value of their own currencies, a move in which President Obama and the aforementioned countries strongly oppose. While this practice, especially from larger countries like Japan (and China although not part of TPP), can lead to cheaper prices for American consumers, experts cite that it can lead to global currency fluctuations and could possibly cause macroeconomic instability. It is likely that the president will have to concede on this provision to some degree, at minimum, to achieve some level of compromise within his party.

While Tuesday’s vote puts TPP into a state of uncertainty, McConnell vowed that the issue is not over, saying “This is not a game. This is about trying to accomplish something important for the country that happens to be the president’s No. 1 domestic priority.” Resolution of the currency manipulation issue will be paramount, as even Commerce Secretary Penny Pritzker weighed in on the measure announcing her opposition, reflecting the strong views of the administration toward the idea. Schumer did consider dropping the currency measure in exchange for a promised vote on it later during the congressional session. Regardless of Schumer’s consolation, Reid proclaimed his steadfastness after the vote on the inclusion of the measures, and will likely be a tough negotiating partner on what will probably be a series of amendments/concessions that the president and McConnell will have to accept in order to raise another vote. It is unknown if compromises will be reached in time to vote before the Memorial Day break, which was McConnell’s goal. If the measure is ultimately successful in the Senate, it faces a potentially more uphill battle in the House of Representatives, where the Investor State Dispute Settlement (ISDS) procedures will be a matter of serious contention. Combined, all of these forecasted obstacles seriously jeopardize the previously assumed inevitability of the TPP agreement.



New York Times – Jonathan Weisman

Vox – Timothy B. Lee

Wall Street Journal – Siobhan Hughes and William Mauldin

Yahoo News/AP – Charles Babington




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