From the start, the Trans-Pacific trade pact that Barack Obama is trumpeting faced rough going on Capitol Hill, not least because some of Congress’s most powerful Republicans – among them the Senate majority leader, Mitch McConnell – were complaining about it.
But the pact’s chances of winning ratification in Congress diminished on Wednesday when Hillary Clinton, the Democratic frontrunner, said: “Based on what I know so far, I can’t support this agreement.” Clinton’s statement was a major rebuff to Obama, who wants to make the 12-nation pact, the Trans-Pacific Partnership, a centerpiece of his diplomatic legacy and his strategy to expand America’s role in Asia to counter China.
“Her decision is a critical turning point, and will be invaluable in our effort to defeat TPP,” said Richard Trumka, president of the AFL-CIO, the main US labor federation.
The Pacific agreement, which includes Canada, Chile, Japan, Mexico and Vietnam, faces intense opposition from the left and the right in the US, as well as from many internet activists, while its most enthusiastic supporter is corporate America. On the left, opponents include Bernie Sanders, organized labor and most environmental groups, and on the right, its foes include Donald Trump, the Republican frontrunner, and some Tea Party Republicans reluctant to give any victory to Obama.
“Every trade deal we make stinks,” Trump said. “It stinks. I like trade, and I like smart trade. You know, fair trade is good if you have smart people negotiating.”
Further undercutting the pact’s chances, the powerful drug and tobacco industries are also unhappy with it. Senator McConnell of Kentucky is upset that the deal exempts the tobacco industry – one of his home state’s most important industries – from controversial rules that let multinationals sue other countries in private courts over regulations that hurt their profits.
Senator Orrin Hatch, a Utah Republican who is chairman of the Senate finance committee, said the deal falls “woefully short”, partly because it doesn’t give the US pharmaceutical industry the 12 years of protection from generics that it sought for new advanced drugs known as biologics.
“Right now I don’t think TPP can get through Congress,” said Lori Wallach, a leading TPP critic and director of Public Citizen’s Global Trade Watch. “If the entire corporate coalition doesn’t line up in support and throw money at it and threaten to break knees, it’s going to have problems passing.”
The Nelson Report, a public policy newsletter for Washington insiders, agreed. Its headline on Monday was: “This TPP is D.O.A.” It added, “Republicans want a TPP, not this one.”
But Robert Moran, a partner at Brunswick Insight, a research firm that surveyed 300 Washington policy leaders, experts and lobbyists about TPP, predicted the deal would be ratified. In June, the House narrowly approved fast-trade trade promotion authority, 218 to 208, with strong Republican support but just 28 House Democrats backing it.
“A pretty large majority of the policy elite thinks this will get approved although it’s not a foregone conclusion,” Moran said. “You can make economic arguments about it, but at the end of the day, the last big argument is the commander-in-chief says this is important for national security and strategy. This is an important part of the Asia pivot.”
Obama said the deal, reached early on Monday after five years of negotiations, would boost the nation’s economy and exports.
“I wanted to get the best possible deal done for American workers and American businesses, and that is what we have achieved,” he told agricultural and business leaders on Tuesday. He said the pact would make the US more competitive by eliminating 18,000 tariffs that other countries place on America’s products – such as Malaysia’s 30% tariff on American auto parts and Vietnam’s tariffs of up to 70% on US-made cars.
“This agreement has the strongest labor standards of any trade agreement in history, including setting fair hours, prohibiting child labor,” Obama said. “Unlike past agreements, these standards – high standards around labor and environment – are actually enforceable.”
But labor leaders argue that the agreement will hurt US workers, saying it doesn’t bar currency manipulation, it will not force Mexico to improve worker rights after it has often suppressed independent unions, and that it will do little to strengthen labor rights in Vietnam, which is a one-party communist state that doesn’t allow free trade unions.
One of labor’s biggest complaints is over rules of origin, which allow products to enter tariff-free if a specific amount of that product is made in a TPP nation.
Thea Lee, an AFL-CIO trade expert, said the US auto parts industry will be hurt badly because the pact says Vietnam, Malaysia, Japan and other TPP nations need only 40 to 45% content in auto parts. “It’s a huge problem,” Lee said, noting that these rules will allow 55% of an auto part’s components, perhaps an engine, to be made in China.
While US officials boast that the TPP required countries to have minimum wage laws and maximum hour laws, Lee said, “Under the agreement, a country can set a minimum wage of one cent an hour, and say, ‘I comply with requirements.’ ”
Leo Gerard, president of the United Steelworkers, said the deal would destroy jobs and expand America’s already huge trade deficits. “The hastily concluded TPP deal will simply continue today’s outdated, disastrous approach to trade,” he said. “Chinese-produced auto parts could account for more than a majority of a car’s parts and still get sweetheart treatment.”
James P Hoffa, the Teamsters president, called it a “bad deal”, saying: “TPP backers like to insist it will result in new work for Americans, although they can never quite explain how.”
Numerous environmental groups including Greenpeace and Food and Water Watch, criticized the deal, with Erich Pica, president of Friends of the Earth, calling it “a frontal assault on environmental and climate safeguards”. Michael Brune, the Sierra Club’s executive director, said: “The TPP would empower big polluters to challenge climate and environmental safeguards in private trade courts and would expand trade in dangerous fossil fuels that would increase fracking and imperil our climate.” He said history gives his group little confidence that TPP’s new rules on illegal timber or wildlife trade would ever be enforced.
But the World Wildlife Fund had kinder words. David McCauley, the fund’s senior vice president for policy, praised TPP for setting “a new standard for trade agreements on the environment”. “There are some new measures on combating trade in illegal timber and wildlife that are really raising the bar,” McCauley said. He praised provisions that would crack down on countries using unreported, unregulated fisheries.
The Electronic Frontier Foundation, a civil liberties advocacy group, is seeking to rally internet activists against the pact. Maira Sutton, a global policy analyst at the foundation, criticized it for lengthening copyright laws in many nations, imposing harsh punishment for copyright infringement and banning the breaking of digital locks on many devices. She warned that TPP’s rules against misappropriating trade secrets could create criminal penalties for whistleblowers and journalists who expose corporate wrongdoing.
“We’re just as opposed to TPP as we’ve ever been,” Ms. Sutton said. “One good thing is it does impose a timeline on the White House to release the text. That’s a tiny glimmer of hope in a very undemocratic process.”
The text of the pact is required to be made public 60 days before Congress votes on it.