It’s crunch-time for the TPP trade pact

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By Leith van Onselen

The prospect of concluding the Trans-Pacific Partnership (TPP) agreement – the US-led trade deal between 12 Pacific Rim nations (including Australia) – is entering its make-or-break phase, with the US Congress set to decide on whether to grant President Obama “Trade Promotion Authority” (TPA), allowing the President to negotiate an agreement and have Congress pass it without amendment.

As reported in The ABC today, the prospects of Congress granting TPA rests on a knife-edge:

Observers in Washington DC have acknowledged it’s still a close call whether TPA will pass.

…while there’s support from both Democrats and Republicans for Trade Promotion Authority, others on both sides of the aisle remain strongly opposed to both TPA and any eventual TPP agreement.

Some Democrats are concerned the deal will support multinational corporations, while eroding protections for workers and the environment.

Some Republicans see Trade Promotion Authority as handing extra power to a Democratic president they don’t support…

There’s intense pressure on Congress both for and against Trade Promotion Authority…

Philip Levy, from the Chicago Council on Global Affairs think-tank, previously worked for the government under George W. Bush and is sceptical a deal can be reached in the current political climate.

“Watching the domestic politics as I have for the past 10-15 years, it looks particularly difficult,” Mr Levy said…

“Even assuming we get [TPA], there are still issues to be addressed: are we going to give Australia more sugar access? What are we going to do about Vietnam and state owned enterprises? There’s a whole range of these kinds of questions”…

Congress could vote on Trade Promotion Authority as early as the end of this month.

But as the 2016 US presidential election looms closer, with two Republican candidates already declared, there’s growing concern a controversial trade deal will be pushed to the backburner until that race is run.

Without TPA, the TPP has little hope of being concluded – a point acknowledged by Trade Minister, Andrew Robb:

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Mr Robb said the TPP could be concluded, “in a couple of months, but only – only – if all of us, including the other 10 countries, were satisfied that the authority has been given to the US president.”

“Otherwise we’re finalising a deal when it may be frustrated and challenged again in the Congress,” Mr Robb said…

[Mr] Robb says there’s concern that if a TPA deal isn’t done before the middle of this year, it won’t be done at least until the next president takes office.

So it seems Australians’ best hopes of scuttling the TPP now rests with the US Congress denying the President TPA. Let’s hope US domestic opposition wins the day.

Otherwise, Australia’s health system and taxpayers will be the big loser.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.