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Dec. 11 — President Barack Obama said Dec. 11 he is “much more optimistic” about being able to close out an agreement on the Trans-Pacific Partnership (TPP), a regional free trade agreement the U.S. is negotiating with 11 other Pacific Rim countries.
The president, attending a meeting of his export council, told members that this does not mean “it's a done deal,” although he added that he thinks chances have improved from a year ago.
“The odds of us being able to get a strong agreement are significantly higher than 50/50,” the president said, acknowledging that “Last year, I think it was still up for grabs.“
But contentious issues in TPP negotiations persist, the president said, pointing to a “big bugaboo,” namely tobacco companies suing poorer countries to make sure that anti-smoking legislation is banned, or pursuing prolonged litigation so smaller countries cave.
“Those are issues that I think can be negotiated,” the president said, adding that overall, the principle should be to “make sure that U.S. companies, when they invest or export to other countries, are abiding with their safety rules but that those public health and safety rules are not being discriminatorily applied or a ruse in order to keep us out.”
The U.S. is negotiating the TPP agreement with Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam and chief negotiators are scheduled to meet Dec. 12 in Washington, D.C.
The President's Export Council (PEC) is chaired by Jim McNerney, chief executive officer of The Boeing Co., and vice-chaired by Ursula Burns, chief executive officer of the Xerox Corp. The council is the principal advisory committee to the president on exporting. Executives of UPS, Vermeer, AES Corp., Lockheed Martin Corp., Marriott International, Inc., and Archer Daniels Midland Co. also attended the meeting.
Beyond finalizing the agreement with participating nations, the president needs Congress to pass trade promotion authority (TPA).
Administration officials attending the PEC Dec. 11 such as Commerce Secretary Penny Pritzker called on Congress to take the steps necessary to reauthorize the Export-Import Bank of the U.S. and pass TPA legislation that will allow the president to finalize large regional trade free trade agreements being negotiated that include the TPP and the Transatlantic Trade and Investment Partnership.
Ex-Im Bank's lending authority expires at the end of June. Reauthorization of the bank has developed into a contentious battle in Congress with Republicans, including Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, which has oversight over Ex-Im.
TPA, which expired in 2007 and is unpopular with labor unions, environmental groups as well as many Democrats, defines U.S. negotiating objectives and priorities for trade agreements. It also outlines consultation and notification requirements for the president to follow and bars potential amendments after legislation is formally introduced that could sink a trade deal.
Regardless of what happens first—whether a final agreement on TPP will be reached first or Congress will pass TPA legislation—the president said the business sector is “going to have to make the sale” to the public and businesses.
Rep. Dave Reichert (R-Wash.) also called for progress on TPA, saying “we are meeting with the leaders of the countries involved in the negotiations weekly sometimes more. They tell us that negotiations are going well.” Reichert sits on the House Ways and Means Trade Subcommittee.
Reichert said he met with U.S. Trade Representative Michael Froman a few days ago, and the two are scheduling a follow-up meeting. Froman attended the export council meeting.
Congressional passage of TPA is expected to be an uphill battle, but the president said he doesn't think the Republican gains in the recent election change much.
“I think that despite the fact that we had an election I did not—I wasn't that happy with, the dynamics really don't change in terms of the number of votes in the House and the Senate that are there to be gotten for a good trade deal,” the president told the council.
“I think we can make a very strong case that what we're doing here is really setting a higher bar that will give us more access to markets, will give us greater IP [intellectual property] protection, will make sure that U.S. companies both in goods and in services are less disadvantaged by non-tariff barriers and state support and procurement practices in these countries than they've been in the past,” the president said.
Obama said such deals face a “public perception generally” that trade has resulted in an erosion of the U.S. manufacturing base as companies have moved overseas in search of lower-wage labor.
“[M]y essential response to those arguments is not to deny that there have been some consequences to China's ascension to the WTO [World Trade Organization] and offshoring, but rather that that horse is out of the barn,” the president said. “We are now in the worst of all worlds where they have access to our markets, much of that shift in search of low-wage labor has already occurred, and yet, we don't have access to those markets that are growing and no levers to force these other countries to increase their labor standards and their environmental standards.”
The president said there are also opportunities to make bipartisan progress on fixing loopholes in the corporate tax rate, which will make the U.S. more competitive in the global marketplace.
“[T]oday our companies face the highest corporate tax rate in the world on paper,” the president said, adding that he thinks there is Democratic and Republican support for such action. “There are so many loopholes that some end up paying a much lower rate; some pay the full freight. It distorts our allocation of capital. It makes us less competitive relative to businesses that are headquartered overseas.”
The president also announced at the council meeting additional measures the administration would take to boost manufacturing in the U.S., including more than $290 million in new investments to launch two additional high-tech manufacturing hubs. One site will focus on flexible computer chips and the other on advance sensors designed to reduce energy costs at factories. There are eight such hubs already and the administration has said it intends to get to 16.
Pritzker provided the council with an update on the president's National Export Initiative designed to spur economic growth and job creation.
“We're on track for the fifth straight record-breaking year of exports,” Pritzker told the council. “According to the latest trade data released last week, recent data [on] U.S. exports of goods and services increased by more than $2 billion just month over month, so we really have a good momentum going.”
Pritzker said the administration is “laser focused” on broadening the base of exporters and expanding the base of U.S. export activity. Central to meeting that mission, the secretary said is a series of steps to “strengthen our hand in markets around the world.”
Also attending the meeting were Jeff Zients, director of the National Economic Council; Valerie Jarrett, advisor to Obama; Fred P. Hochberg, chairman of the Export-Import Bank; Elizabeth Littlefield, chief executive officer of Overseas Private Investment Corporation; Leocadia I. Zak, director of the U.S. Trade and Development Agency; Broderick Johnson, assistant to the president; Maurice Obstfeld a member of the Council of Economic Advisers.
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