U.S. Industry, Leadership Weaker Without TPP, USTR Says

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By Lucien O. Chauvin

July 29 — Failure by Congress to approve a 12-nation Pacific Rim trade agreement would seriously weaken the U.S. manufacturing base and the country's leadership in the Asia-Pacific region, the U.S.'s top trade negotiator said.

The Trans-Pacific Partnership (TPP) would create new markets in the Asia-Pacific for U.S. products, from auto parts to meats, U.S. Trade Representative (USTR) Michael Froman said.

But if Congress fails to approve the agreement, “instead of new opportunities in the fast-growing markets of the Asia-Pacific, we could see a decline in market share,” he told a group of reporters in Lima, Peru, where he was attending the inauguration of the country's new president.

Froman highlighted the case of the livestock industry. He said Australia and Japan, two of the 12 countries in the trade agreement with the U.S., already have a bilateral agreement in place, and Australian beef is entering Japan with lower tariffs. He said U.S. cattlemen are already losing $120 million annually in beef exports to Japan, and “and this will only grow year by year” if the TPP is not approved.

China Factor

Froman said a decision on the agreement—which was signed by the 12 nations in February in New Zealand and could come up for a vote in Congress during the expected lame duck session after the November elections—would define the U.S. strategic position in the world.

“We are one vote way from either cementing our leadership in this region and in the global trading system or ceding it to China. This is how much is at stake if TPP gets voted on, and it is one reason that at end of the day there will be support for TPP because I do not think Congress wants to cede U.S. leadership in that regard,” he said. “At the end of the day I do not think congress wants to be responsible for handing the keys to the castle to the Chinese.”

China has a large number of initiatives under way in the Asia-Pacific, spearheading the 16-nation Regional Comprehensive Economic Partnership (RCEP) that is similar to the TPP. It includes many of the same countries, as well as India, but Froman said it doesn't go as far as the TPP in establishing a 21st century trade agreement.

He said the two trading platforms are not mutually exclusive and could develop simultaneously, but there would be major problems if the Chinese-led initiative goes forward and the TPP withers.

“If we are living in a world in which the RCEP rules of the road are the ones defining the trading regime for the Asia-Pacific region, that is very much to our disadvantage. It does not reflect our interests, it does not reflect our values, and that is a problem,” he said.

He said the RCEP does not include labor or environmental protections, offer strong intellectual property rights enforcement or deal with conflicts created by state-owned enterprises.

Renegotiation No Option

Froman said he believes U.S. lawmakers will come around to supporting the TPP, despite the heated rhetoric against the agreement and trade in general during the Democratic and Republican conventions.

The USTR is working on different tracks to facilitate approval of the trade partnership, addressing concerns that have been raised, meeting with lawmakers to present the benefits the agreement for their constituents and preparing the nuts and bolts needed under the Trade Promotion Authority, such as drafting the statement of administrative action.

Froman acknowledged that there are concerns, but he said problems could be resolved with implementing rules, not reopening negotiations that ended last October after more than six years. He said the last major outstanding issue has to do with biological and intellectual property rights and constructive dialogue was under way with lawmakers.

“Renegotiation is not an option. Many issues are tied to other issues and countries assessed the balance of offensive and defensive outcomes they were able to achieve. It is a carefully balanced agreement,” he said.

To contact the reporter on this story: Lucien O. Chauvin in Lima, Peru, at correspondents@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

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