Abe Visit Builds Expectations for TPP Progress, Despite White House Caution
Japanese Prime Minister Shinzo Abe will likely offer U.S. officials a Trans-Pacific Partnership market access proposal during his visit to Washington over the coming days, said Adam Posen and Jeff Schott, both with the Peterson Institute of International Economics, on an April 27 conference call. Abe will meet with President Barack Obama on April 28 and speak to Congress the next day (see 1503280002). The U.S. and Japan continue to hammer out details on an agriculture and auto market access deal that would allow more U.S. exports to Japan.
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The White House, however, did not report a breakthrough in an April 28 statement, released jointly by the U.S. and Japan. "We welcome the significant progress that has been made in the bilateral negotiations and reaffirm our commitment to work together to achieve a swift and successful conclusion to the broader agreement," the statement said. U.S. Trade Representative Michael Froman returned from Tokyo recently with a similar report on modest, but insufficient bilateral progress (see 1504210069).
Nonetheless, a U.S.-Japanese agreement on bilateral terms in TPP would bring the pact closer to a close, but TPP partners still have to reconcile other areas of disagreement in the broader negotiations, said Posen and Schott. TPP isn't a "lock," even with a U.S.-Japanese accord, said Posen.
The movement of Trade Promotion Authority on Capitol Hill will also invigorate TPP talks, said Schott. The TPA bills, which have advanced through committee in both chambers of Congress, makes a number of changes to previous versions of the bill, including a requirement for Obama to publish the text of the agreement 60 days prior to signature. But regardless of the changes in the bill, TPA movement sends a positive signal to TPP partners, said Schott. TPA “increases the probability that Congress will act favorably on the overall [TPP] agreement,” he said, citing a fundamental argument of TPA supporters. “That’s what’s most important to our trading partners.”
TPA will likely move through the House and Senate floor, due in significant part to a “big change” in Republican willingness to allow Trade Adjustment Assistance, said Schott. The Senate Finance and House Ways and Means committee approved TAA the same day as TPA, following markups on April 22 and 23. Finance ranking member Ron Wyden, D-Ore., one of the key brokers of the trade legislation, has pledged to pass TPA and TAA on the same day, and a White House spokesman said Obama would veto TPA if Congress does not also send him TAA (see 1504200056).
But a Senate TPA provision, which would threaten the U.S. ability to seal a TPP deal with Malaysia, is a concerning factor, said Schott, echoing comments made in recent days (see 1504270008). The Finance Committee approved an amendment, offered by Sen. Bob Menendez, D-N.J., to strip Congress of the ability to use TPA’s expedited procedures for a trade agreement with a country on tier 3 of the State Department’s human trafficking scale. Schott said Congress wants to act on trafficking legislation, but lawmakers may ultimately handle trafficking separate from TPA. Congress may decide to give the State Department more power to address trafficking in a broader independent bill, said Schott, while rejecting the Menendez provision. “Essentially this is designed to knock Malaysia out of the TPP,” said Schott. “There are various ways that the leadership [in Congress] can try to achieve two mutually reinforcing objectives at the same time.”