Maui Failure Could Push TPP Congressional Action into Next Presidency

Following a final agreement, Obama must publish the text three months before formally signing the pact. Lawmakers included that stipulation in Trade Promotion Authority, the legislation considered critical for bringing home a TPP deal (see 1504170024). TPA, which became law in late June, also bars amendments on implementing legislation and forces an up-or-down vote in both chambers.

That means if a deal is reached in, for instance, the beginning of September, Obama will be able to sign the deal and Congress will be able to move to adopt implementation by December, said Gary Hufbauer, senior fellow at the Peterson Institute for International Economics. “If it isn’t done by early September, then this timeline pushes it well into the presidential election period,” he said. “I think then you’re looking at a postponement on the ratification vote until the next administration.”

TPP parties released a joint statement on July 31 after the negotiators wrapped up the ministerial in Maui. The 12 countries "will continue work on resolving a limited number of remaining issues, paving the way for the conclusion of [TPP]," said the statement. "In this last stage of negotiations, we are more confident than ever that TPP is within reach and will support jobs and economic growth." The most impactful areas of outstanding consensus are auto trade and the lifespan of data protection for biologics, as dairy and sugar, said Australian Trade Minister Andrew Robb. “I would say we have taken provisional decisions on more than 90 per cent of issues and during my involvement in TPP negotiations this has been by far the most productive meeting at both ministerial and officials’ level,” said Robb (here).

Negotiations over the sprawling pact have been underway for years, and the negotiating parties topped off at 12 in 2013 with the addition of Japan, the world’s third largest economy. Despite the progress touted by TPP ministers and trade supporters, the fear remains that TPP talks will languish, said Ron Sorini, a trade lawyer with Sorini, Samet and Associates. “Clearly it’s a big disappointment that they couldn’t resolve all the differences. I think there is a concern this could turn into a Doha Round,” he said. The World Trade Organization has been trying to tackle disagreement over the Doha Round of negotiations for roughly 15 years. WTO members recently missed a deadline for a Doha work program (see 1507280063).

After months of focus on U.S.-Japanese bilateral negotiations over agriculture and autos in TPP, the U.S.-Australian negotiating battles emerged as a major sticking point during the Maui summit, said Hufbauer. Australia is pushing strenuously for expanded access to the U.S. sugar market, and the two sides are exploring some arcane ways of facilitating that, he said. The Australian sugar industry has pressured more access over recent decades (see 14100601). A number of Australian lawmakers recently called for substantial improvements to bilateral sugar terms (see 1507300077).

Australia is demanding 150,000 metric ton raw value as its threshold into the U.S. sugar market, Hufbauer said. The U.S. allocates Australia more than 87,000 metric tons raw value annually in accordance with rules stipulated in the U.S. sugar program (see 1507140016).

The Australians are also opposed to the U.S. preference for 12 years of biologics data protection, said Hufbauer. Australian law gives five years of data protection. “Australia is not going to give in on the biologics,” said Hufbauer. Senate Finance Chairman Orrin Hatch, R-Utah, has spearheaded Capitol Hill efforts to include the 12-year lifespan in TPP (see 1505130065). But many lawmakers, mostly Democrats, say that lifespan will deprive global consumers of life-saving generic drugs (see 1505280065). Rules on state-owned enterprises remain an obstacle, as well, said Hufbauer.

The Capitol Hill reaction to the news of failure flooded out on July 31 and the days that followed. Hatch encouraged more work on outstanding issues, but issued vague criticism of the negotiation priorities for some TPP parties. “While I remain deeply concerned with some of the positions taken by our counterparts in these talks, I’m confident that with more time and a renewed commitment a strong agreement can be reached that will earn my support,” he said.

House Ways and Means ranking member Sandy Levin, D-Mich., and Rosa DeLauro, D-Conn., among others, said the U.S. still needs to make sweeping changes in its TPP priorities. "This setback to the TPP in Maui shifts the momentum in the national debate,” said DeLauro, while pointing to the biologics impasse as the most significant outstanding issue. “Even though this delay may push the debate until next year, the potential agreement would still have the effect of depressing wages and threatening food safety." Levin said labor standards in the pact remain front-and-center in continuing negotiations.

Rep. Ron Kind, D-Wis., one of only 28 House Democrats to vote in favor of TPA, said USTR’s caution at this latest summit was the most prudent approach. “Given the sensitivity of the remaining issues it's important to take more time to get it right than to rush something to conclusion and make it more difficult to get the support of congress,” said Kind. He and those other 27 Democrats will face “enormous pressure” to oppose TPP implementation legislation from unions and political critics of the deal, said Hufbauer.