With the Trade Promotion Authority (TPA) vote derailed in the House of Representatives last Friday, President Obama seems to be running out of time and options to move forward with his trade deals.
In a last-minute move last Friday – and contradicting the White House’s confident expectations – a group of House Democrats led by California congresswoman Nancy Pelosi blocked the passage of the TPA (a piece of legislation that would deprive Congress of the ability to make changes to the Trans-Pacific Partnership’s text before approving it, allowing the president to fast-track the agreement) by voting against the Trade Adjustment Assistance (TAA). The measure, which provides training and assistance to workers who lost their jobs as a consequence of free trade, is usually widely supported in the Democratic Party, and its rejection last week shows how badly Democrats wanted the TPA to fail.
“It seems as though the Democrats definitely abandoned the president,” says John Raines from IHS.
According to him, Obama and House speaker and Ohio Republican representative John Boehner, who have been working together on this legislation, now have three options to try and get the bill passed and hopefully move forward on the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP).
The first option is to try to convince the Democrats one more time with another vote structured the same way – an unlikely outcome considering that they would need to turn nearly 100 votes around. This path seems to have been dismissed today as rumours of another vote this week were denied by various news sources and replaced by rumours of a potential rule that would give Boehner until July 30 to find a better solution.
The second choice would be to split the two bills, pass the TPA and let the TAA fail – a risky approach as without the TAA, Democrats who do support the TPA might change their minds.
Finally, they could unite both bills in a comprehensive package, hoping to get enough Republican support for it to pass – but this time it’s the Republicans that are against the TAA that might change their minds.
Whichever way forward Obama chooses, the likelihood of the TPA ever being approved seems to have dropped significantly.
“My original gut feeling was that in some way, in some form, this bill is going to pass because there will be enough support out there; people will realise the geopolitical consequences. To think that a country will wilfully give up its leadership position solely based on domestic politics seems hard to swallow, but that’s certainly what appears to be happening here,” Raines tells GTR.
The world doesn’t wait, not even for the United States… You’re either in or you’re out. K. Shanmugam, Singapore foreign ministry
Experts have warned about the consequences of the US’ indecisiveness on the international stage. Speaking to GTR before the vote, former chief of staff to the US Trade Representative Timothy Keeler said: “If TPA was to fail then the US would not be in a leadership position to draw up the next set of trade rules, particularly the next generation of trade rules in Asia Pacific. Most likely, China would.”
While this is clearly a setback, many analysts still believe the bill will eventually pass.
“I think they will reach an agreement on TPA soon – this is just a pause to enable Democrats get more on worker compensation. The quid pro quo of trade adjustment assistance for fast track is nothing new in US trade politics. However, this also illustrated how powerful the union lobbies are in the Democratic party – they will be a force to be reckoned with also when especially TPP is voted on, possibly also when TTIP is ready,” Kati Suominen, an adjunct fellow with the Centre for Strategic International Studies tells GTR.
However, others warn that the US is running the risk of losing its credibility with international trade partners and beyond.
Currently on a working visit to Washington DC, Singapore’s foreign minister, K. Shanmugam, expressed renewed support for the TPP, but warned that “the world doesn’t wait, not even for the United States… You’re either in or you’re out”.
“If you don’t do this deal, what are your levers of power? How integrated are you into the Asian economies? Meanwhile there are a whole series of other trade deals that have happened, will happen and from which you will be excluded. So the choice is a very stark one: Do you want to be part of the region or do you want to be out of the region? (…) Let’s be frank about it, the president wants it, everyone knows this is important, yet you can’t get it through, how credible are you going to be?” Shanmugam asked during his keynote speech at the Centre for Strategic and International Studies on June 15.