U. S. Congress Must Pass the TPP

Amcham Sin­ga­pore re­cently re­leased an op- ed in the Straits Times sup­port­ing the rat­i­fi­ca­tion of the Trans- Pa­cific Part­ner­ship ( TPP)

Thai-American Business (T-AB) Magazine - - Contents - Writ­ten by: Steven Okun and Deb­o­rah Elms

“Sin­ga­pore fer­vently hopes that the U. S. will stay en­gaged and main­tain its in­dis­pens­able role in the Asia- Pa­cific. In par­tic­u­lar, we hope, and I’m sure the pres­i­dent shares this hope, that Congress will rat­ify the TPP soon,” Prime Min­is­ter Lee said on his re­cent State Visit to the U. S.

Amcham Sin­ga­pore agrees com­pletely. The TPP is not only eco­nom­i­cally in the U. S. in­ter­est, it keeps the U. S. front- and­cen­ter as an “in­dis­pens­able” na­tion in the Asia- Pa­cific.

It hasn’t even passed, yet the TPP al­ready has been in­flu­en­tial in the re­gion to the U. S.’ ben­e­fit. TPP coun­tries and even some that are hop­ing to join in the fu­ture are chang­ing or con­sid­er­ing changes to their laws to meet TPP stan­dards – stan­dards that largely re­flect U. S. ap­proaches as set out in Congress’ Trade Pro­mo­tion Au­thor­ity re­quire­ments.

Pres­i­dent Obama has now given no­tice to Congress that he will be send­ing a bill to im­ple­ment the TPP.

All of this comes to an end if the Congress does not pass the TPP this year.

Given state­ments by both U. S. pres­i­den­tial can­di­dates, those in the re­gion be­lieve if the TPP does not pass in this Congress and is signed by Pres­i­dent Obama, it will be years be­fore the U. S. will be pre­pared to en­gage with cred­i­bil­ity on craft­ing an amended agree­ment.

Not ap­prov­ing the TPP will nec­es­sar­ily turn part­ners like Japan, Aus­tralia, and Viet­nam – who have faced of­ten con­sid­er­able do­mes­tic po­lit­i­cal heat over cer­tain stan­dards in the agree­ment dur­ing the nearly five years of ne­go­ti­a­tions - to those who can ne­go­ti­ate, sign and close a deal.

And other coun­tries, now on the out­side of TPP and look­ing in, will move for­ward with- out the U. S. to en­gage through other ini­tia­tives with the rest of the TPP mem­bers.

The dam­age to U. S. in­ter­ests is much greater than sim­ply the loss of years of work putting to­gether a com­plex agree­ment with a net­work of com­mit­ted part­ners span­ning the Pa­cific that is widely rec­og­nized as bring­ing the U. S. eco­nomic ben­e­fits.

The United States will lose its pre­em­i­nence in de­sign­ing fu­ture trade and eco­nomic ar­range­ments if it fails to join the TPP.

The TPP re­quires that the United States and Japan plus at least four other coun­tries sign the deal for it to go into force. If Congress does not vote in fa­vor of the im­ple­ment­ing leg­is­la­tion needed to en­act the TPP, the TPP can­not go for­ward – even if all other 11 coun­tries are ready and will­ing. If this hap­pens, the agree­ment will un­ravel.

Amer­i­can com­pa­nies are al­ready see­ing the con­se­quences of a world in which trade lib­er­al­iza­tion oc­curs without the United States. Aus­tralia has free trade agree­ments ( FTAS) with China, Korea and Japan – per­mit­ting their com­pa­nies much greater ac­cess with bet­ter ben­e­fits than the U. S. gets in key sec­tors like agri­cul­ture and health care. The EU has en­tered into an FTA with Viet­nam, and is ne­go­ti­at­ing with oth­ers in the Asia- Pa­cific, in­clud­ing Japan and Malaysia, giv­ing its mem­bers greater ac­cess to one of the world’s fastest grow­ing economies, and one of the most strate­gi­cally im­por­tant from a geopo­lit­i­cal per­spec­tive.

Prime Min­is­ter Lee dur­ing his U. S. visit, said, “For Amer­ica’s friends and part­ners, rat­i­fy­ing the TPP is a lit­mus test of cred­i­bil­ity and se­ri­ous­ness of pur­pose. We need to know that agree­ments will be up­held and that Asia can de­pend on Amer­ica. Your rat­i­fi­ca­tion of TPP will there­fore be a clear state­ment of your com­mit­ment and con­fi­dence in our re­gion.”

There are many ironies at­tached to a pos­si­ble U. S. non- rat­i­fi­ca­tion of the TPP. Chief among them is that without the TPP, the other Asia Pa­cific na­tions have a Plan B, while the United States does not.

Who will step in with the U. S. ab­sence? Three can­di­dates are China, the Euro­pean Union ( EU), and Aus­tralia, all of which

com­pete di­rectly with the U. S. in the re­gion. U. S. ex­porters are keenly aware of the ad­van­tages lost to their com­pe­ti­tion if the U. S. does not move ahead.

One ex­am­ple is in the wine in­dus­try, where the U. S. and Aus­tralia are di­rect com­peti­tors. In 2015, the value of Aus­tralian wine ex­ports reached its high­est value since the Great Re­ces­sion on the back of its FTAS with China, Japan and Korea. Un­der the TPP, im­port du­ties on U. S. wines will be com­pletely abol­ished in eight years, which will help the U. S. grow in Japan. This is crit­i­cal for states like Cal­i­for­nia, since their TPP com­peti­tors Chile and Aus­tralia al­ready have free trade agree­ments with Japan, and ben­e­fit from a duty ad­van­tage.

From a mul­ti­lat­eral per­spec­tive, the re­main­ing TPP mem­bers will look to the Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship ( RCEP) as the next step. This agree­ment lacks much of what makes the TPP so spe­cial – chap­ters that ad­dress 21st cen­tury do­ing busi­ness is­sues. RCEP is miss­ing the U. S., but does in­clude China, Indonesia, Japan and nearly ev­ery other key U. S. trad­ing part­ner in Asia.

The Euro­pean Union is push­ing for trade agree­ments with Japan, Malaysia, Indonesia, In­dia and oth­ers, and plans to com­bine ex­ist­ing bi­lat­eral agree­ments with ASEAN mem­bers into a re­gion- wide deal. Both China and the EU use trade tem­plates that do not match Amer­i­can mod­els. Nei­ther pro­vides the kind of pref­er­ences to Amer­i­can com­pa­nies, of course, that the TPP would have granted.

As a re­sult, ab­sent the TPP, Amer­i­can com­pa­nies are in­creas­ingly likely to find them­selves dis­ad­van­taged. Tar­iff lev­els, which are higher in for­eign mar­kets than in the United States, will not fall for Amer­i­can com­pa­nies try­ing to ex­port goods. Ser­vices mar­kets will not be opened. In­vest­ments will not be opened or pro­tected to the same ex­tent that other FTA part­ners re­ceive.

The kinds of stan­dards for food and food safety, la­bel­ing, pro­tec­tion and en­force­ment of in­tel­lec­tual prop­erty rights may be quite dif­fer­ent ( or even nonex­is­tent) in th­ese other types of trade agree­ments.

Amer­i­can com­pa­nies have be­come quite used to set­ting the de facto stan­dards for many types of prod­ucts. This can­not be taken for granted.

Ul­ti­mately, the stakes in rat­i­fy­ing TPP are not just for U. S. businesses and work­ers to gain the ben­e­fits of TPP it­self, but also for the United States’ abil­ity to re­main com­pet­i­tive and ad­vance our in­ter­ests in the re­gion. Those of us who live and work in the re­gion know this first- hand.

The U. S. Congress must pass the TPP.

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