Republican control of Congress does not mean TPP is a done deal

While Japanese and U.S. officials expect little change in the U.S.-Japan relationship following Tuesday’s midterm elections, experts are divided on what a Republican-controlled Congress means for Trans-Pacific Partnership negotiations and, ultimately, for reaching a deal before the 2016 presidential election.

A long-standing belief among U.S. and Japanese policy experts is that Republican-led Congresses generally mean less protectionist trade policies. But in the case of TPP, where the U.S. and Japan remain deadlocked over agricultural and auto issues, frustration in Washington, especially in Congress, has grown to the point where some experts are speculating about concluding a TPP agreement without Japan.

“Because Japan has most-favored relations with most TPP parties, many U.S. exporters expect gains in market access. That is, terms of trade would improve with Japan in more ways than with TPP partners that already have free-trade agreements with the U.S.,” said Scott Miller, senior adviser at the Washington-based Center for Strategic and International Studies.

For a breakthrough in negotiations to occur, Miller said, Japan needs to make an opening move. Otherwise the other 11 nations involved in the TPP could decide to conclude an agreement without Japan.

“Most U.S. observers prefer the former. However, I think a conclusion without Japan now, which delivers a high-standard, comprehensive agreement, would be easier to sell in Washington than a deal which includes Japan but does not achieve the desired high standards,” Miller said, adding that it would better for all if Japan were a member.

Paul Sracic, a political science professor at Youngstown State University who has followed the TPP talks closely says pursuing a deal without Japan would be politically unwise.

“TPP is as much about geopolitical strategy as it is about trade. If Japan is excluded, will China step into the breach, putting its energy behind the Regional Comprehensive Economic Partnership (RCEP)?” Sracic asked.

The RCEP is a proposed trade block that would include 16 East and Southeast Asian nations. It would cover all 10 members of ASEAN plus Australia, China, India, Japan, South Korea, and New Zealand — all countries with which the ASEAN nations have free-trade agreements. But it would not include the U.S.

One of the keys to a breakthrough between the U.S. and Japan on the TPP is whether or not the Republican Congress will grant the Democratic president trade promotion authority (TPA). This would allow Obama to negotiate the TPP without congressional debate on the final agreement. Other nations, especially Japan, are reluctant to cut trade deals unless they know Obama has the authority to get it passed in Congress.

“A Republican Senate and House offers a more straightforward legislative path (to granting TPA). Ultimately, however, presidential leadership is the essential element,” Miller said.

However, a host of nonagricultural issues remain to be solved before Congress is likely to agree to TPA, let alone a final TPP agreement.

Last year, 290 Republicans and Democrats in both houses of Congress called on Obama to address currency manipulation in the TPP talks, a concern U.S. lawmakers have about Japan in particular. But this is an issue that has yet to be fully addressed in the trade negotiations.

“It’s becoming increasingly clear that congressional demands relating to the inclusion of currency disciplines in TPP will have to be met for a deal to get through Congress,” said Lori Wallach, director of Washington-based Public Citizen’s Watch, which opposes TPP, speaking after TPP negotiations were held in Australia last month.

“The election results mean that the Obama administration will not be able to step back its position regarding Japan and agriculture in TPP even if it were so inclined, as the demand for tariff zeroing on all commodities comes from the Republicans. Also, the prospect that fast-track will be passed during Obama’s last two years is further reduced by Republican control of the Senate,” Wallach said. “Fast track” is another name for trade promotion authority.

“The version of trade authority supported by the incoming GOP chairman of the committee with jurisdiction over trade does not have wide support in the House of Representatives among Republicans or Democrats, while the Democratic senator that had been chair was working to write a new type of trade authority that might have garnered wider support,” she added.

Yet with Prime Minister Shinzo Abe’s approval rating slipping in the polls and local nationwide elections scheduled for April, it remains unclear what actions by Congress or Obama might convince Tokyo to make concessions on TPP in the short term.

Hironori Sasada, an associate professor of political science at Hokkaido University and an expert on Japan’s agricultural policy, says even if Obama gets trade promotion authority from Congress, it does not mean he can easily reach an agreement with Japan.

He added that Japan’s farm lobby is not as strong as it used to be, but “if Abe’s approval rate keeps declining, he’ll have to be very cautious about dealing with controversial issues like TPP.”

Source: Japan Times