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Trans-Pacific Partnership Trade Deal Is Reached Trans-Pacific Partnership Trade Deal Is Reached
(about 4 hours later)
ATLANTA — The United States, Japan and 10 other Pacific basin nations on Monday agreed after years of negotiations to the largest regional trade accord in history, an economic pact envisioned as a bulwark against China’s power and a standard-setter for global commerce, worker rights and environmental protection. ATLANTA — The United States, Japan and 10 other Pacific Rim nations on Monday reached final agreement on the largest regional trade accord in history, teeing up what could be the toughest fight President Obama will face in his final year in office: securing approval from Congress.
The announcement here that weary trade officials had finally agreed on the Trans-Pacific Partnership was merely “an important first step,” the United States trade representative, Michael B. Froman, said. Now their agreement faces months of debate in each of the 12 nations, including in Congress, where some bipartisan opposition was immediate. The conclusion of the Trans-Pacific Partnership, after years of negotiations and a series of sleepless nights here, was merely “an important first step,” conceded Michael B. Froman, the United States trade representative, as he and other weary officials announced their accord.
The trade issue also is certain to become a flash point of presidential politics in 2016, with populist anti-trade sentiment roiling both parties. Now the deal faces months of scrutiny in Congress, where some bipartisan opposition was immediate. That debate will unfurl against the backdrop of a presidential campaign in which populist anti-trade talk against the deal is already prominent.
For a day, however, President Obama could celebrate a potentially legacy-making achievement that links countries representing two-fifths of the global economy, from Canada and Chile to Japan and Australia. The trade initiative, dating to the start of his administration, is a centerpiece of Mr. Obama’s economic program to expand exports. It also stands as a capstone for his foreign policy “pivot” toward closer relations with fast-growing eastern Asia, after years of American preoccupation with the Middle East and North Africa. Still, for Mr. Obama the accord could be a legacy-making achievement, drawing together countries representing two-fifths of the global economy, from Canada and Chile to Japan and Australia, into a web of common rules governing trans-Pacific commerce. It is the capstone both of his economic agenda to expand exports and of his foreign policy “rebalance” toward closer relations with fast-growing eastern Asia, after years of American preoccupation with the Middle East and North Africa.
“When more than 95 percent of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy,” Mr. Obama said in a statement. “We should write those rules, opening new markets to American products while setting high standards for protecting workers and preserving our environment.”“When more than 95 percent of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy,” Mr. Obama said in a statement. “We should write those rules, opening new markets to American products while setting high standards for protecting workers and preserving our environment.”
That argument — that the Pacific pact would be a bulwark against China’s power and a standard-setter for global commerce — will be central to the president’s hard sell ahead to Congress, administration officials said.
For Mr. Obama to win Congress’s approval, he will have to assemble a bipartisan coalition of lawmakers, building out from the political center to marginalize resistance on the left and right. Earlier this year, the president relied heavily on Republicans to win approval of so-called fast-track trade authority, which will allow a vote on the Pacific accord without threat of amendments or filibuster.
This time, the president probably will need more Democrats’ votes. Final concessions his team made in Atlanta angered the tobacco and brand-name pharmaceutical industries, which in turn could cost the president support among Republicans who were allies on the fast-track issue. Also, many conservatives oppose giving Mr. Obama any big accomplishment. And anti-trade talk from presidential candidates — the Republican front-runner, Donald J. Trump, called it “a terrible deal” on Twitter on Monday — most likely will embolden the conservatives.
Among Democrats, too, opposition from the presidential arena is certain to bleed into debate over the Pacific pact.
Senator Bernie Sanders of Vermont, who is running for the Democrats’ 2016 nomination, began a fund-raising appeal within hours of the deal’s announcement. “Wall Street and big corporations just won a big victory to advance a disastrous trade deal,” he said in a statement. “Now it’s on us to stop it from becoming law.”
The pressure now builds on Hillary Rodham Clinton to take a stand. She promoted the trade talks as Mr. Obama’s secretary of state, but as a presidential candidate she has expressed enough wariness before liberal audiences that her support for an agreement is widely in doubt.
The Pacific accord would phase out thousands of import tariffs as well as other barriers to international trade, like Japanese regulations that keep out some American-made autos and trucks. It also would establish uniform rules on corporations’ intellectual property, and open the Internet even in communist Vietnam.The Pacific accord would phase out thousands of import tariffs as well as other barriers to international trade, like Japanese regulations that keep out some American-made autos and trucks. It also would establish uniform rules on corporations’ intellectual property, and open the Internet even in communist Vietnam.
The Office of the United States Trade Representative said the partnership eventually would end more than 18,000 tariffs that the participating countries have placed on United States exports, including autos, machinery, information technology and consumer goods, chemicals and agricultural products as varied as avocados from California or wheat, pork and beef from the Plains states. The Office of the United States Trade Representative said it eventually would end more than 18,000 tariffs that the participating countries have placed on American exports, including autos, machinery, information technology and consumer goods, chemicals and agricultural products as varied as avocados in California and wheat, pork and beef from the Plains states.
The overall economic and political heft of the 12-nation group suggests that, as trade officials predicted, its agreement would be a model for future accords. It would overhaul the system of settling disputes between nations and foreign companies, while barring tobacco companies from using that process to block countries’ antismoking initiatives. It also would enforce higher standards of labor conditions and environmental protection, including wildlife-trafficking. The trade ministers who negotiated it predicted the overall economic and political heft of the 12-nation group would turn the accord into a model for future trade agreements. It would overhaul the system for settling disputes between nations and foreign companies, while barring tobacco companies from using that process to block countries’ antismoking initiatives. Negotiators said it also would enforce higher standards for labor conditions and environmental protection, including wildlife-trafficking.
After five days here and sleepless nights of tense haggling, the agreement came together at 5 a.m. Monday, the trade officials said. When the 11 men and one woman (Magali Silva of Peru) filed onto a dais in a hotel ballroom several hours later to meet reporters, scores of aides burst into applause and some ministers joined in. By law, Congress will have months to deliberate, perhaps to next April. Mr. Froman said he did not know when Mr. Obama would officially notify Congress that he intends to sign the accord, but once he does, that notice will give Congress 90 days to first consider it. Additional time most likely will be needed, congressional and administration officials said.
Mr. Froman read a joint statement that hailed a “historic agreement” that would promote growth, good jobs, higher living standards and good governance. But the ad-libbed comments of several ministers, including those from New Zealand and Canada who had been at the center of a final, heated standoff over dairy exports, spoke to a shared sense of accomplishment. The administration wasted no time beginning its campaign for approval. Mr. Froman flew back to Washington as soon as he and the other trade officials announced their agreement to start reaching out to Congress, as well as to interest groups and industries that afternoon.
Ed Fast, the minister of Canada, where criticism of the trade accord has been prominent ahead of federal elections this month, conceded there had “very tough discussions.” Key members of Congress in both parties and interest groups influential in Washington expressed ambivalence at best or outright opposition, though the agreement’s 30-chapter text will not be available for perhaps a month.
But, he added, “At the end of the day, here we are as 12 T.P.P. partners, having achieved something that at times many people didn’t think was achievable.” The Ford Motor Company quickly condemned the agreement, saying in a statement that it would not meaningfully address currency manipulation by American trading partners, like Japan, that has the effect of lowering prices for their exports to the United States.
For New Zealand, a small nation that is a major dairy exporter and would gain new access to markets in Canada and the United States, among other countries, the minister, Tim Groser, interjected, “Look, long after the details of this negotiation on things like tons of butter have been regarded as a footnote in history, the bigger picture of what we’ve achieved today will be what remains.” “To ensure the future competitiveness of American manufacturing, we recommend Congress not approve T.P.P. in its current form,” the Detroit automaker said.
“Other people will join this agreement,” he predicted. While Mr. Groser refused to specify countries that would join the Pacific trade partnership, South Korea and Thailand are among nations that have been named. Representative Sander Levin, a congressman from Detroit and a point man on trade for his party as ranking Democrat on the House Ways and Means Committee, released an ambiguous statement that also cited a continued concern over currency policies — one shared by scores of lawmakers — and disappointment that the agreement did not do more to force Mexico to allow truly independent unions.
“We each have our own domestic processes to go through. We’ll be consulting closely with congressional leadership on the next steps and the timetable,” Mr. Froman said, adding, “We’re confident that people will see this as a very strong deal.” In Atlanta, Australia’s trade minister, Andrew Robb, implied the weakness of the currency language when he labeled the side agreement a set of principles “that have been more or less agreed.”
Several potentially deal-breaking disputes had kept the 12 trade officials talking through the weekend and forced them repeatedly to reschedule the promised Sunday announcement of the deal into the evening and beyond. Final compromises covered commercial protections for drug makers’ advanced medicines, more open markets for dairy products and sugar, and a slow phaseout — over two to three decades — of the tariffs on Japan’s autos sold in North America. The entire trade agreement came together only at 5 a.m. Monday, after five days and sleepless nights of tense haggling secluded in an Atlanta hotel. When the 11 men and one woman (Magali Silva of Peru) filed onto a dais in a hotel ballroom several hours later to meet reporters, scores of aides burst into applause, and some ministers joined in.
Yet the trade agreement almost certainly will encounter stiff opposition. Mr. Froman read their joint statement that hailed a “historic agreement.” But the ad-libbed comments of several ministers — including those from New Zealand and Canada, who hours earlier had been at the center of a final, heated standoff over dairy exports — attested to a shared sense of accomplishment. (Other parties to the Pacific pact are Singapore, Vietnam, Malaysia and Brunei.)
Its full 30-chapter text will not be available for perhaps a month, but labor unions, environmentalists and liberal activists are poised to argue that the agreement favors big business over workers and environmental protection. Donald Trump has repeatedly criticized the Pacific trade accord as “a bad deal,” injecting conservative populism into the debate and emboldening some congressional Republicans who fear for local interests like sugar and rice, and many conservatives who oppose Mr. Obama at every turn. Canada’s minister, Ed Fast, who had to negotiate just weeks before federal elections in his country, with anti-trade critics on the attack, conceded there had been “very tough discussions.”
While many opponents say the trade pact will kill jobs or send them overseas, the administration contends that the United States has more to gain from freer trade with the Pacific nations. Eighty percent of those nations’ exports to the United States are already duty-free, officials say, while American products face assorted barriers in those countries that would end. But, he added, “at the end of the day, here we are as 12 T.P.P. partners, having achieved something that at times many people didn’t think was achievable.”
Also, the administration contends that increased United States sales abroad would create jobs in export industries, which generally pay more than jobs in domestic-only businesses. Tim Groser of New Zealand, a small nation that is a major dairy exporter and would gain new access to markets in Canada, the United States and elsewhere, interjected, “Look, long after the details of this negotiation on things like tons of butter have been regarded as a footnote in history, the bigger picture of what we’ve achieved today will be what remains.”
The parties to the accord also include Mexico, Malaysia, Singapore and Brunei. The ministers confirmed that one of the most challenging issues was dealing with so-called biologics, which are advanced medicines made from living organisms. The United States sought up to 12 years’ protection for drug makers to withhold data needed to produce generic “biosimilars,” as an incentive for their innovations, while Australia and Peru led most other nations in fighting for no more than five years of protection.
The accord for the first time would require state-owned businesses like those in Vietnam and Malaysia to comply with commercial trade rules and labor and environmental standards. Mr. Froman called the labor and environmental rules the strongest ever in a trade agreement and a model for future pacts, although some environmental groups and most unions remained implacably opposed. The worker standards commit all parties to the International Labor Organization’s principles for collective bargaining, a minimum wage and safe workplaces, and against child labor, forced labor and excessive hours. The compromise set a mandatory minimum of five years, without setting a maximum, leaving both sides to declare victory. “We do think we have a balanced result,” said Ms. Silva of Peru.
Unions and human rights groups have been skeptical at best that Vietnam, Malaysia and Brunei will improve labor conditions, or that Malaysia will stop human trafficking of poor workers from Myanmar and Southeast Asia. The United States reached separate agreements with the three nations on enforcing labor standards, which would allow American tariffs to be restored if a nation is found in violation after a dispute-settlement process. But that compromise raised questions from a significant source, Senator Orrin Hatch of Utah, chairman of the Senate Finance Committee, which has jurisdiction over trade. Mr. Hatch had shepherded fast track through the Senate, but has demanded no compromise on the American position protecting pharmaceutical giants.
On the environment, the accord has provisions against wildlife-trafficking, illegal or unsustainable logging and fishing, and protections for a range of marine species and animals including elephants and rhinoceroses. The decision to bar tobacco companies from using the deal’s dispute resolution tribunals to challenge antismoking law may cost the accord support among Republican lawmakers from tobacco states.
For the first time in a trade agreement there are provisions to help small businesses without the resources of big corporations to deal with trade barriers and red tape. A committee would be created to assist smaller companies. But without those compromises, a final accord may not have been possible.
The agreement also would overhaul special tribunals that handle trade disputes between businesses and participating nations. The changes, which also are expected to set a precedent for future trade pacts, respond to widespread criticisms that the Investor-State Dispute Settlement panels favor businesses and interfere with nations’ efforts to pass rules safeguarding public health and safety. Only by dawn had negotiators settled on expanding access to dairy and sugar markets, especially in the United States and Canada. Also in final days, the United States and Japan agreed to long periods before American tariffs on Japanese vehicles sold in this country are phased out — 30 years for trucks, 25 for autos, and up to 15 years for some auto parts.
Among new provisions, a code of conduct would govern lawyers selected for arbitration panels. And tobacco companies would be excluded, to end the practice of using the panels to sue countries that pass antismoking laws. On Sunday, Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, hailed the provision as “historic.”
In a concession likely to be problematic with leading Republicans, the United States agreed that brand-name pharmaceutical companies would have a period shorter than the current 12 years to keep secret their data on producing so-called biologics, which are advanced medicines made from living organisms. Senator Orrin G. Hatch of Utah, chairman of the Senate Finance Committee, which has jurisdiction over trade, has threatened to withdraw his support for the accord if United States negotiators agree to loosening pharmaceutical industry protections against American law.
But arrayed against the United States, which said the protection was a necessary incentive for drug makers to innovate, were virtually every other country at the table, led by Australia. The generic drug industry and nonprofit health groups also strenuously opposed the United States’ position, pressing for access to the data within five years to speed lower-priced “biosimilars” to market. The compromise is a hybrid that protects companies’ data for five years to eight years.