Whatever the merits of the existing Trans-Pacific Partnership agreement, it might not be ratified. A number of Members of Congress who may refuse to vote for the Trans-Pacific Partnership (TPP) are avowed free traders. Free traders who find the TPP inadequate as it stands are obliged to offer a sensible alternative, because this opportunity should not be lost.
The problem: there may be no such alternative. Unfortunately, it is probably unreasonable to expect the current administration to renegotiate – this is what they achieved given their priorities.
Japan’s Economics Minister Akira Amari (L) with a journalist, next to U.S. Trade Representative Michael Froman, during a news conference after a four-day (TPP) Ministerial meeting in Singapore February 25, 2014. REUTERS/Edgar Su.
Turning to the next administration, it is hugely encouraging that the next president will have Trade Promotion Authority through his or her first term, where President Obama has only possessed it for a few months. Odds are good the next president will be interested in putting his or her own stamp on trade, as President Obama did in 2010.
The far bigger challenge is successfully renegotiating with 11 partners; they cannot simply be ordered to grant better terms. The simplest step is to renegotiate several key items, perhaps starting with converting non-conforming measures into free trade commitments with long phase-ins. Crucially, asking for more requires the president and Congress to be willing to offer more.
If this cannot work, free traders should not abandon the TPP. The next step would be to shrink the number of participants in the first round. This will harm US relations with the governments (temporarily) excluded and general American credibility to some extent.
However, these costs are far less than the cost of rejecting the TPP or signing what proves to be a weak TPP. Further, the logic of the TPP is for few members and a stronger agreement. The TPP exists in large part because the WTO has become so unwieldy as to make progress there all but impossible.
The US could shunt to a second TPP round the one or two countries which are making the most troublesome demands. It is again true that American side would have to make more concessions as well in a first round with countries more committed to free trade.
A final option is to first conclude a bilateral agreement with Japan that eliminates some flaws in the TPP. The motivation is a good chunk of the short-term benefits from the TPP for the US stems just from the inclusion of Japan. The immediate, sizable obstacle is that neither side may be truly willing, and free trade advocates should be highly cautious in touting this alternative.
Nonetheless, a major accomplishment of the Obama administration was to fold Japan into the TPP, where Japan signing a genuine free trade agreement seemed unthinkable a decade ago. It is now “thinkable” and, indeed, a good deal of work has been done. A US-Japan agreement would set terms for reciprocal access to the Japanese market and serve as the core of an improved TPP.
TPP proponents emphasize that the deal is much better than nothing. The alternative is not nothing. It will certainly not be easy to strengthen the TPP but it is possible and the US would benefit greatly from a strong TPP.
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