The Obama administration is stoutly maintaining that the defeat (52-45) of an attempt to open debate on Trade Promotion Authority and a package of other trade-related bills was merely a bump in the road, a “procedural snafu.” Not so: In the phrase often used by the president, “it was a whupping.” With all the (trade) world watching and keen press attention, this was an important symbolic defeat that has produced damning headlines (“Obama foiled on Trade Pact by Democrats”), many of which stressed the civil war within the Democratic Party and the declining influence of a lame-duck president. Though less titillating for Washington insiders, the more important reaction is no doubt taking place in the capitals of the other 11-member nations in the TPP. How that reaction plays out will depend on what comes next.
In attempting to assess the damage and a way forward, a bit of background is helpful. First, the 20-6 favorable vote on TPA in the Senate Finance Committee demonstrated that there is support for the president from a notable minority of Senate Democrats: during yesterday’s frantic maneuvering a group of 10-14 Democrats informally caucused looking for a way forward. As press reports have described in recent days, the complications came not from a straight vote on the TPA itself, but from Senate Democrats’ demands for a package of bills that included legislation for so-called Trade Adjustment Assistance (for workers allegedly thrown out of work by trade agreements), a bill to reauthorize special trade preferences for African countries, and finally, a bill to change the terms of some US trade remedy rules, including a provision mandating retaliation against nations who manipulated their currency. The currency item is counted by the Obama administration and the Republicans as a poison pill that, if enacted, would kill the TPP negotiations.
The key figure here is Sen. Ron Wyden (D-OR), who crafted compromises on the TPA bill with Sen. Hatch (R-UT), the chairman of the Senate Finance Committee. Reading between the lines from Senate colloquy and outside press reports, Wyden and the Democrats had gotten agreement from the Republicans to move TAA with the TPA bill, and a guarantee of votes on the other two bills separately. Then, apparently Sen. Harry Reid (D-NV), the Senate minority leader, and others, intervened to demand placing all four bills in a single package for passage together. Sen. Hatch, while careful not to foul the waters for future compromises, clearly believes that Wyden went back on his word and acquiesced to demands of Reid and the rest of the caucus. Wyden’s own remarks after the vote amounted to an agonized plea to put Humpty-Dumpty back together again (without admitting his own role in the debacle).
Details surrounding the final negotiations before the vote yesterday are still murky. It is not clear, for instance, just why Senate majority leader, Mitch McConnell (R-KY), went forward with the vote knowing the Republicans and the president would lose. To be fair, it looks as if negotiations for a compromise were going forward right down to the vote. They failed, but all sides (at least outwardly) seem undaunted. The president met immediately with the rump pro-trade Democrats at the White House, and the Republicans vowed to bring the issue up again for a vote. At this writing, the most promising result is the apparent offer by Sen. Reid to agree to separate the poison pill legislation from the other pieces of the package (something he had refused to do initially). Republicans have expressed distrust of Reid’s offer — but if fit is genuine, it would offer a way out. As a separate bill, the currency provision is unlikely to pass the House, and even if it did, it would face a presidential veto.
It’s time for the president and his people to step in here. If there is any way to avoid putting this off until after the Memorial Day recess, the administration and pro-trade Republicans and Democrats should take it. First, delay just gives opponents added opportunity to spew out more false claims and general populist demagoguery. Second, as noted above, our TPP trading partners are watching all of this unfold. Delay will only increase their wariness in putting forward their final offers and further delay the conclusion of the negotiations — which, by the way, are already running up against the highly political calendar of 2015.
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