All eyes will be on trade when Obama heads to Asia
04/17/2014 4:37 PM
04/23/2014 8:58 AM
President Barack Obama will travel next week to Asia with the centerpiece of his planned focus on the region still in limbo amid opposition from his own party and thorny tangles with powerhouse Japan over trade.
The White House has been championing the ambitious Trans-Pacific Partnership, which – if it can get through Congress _ would expand trade throughout the Pacific Rim and serve as the biggest trade deal in history.
“It’s where the growth in jobs are. It’s where the money is,” said Matthew Goodman, a former Obama administration official who chairs the political economy program at the Center for Strategic and International Studies, a Washington research center. “That’s why we go to Asia.”
Each stop of Obama’s trip to Japan, South Korea, Malaysia and the Philippines has a connection to the trade pact: Japan and Malaysia are members and South Korea and the Philippines likely will join later.
The pact is central to the administration’s bid to make its mark with the fast-growing economies in the region. But minefields abound, and the trip _ particularly the first stop, in Japan _ could go a long way in determining whether the long-delayed pact collapses or Obama can strike the balance.
“We believe that there is a package on the table and we just need to line up the politics in order to get it,” said Tami Overby, vice president for Asia at the U.S. Chamber of Commerce. “The coming days and weeks will be critical. . . . The world will be watching.”
While details of the talks remain private, all parties agree that a major obstacle is causing a stalemate: getting Japan and the U.S. to agree on tariffs that would set rules for sales of cars and crops.
Critics worry that Obama’s trade negotiators may lower or even scrap automobile tariffs to win greater access to Japan’s tightly controlled markets for beef and pork, rice, dairy, sugar and wheat products.
While that would help U.S. farmers, it also would allow more Japanese cars to enter the country at a lower cost, a blow to the domestic automobile industry. When Japan joined the trade deal last year, the United Auto Workers complained that Japan already sold 117 cars in the U.S. for every American vehicle sold in Japan.
Lowering the auto tariffs might help the administration seal a deal in Asia, but it would complicate the politics on Capitol Hill, where Obama’s trade agenda is stalled amid blow-back from his base.
Opponents are ready to fight, saying the president is getting ready to widen the U.S. trade deficit and promote corporate interests at the expense of the middle class. They deride the pact as “NAFTA on steroids,” a reference to the North American Free Trade Agreement, which took effect 20 years ago. Critics blame that deal for chasing thousands of U.S. jobs to Mexico, where companies found lower-wage workers.
“We have seen this movie several times before,” said Rep. Rosa DeLauro, D-Conn., one of the pact’s leading opponents.
Analysts suggest it won’t come to that, saying the stalemate with Japan isn’t likely to be resolved on this trip despite Obama’s meetings with Prime Minister Shinzo Abe.
“The betting is against any breakthrough,” said Michael Green, senior vice president for Asia and Japan chair at CSIS.
He said Japan argued that Obama hadn’t been willing to make an aggressive case, “so why should Japan take a hit and do all of the hard politics?”
But Abe “is committed to getting TPP” as a driver for his economic revitalization efforts, said Douglas Paal, vice president for studies and director of the Asia program at the Carnegie Endowment for International Peace.
Paal said Japan’s 132-person negotiating team was based in Abe’s office for the first time ever, suggesting its negotiators aren’t “hostage” to various domestic concerns.
The former Reagan and George H.W. Bush official said his understanding from negotiators on the Japanese side was that they had “a lot more flexibility than I ever saw.”
In advance of Obama’s trip, U.S. Trade Representative Michael Froman traveled to Japan last week for negotiations. Two of Japan’s top trade officials were in Washington this week for three days of talks, discussing tariffs on vehicles and farm commodities.
The pact marks a “once-in-a-lifetime opportunity to craft the rules of the road” for Asian trade, Froman told a Boston audience, noting that the 12 trade-pact countries represent 40 percent of the global gross domestic product and Asia has 500 million middle-class consumers, a number that’s expected to grow to 2.7 billion by 2030.
“Will they be buying made-in-America products or products made by other countries?” Froman asked. “We can’t afford to sit on the sidelines.”
He said people around the world “are hungry for American products.”
Japan complicated the trade talks last year when it became the 12th entrant, joining the U.S., Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
While Japan gets the most attention because of its size, a Congressional Research Service report found that Vietnam might hold the greatest potential for increased economic relations with the U.S.
That’s a frightening prospect for opponents, who fear it would increase the global demand for cheap labor and reduce international wages.
U.S. businesses are sure to find Vietnam particularly attractive, with a minimum wage of 28 cents an hour, said Rep. Alan Grayson, D-Fla.
“The result of that in the end will be the impoverishment of the middle classes everywhere,” he said.
Even if Obama succeeds in Asia, he’ll face perhaps a heavier lift in getting Congress to pass the plan, especially in an election year.
The president has failed to convince Congress to give him special trade-promotion authority known as “fast track,” which would limit congressional debate and force quick votes on trade pacts. Even his party’s leaders, Senate Majority Leader Harry Reid, D-Nev., and House Minority Leader Nancy Pelosi, D-Calif., oppose the plan.
“Fast track empowers President Barack Obama, and I’ve got Republican colleagues who wouldn’t empower President Barack Obama to do anything,” said Rep. Brad Sherman, D-Calif.
Still, business lobbyists are optimistic. House Speaker John Boehner, R-Ohio, is backing the deal, though he’s criticized Obama as not being aggressive enough in selling it. The U.S. Chamber of Commerce, which represents more than 3 million businesses across the nation, is an enthusiastic supporter.
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