Hearing on TPP in Senate Shows No Path to US Rejoining

Senate Finance Subcommittee on International Trade Chairman Sen. Tom Carper, D-Del., and ranking member Sen. John Cornyn, R-Texas, agree that the U.S. should be in the Trans-Pacific Partnership, but the expert witnesses at the hearing they held June 22 showed no path to the U.S. reentering the agreement with the 11 countries that went on to seal the deal. This was despite agreement among most subcommittee members (though not Sen. Sherrod Brown, D-Ohio) and the witnesses that leaving TPP was a tactical mistake that leaves the U.S. at a trade and geopolitical disadvantage.

Cornyn noted that the U.S. cannot effectively speak up against China's wish to join the TPP, or counter the Chinese-led Regional Comprehensive Economic Partnership, because it refused to join TPP.

Several witnesses talked about needing rewrites of the labor and environmental chapters to have them mirror the USMCA, but strict rules of origin for autos in NAFTA, and then stricter rules still for autos in USMCA, were not mentioned, and that issue was one that the auto unions homed in on as they opposed the deal.

Former TPP negotiator Wendy Cutler, who now leads the Asia Society Policy Institute, said that a more pragmatic approach would be to negotiate a digital trade chapter, as was already done with Japan, Mexico and Canada, three of the 11 countries. While that would have some trade facilitation characteristics, it would not change tariffs for goods exporters or importers.

Sen. Pat Toomey, R-Pa., asked Cutler if she agrees with him that a comprehensive trade deal is preferable to sectoral agreements. Cutler said she does agree, but added, "I don’t think a multilateral TPP-like agreement is realistic right now. Do we wait and put everything on hold, or are we pragmatic?" She said that she thinks one sectoral agreement could lead to another, and could be building blocks toward a comprehensive deal years from now.

Cutler said the aftermath of the TPP on our credibility continues. She told Carper that the U.S. needs to show that it's serious about trade "and [that] when we conclude an agreement we can bring it into effect."

She suggested that negotiating priorities be reevaluated during long negotiating periods. The TPP negotiations took five years, and in her view, the negotiating priorities the U.S. trade representative was given by Congress at the beginning no longer reflected public sentiment by the end.

But she also said she doesn't expect the administration to ask for a new Trade Promotion Authority, which gives Congress the opportunity to express its negotiating priorities. The current TPA expires soon. "Hopefully, eventually we will need it. Right now the administration does not seem focused on negotiating new trade agreements," she said.

Don Allen, president and chief financial officer of Stanley Black & Decker, said that the TPP had attractive planks, such as its rules on the use of government subsidies and currency manipulation, as well as improvements in market access for U.S. exporters. But in his testimony, Allen focused more on the pain that the Section 301 tariffs on Chinese imports are causing, and said that Congress needs to compel the administration to bring back exclusions to the 25% tariffs, "particularly on those imports that support U.S. manufacturing."

Although TPP was seen as a boon to agricultural exporters, there was no talk of the market access needed in Vietnam, Malaysia or other countries where the U.S. does not have a free trade agreement.

Instead, Sen. Steve Daines, R-Mont., said he thinks the U.S. should start formal trade negotiations with India, and he said his pulse farmers would have big opportunities to export to India if India lowered its barriers to their products. "Look, when it comes to India, I couldn’t agree with you more -- there are enormous opportunities," Cutler said. "I need to be quite honest, there are enormous challenges there as well." She said in her long career as a negotiator at USTR, India provided a lot of disappointment. She noted that India was meant to be in RCEP, and a year before it was signed, it withdrew. India "faces a lot of domestic opposition to trade liberalization and is not ready to open its market yet," she concluded.