WASHINGTON — The 12-nation Trans-Pacific Partnership trade deal might not be dead but it’s certainly on life support.
The chances of passing the far-reaching trade deal in a lame duck session of Congress this year are slim and if it slides into next year, TPP will come under tough scrutiny by a new president, which could inevitably slow it down or kill it altogether, according to trade experts. Both Donald Trump and Hillary Clinton have voiced their opposition to the deal — the Republican candidate wholeheartedly and Clinton by saying she doesn’t agree with it in its present form.
There is widespread disagreement over whether the U.S. could successfully renegotiate TPP, as many of the countries involved have made it known they would not come back to the negotiating table. Some trade experts believe there is more of a possibility of negotiating “side deals” on key issues, although even that scenario has its risks.
Even if Clinton or Trump were to manage to renegotiate the embattled Asia-Pacific trade pact, which would encompass nearly 40 percent of the world’s gross domestic product if enacted, it faces significant opposition from a broad swath of rank-and-file lawmakers in both parties, while top Republican leaders in Congress have raised concerns about the trade pact.
TPP includes the U.S., Australia, Japan, Mexico, Canada, Vietnam, Malaysia, Peru, Singapore, Chile, Brunei and New Zealand.
President Obama, his top lieutenants and several large business groups continue to make the case for trade and TPP in a counter offensive against the antitrade voices. On Tuesday, during the state visit to Washington by Singapore Prime Minister Lee Hsien Loong, Obama forcefully reiterated his support for the trade deal and said he will fight for it throughout his remaining time in office.
“Right now I’m president, and I’m for it,” Obama said. “And I think I’ve got the better argument. I’ve made this argument before. I’ll make it again. We are part of a global economy. We’re not reversing that.”
But the antitrade fervor on display at the Republican and Democratic conventions during the past two weeks didn’t help TPP’s chances.
Joshua Meltzer, a senior fellow on the global economy and development at the Brookings Institution, said TPP is not dead and thinks there is a possibility it could pass in a lame duck session. Melzer said it would be difficult to change or renegotiate TPP before a lame duck vote because 11 other countries are involved and many have said they will not change it.
“They have all been pretty emphatic that they are not prepared to reopen the deal,” he said. “It’s a very good deal for the U.S. The U.S. is getting most of what it wants.”
He did note that for one key sticking point — in the area of protections for biologics, which are high-priced medicines derived from living organisms — there will be need to be some sort of fix to bring U.S. lawmakers, such as Senate Finance Chairman Orrin Hatch (R., Utah) on board. The TPP provided a much shorter protection period for biologics than the 12 years of intellectual property protection that exists in the U.S. today.
Another thorny issue is in the area of tobacco. The TPP created a carve-out barring tobacco companies from suing the 11 governments that are part of the trade pact under Investor State Dispute Settlement provisions, which has angered tobacco-state lawmakers.
Meltzer said if Clinton is elected and the vote on TPP slips to next year, the deal will likely need to be renegotiated in some form to get it across the finish line. If Trump is elected, he said he doesn’t see TPP going anywhere.
“He’s got a whole range of fairly outrageous positions on trade more generally,” Meltzer said. “It’s just unclear how much he means and what he would actually follow through on.”
Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, said the chances of TPP being ratified in a lame duck session in November are “small.”
“I would put the number at 10 percent,” he said. He said Trump would have to lose by a landslide; Republicans would have to go back to their pro-trade roots; Democratic presidential nominee Hillary Clinton would have to give Obama a “pass” on the legacy-defining trade deal, and Republican leaders would have to accept TPP as it stands now as the best deal they are going to get and put it to a vote.
If those pieces don’t come together, Hufbauer said TPP will slide to next year, though he said the chances of it passing then are also small, assuming Clinton is elected.
If Trump is elected, Hufbauer said TPP will be “nonexistent.”
“I don’t see how the temperature on this issue can cool down in a year,” he said, adding that if the economy improves in 2018, wages rise and unemployment continues to fall, a Clinton presidency “could revive the trade agenda” but not before 2018.
David Spooner, a partner at Barnes & Thornburg LLP, who was the chief U.S. textile negotiator from 2002 to 2006, said while TPP isn’t dead, its chances of passing this year are “slim.”
“There may be a window in the lame duck session but the votes aren’t there now,” he said. “Even if the two presidential candidates were calling for a vote [and they are calling for the opposite] without progress on issues like tobacco and biologics, it wouldn’t pass the Senate or House if it came up for a vote today.”
Spooner said its chances are better next year, but only late next year, especially if side deals are cut on outstanding issues, similar to past trade deals, such as those with South Korea and Colombia.
Speaker of the House Paul Ryan (R., Wisc.) and Senate Majority Leader Mitch McConnell (R., Ky.) remain pro-trade on principle but are not bringing TPP to the floor because the votes are not there to pass it, he added.
“When you have all of the candidates against it and all of the leaders in Congress hedging their bets, anyone who doesn’t say it’s on life support is misleading their members. You can use it as cue time to fight harder if you want to win, but you don’t paint a rosy picture,” said Rick Helfenbein, president and chief executive officer at the American Apparel & Footwear Association.
“It’s either going to be renegotiated or ultimately for once in his short political career Mr. [Donald] Trump [the Republican presidential nominee] may be right. We might end up dealing with individual countries [on trade deals].”
Helfenbein said AAFA and other trade associations will continue to “fight to the end for TPP,” but he said when he looks at the facts — that many pro-trade politicians are now coming out against it — he has become less optimistic about its chances.
Similarly, Julia Hughes, president at the U.S. Fashion Industry Association, said: “I won’t claim that we’re optimistic — but it’s not dead. As the campaign plays out over August and as we get into full election season in the fall, we’ll have to see where the dialogue is going. There have been a number of press reports that continue to reiterate the fact it could be doable in a lame duck if there is political will. There is not today, but there could be after the election.”