By William Mauldin
The White House and Republican leaders notched a significant
victory Wednesday with the Senate's passage of divisive trade
legislation, but the win kicks off a grueling, monthslong process
to complete a Pacific trade pact that still faces domestic
opposition and must win final congressional approval.
President Barack Obama is expected to sign the fast-track
legislation within days, clearing a negotiating roadblock that
prevented officials from moving ahead on the 12-nation
Trans-Pacific Partnership.
But even with the enhanced powers and the Senate's subsequent
action on Wednesday to advance a related bill on assistance to
workers deemed to have been hurt by international trade, multiple
challenges remain.
"To say that this is an easy march to victory is a big mistake,"
said Gary Hufbauer, senior trade expert at the Peterson Institute
for International Economics, which backs trade liberalization.
Granting the president fast-track negotiating powers, he said, is
merely "the prelude to Act Two of the drama."
The Senate's 60-38 passage of fast-track, which gives the
president the power to submit trade deals to Congress for an
up-or-down vote without amendments, capped a fight that split the
Democratic Party and almost ended in defeat several times.
Supporters already worry that the final vote on the Pacific deal
could spill into next year's contentious U.S. election season, when
populist attacks from the left and the right are likely to make
free-trade policy much harder to enact.
Now attention shifts to the TPP itself, a sweeping proposed pact
among the U.S., Japan, Malaysia, Vietnam, Australia, Canada and six
other Pacific Rim countries.
The pact is aimed at lowering or eliminating a host of tariffs
and other barriers on cars, dairy, meat, wheat and thousands of
other products.
Perhaps more important are commercial rules-of-the-road on
everything from labor and environmental standards to
intellectual-property protections for pharmaceuticals and
movies.
A handful of sensitive issues remain before U.S. Trade
Representative Michael Froman and other trade ministers can sign
the agreement, which could happen as soon as next month.
Still unresolved are the degree to which Japan will open its
agricultural markets, the length of protection for pharmaceutical
companies' new biologic drugs, and Canada's protections of its
dairy and other markets, according to people following the talks.
Other countries in the deal are Brunei, Chile, Mexico, New Zealand,
Peru and Singapore.
If the TPP is completed in July, it could take six months or
more for the agreement to get a final vote in Congress, thanks to
delays built into the legislation and necessary legal and
bureaucratic steps.
The earliest possible time for a congressional vote will be in
the fall.
When the text of the agreement is first published in full after
the ministers' signing, it is all but certain to trigger a chorus
of specific criticisms from environmental and labor groups,
consumer watchdogs and even religious leaders worried about the
deal's effect on the affordability of medicine.
"When the inexcusable and anti-democratic veil of secrecy
surrounding the TPP is finally lifted and the American people see
what is actually in the agreement, they are going to force their
representatives in Washington to vote that deal down," said Robert
Weissman, president of Public Citizen, a government watchdog group
opposing both fast-track and the Pacific deal.
"There will be another whole battle over TPP," said Susan
Schwab, former U.S. trade representative in the George W. Bush
administration. "In a complicated trade agreement, [critics] are
always going to be able to point to things they say are bad."
While most large U.S. companies back the TPP, some domestically
focused American manufacturers are pressing lawmakers to defeat the
deal over concerns it would unleash a flood of cheap imports from
competitors.
Drug makers are among the top firms lobbying for the TPP, eyeing
strong patent protections for drugs and a bigger role in setting
government health policy.
Left-leaning groups and some health professionals have
criticized such rules on humanitarian grounds, warning of higher
medicine prices.
One wild card is the auto industry, which some economists say
could be hurt by an relative increase in imports, depending on the
size and timing of expected U.S. tariff cuts to cars, trucks and
parts imported from Japan.
Some of the pact's most vocal critics are lawmakers from auto
states such as Michigan and Ohio. For their part, the big three
U.S. auto makers have taken a more nuanced approach, demanding
strong rules to prevent Japan and other countries from cheapening
their currencies to gain a competitive advantage in the future, as
well as policies to help them sell more cars in Japan.
"We would like to be in a position to support the TPP, but in
order to do that the TPP has to address currency manipulation and a
lot of other non-tariff barriers in a meaningful way," said Matt
Blunt, head of the American Automotive Policy Council, which
represents the big Detroit auto makers.
Ford Motor Co. pushed for stronger language committing the Obama
administration to include binding rules to punish alleged currency
manipulation, something U.S. and foreign officials opposed.
While liberals and many conservatives say corporations are too
involved in trade policy, business and farm groups will be a key
asset to Mr. Obama and Republicans when they seek to pass the
TPP.
Agricultural groups are eager to get better access to Japanese
and other markets. Hollywood studios want firm rules to protect
copyrights, and technology companies are looking for guarantees of
an open Internet and the free flow of data.
"We are on the brink of a cutting-edge Pacific trade agreement
that will ensure data flows freely in the cloud, and that
governments don't build barriers to the Internet in this century
the way they built tariff walls against manufactured goods in the
last one," said Chris Padilla, vice president of government and
regulatory affairs at International Business Machines Corp.
Write to William Mauldin at william.mauldin@wsj.com
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