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What’s in the Trans-Pacific Partnership for U.S. and Japan?

April 29, 2015 at 6:20 PM EST
Japanese Prime Minister Shinzo Abe’s U.S. visit came at a critical moment in the fight to establish a sweeping Trans-Pacific Partnership. An agreement could mean hundreds of billions of dollars in business, exports and profits, but opponents warn it would cost American jobs and give foreign corporations too much legal power. Gwen Ifill talks to Edward Alden of the Council on Foreign Relations.
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GWEN IFILL: One of the biggest economic fights taking place behind the scenes in Washington and around the country this year is a battle over a far-reaching new trade deal.

That agreement could translate into hundreds of billions of dollars in business, exports and profits. With so much at stake, Japan and the U.S. used a state visit this week to step up their lobbying campaign.

Japan’s leader spent yesterday at the White House and today on Capitol Hill.

It was the first time a Japanese prime minister has ever addressed a joint meeting of Congress.

SHINZO ABE, Prime Minister, Japan: I extend my heartfelt gratitude to you for inviting me.

GWEN IFILL: And it came at a critical moment in the fight to establish a sweeping U.S. trade deal with 11 Asian Pacific Rim nations, not including China.

Once in force, the Trans-Pacific Partnership, or TPP, would account for about 40 percent of the world’s economic output. It’s aimed at opening up trade by removing tariffs and other barriers. It also deals with labor standards, investments and patents, among other issues.

The prime minister today touted the possibilities.

SHINZO ABE: TPP goes far beyond just economic benefits. It is also about our security. Let us bring the TPP to a successful conclusion through our joint leadership.

GWEN IFILL: But, first, President Obama is trying to win renewal of fast-track negotiating authority that would make it harder for Congress to change any deal once an agreement is reached. He admitted yesterday he’s got a fight on his hands.

PRESIDENT BARACK OBAMA: You know, it’s never fun passing a trade bill in this town.

GWEN IFILL: Many Democrats warn that an Asian trade pact would cost American jobs, and wouldn’t include enough environmental protections. But Abe argued today the trade deal is vital to the future.

SHINZO ABE: We must turn the area into a region for lasting peace and prosperity. That is for the sake of our children and our children’s children.

GWEN IFILL: That was an indirect reference to the TPP’s potential to counter China’s growing power across Asia.

Joining us to unpack more of the politics and consequences of the trade deal is Edward Alden, a senior fellow at the Council on Foreign Relations who has been following the trade talks closely.

So, why are Japan and the U.S. in particular so insistent that this happen?

EDWARD ALDEN, Council on Foreign Relations: Well, I think it’s a big deal for both governments.

For the United States, this is really the culmination of an effort to create free trade in the region that goes back 25 years, to the early 1990s. And for Japan, it’s critical to Prime Minister Abe’s efforts to reform the Japanese economy. Japan hasn’t grown in a significant way in almost two decades now. And he’s hoping this will really jump-start what has been a moribund economy.

GWEN IFILL: We mentioned the fast-track trade authority which Congress is going to be asked to vote on. Why — what is it about what Congress could do that could possibly derail this deal?

EDWARD ALDEN: Well, there’s a longstanding tradition of Congress passing trade authority that gives the president the right to go out and negotiate the deal and bring it back to Congress for an up-or-down vote.

The concern is, negotiate an elaborate package, it goes back to Congress, and then Congress amends it. And then you will have to go back to Japan and the other 10 countries and say, well, we have got to amend the deal because Congress didn’t like it.

The fast-track trade authority is intended to say, bring us back the deal, Congress will vote it either up or down.

GWEN IFILL: But the same problems cropped up around NAFTA, especially among Democrats, who are not crazy about this.

EDWARD ALDEN: Yes. Yes, this has been a contentious debate for a long time.

Many of President Clinton’s supporters in the Democratic Party were not with him on the NAFTA vote. But, even then, about 100 Democrats supported it in the House. This time, the numbers could be as low as 20 Democrats supporting in the House, which is an extraordinarily low number, given that we have a Democratic president.

It really goes back to that agreement, and the feeling that these trade agreements have hurt United States workers in various ways. You have seen a big decline in manufacturing employment, offshoring of jobs. Wages have been pretty stagnant for most people for a couple of decades. And there are many on the left who blame the trade agreements for that.

I think the consensus among economists is trade has some effect in this respect, but there are a lot of other things going on, technology in particular.

GWEN IFILL: Let’s talk about China for a moment, because this is something both the — I noticed in an interview with The Wall Street Journal this week, the president kept pressing the idea that China may have an upper hand here. And, of course, Japan has expressed the same concerns.

What is at the root of that?

EDWARD ALDEN: Yes, I mean, China is really the elephant not in the room in these negotiations. China is not part of the deal.

The concern among many countries in the region, Japan, Malaysia, Vietnam, others, is that China is really becoming the dominant power in the region, and they don’t want to see China set the rules for economic engagement throughout Asia.

From the U.S. perspective, the U.S. wants to be a player there. This is really the key part of President Obama’s pivot to Asia. And the idea is to create a set of trading rules that really will work in the United States’ favor, but then also to hold an offer out to China and say, look, if China wants to join, we are open to that, but they’re going to have to play by the rules that the U.S. and these other countries negotiated.

GWEN IFILL: Has China signaled in any way that they’re interested in joining?

EDWARD ALDEN: Yes, tentatively, tentatively. They have certainly indicated that they see the potential for disadvantage if companies that are located in these TPP countries have special rules that make trade easier and cheaper in those countries.

China is worried about losing foreign investment, which has been very important to China’s development. So, yes, they have indicated they might be interested.

GWEN IFILL: So, and the very definition of a deal is everybody gets a little bit of something, but, in this case, Japan and the U.S., for example, get to protect certain industries as well.

EDWARD ALDEN: So, some of the toughest issues between U.S. and Japan have to do with the most sensitive industries.

Japan, for instance, incredibly high tariffs on agriculture, hundreds of a percent on rice and beef. It’s impossible to sell into that market. The U.S. wants to see those import duties eliminated. Japan wants to sell more cars to the United States, even though they sell a lot. And we are saying, well, you need to buy a few American cars, too. Japan buys fewer American cars now than it did 20 years ago. So, there are some pretty sensitive issues there.

GWEN IFILL: It sounds, at the end of the day, as well, that there are a lot of odd bedfellows who are climbing in together to make this thing work.

EDWARD ALDEN: Yes, very much.

So, for instance, there’s controversy over a provision that allows companies to sue governments over regulations that harm their business. Philip Morris is suing the government of Australia because Australia says you can’t put your brand on cigarettes. We want to discourage cigarettes, and so you have to use plain packaging. Philip Morris is suing the government.

So, that has upset a lot of folks on the left in the Democratic Party, but it has also upset libertarians in the Republican Party. So, you do get — you get some odd alliances on this.

But, at the end of the day, if fast-track passes Congress, it will be with the support of a Democratic president, an overwhelming majority of Republicans, and very few of the Democrats in Congress.

GWEN IFILL: And timing?

EDWARD ALDEN: Well, Congress is going to start debating it seriously next week. Could well be done by the end of June.

GWEN IFILL: Edward Alden of the Council on Foreign Relations, thanks for making it clear.

EDWARD ALDEN: Good. It’s good to be here, Gwen.

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