Blocking Pacific trade deal means 'handing the keys' to China, official says

United States Trade Representative Michael Froman argues a trade deal opposed by both Donald Trump and Hillary Clinton will have enough bipartisan support to clear Congress this year and thus help shape the forces of globalization in a way that benefits American workers. 

“Everything in this city is impossible until it is inevitable,” Ambassador Froman quipped at the end of a Monitor-hosted breakfast for reporters where he discussed the Trans Pacific Partnership. The Trans-Pacific Partnership (TPP) is a sweeping trade agreement that would reduce trade barriers between the US and 11 other Pacific Rim nations.

Froman faces formidable challenges in gaining congressional approval for the pact. Mr. Trump has called TPP a “death blow for American manufacturing” and promised to withdraw from the deal. Mrs. Clinton said that if she were president, the US would say “no to unfair trade deals ... including the Trans Pacific Partnership.”

Senate majority leader Mitch McConnell (R) of Kentucky said this week that “chances are pretty slim” that the Senate will take the measure up this year.

President Obama sees TPP has a key portion of his legacy, and Froman calls it “the most concrete manifestation of our rebalancing strategy towards Asia.”

The Trade Representative admits that wage stagnation and income inequality have created a lot of economic anxiety among voters. Since the public cannot vote on the forces of automation and economic globalization, the focus turns to trade deals where Congress has a vote, he said. 

“Trade agreements have become a scapegoat for much of what else is going on in the economy, a vessel into which people pour their legitimate economic anxieties that are largely caused by other factors,” Froman said.

A major argument in favor of trade agreements, he said, was that they “are how you shape globalization to make sure the global economy works for Americas workers, farmers, ranchers, businesses” by establishing rules of the road. 

When pressed on what made him think TPP could clear Congress after the election, Froman said that in his discussions with members “we are getting a very good response on the substance of the agreement.” He mentioned spending “a lot of my time” with rank-and-file House Republicans. “As you walk through the agreement and talk about the benefits to their constituents, they are quite responsive and understand both what the benefits are moving forward and what the costs are” of not acting.  

A recent study by the Peterson Institute of International Economics estimated the cost of postponing TPP adoption for one year would be $94 billion or the equivalent of a $700 tax on every US household as a result of lost export sales. 

The nation’s top trade official also argued that Congress will face a stark choice regarding China. “At the end of the day, I don’t think Congress is going to want to be responsible for handing the keys of the castle over to China,” Froman said. 

He noted that China is executing on a regional strategy expanding its economic influence in the Pacific Rim. “The question is whether we are going to execute on our regional strategy … and whether we are going to be able deliver on the commitments we have made to our partners in the region or whether we are going to cede that ground to China.”