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Ambassadors gather to discuss implications of Trans-Pacific Partnership
Diplomatic Pouch / December 17, 2015

By Larry Luxner

Diplomats representing four of the 12 nations comprising the controversial Trans-Pacific Partnership gathered Dec. 8 at Washington’s Wilson Center to discuss its relative importance amidst a groundswell of opposition from both Democrats and Republicans.

Jane Harman, the center’s director, president and CEO, said that despite the angry rhetoric coming from Congress, the sweeping trade pact merits serious objective analysis.

“By any measure, the TPP is this century’s most significant trade deal,” said Harman, a self-described “pro-trade Democrat” during her years representing California’s 36th Congressional District. “In 30 chapters and more than 5,000 pages, it lays down new rules of the road for a dozen countries and 40 percent of the world’s economy. You need a wide-angle lens to understand just what kind of an impact that will have.”

On Dec. 10, two days after the Wilson Center gathering, Senate Majority Leader Mitch McConnell (R-KY) crushed any hope that Congress would approve TPP before the 2016 presidential elections.

Speaking to the Washington Post,McConnell said President Obama would risk defeat of the trade deal if he lobbied for passage next year, warning that “it certainly shouldn’t come before the election. There’s significant pushback all over the place.”

Leading GOP presidential contender Donald Trump has already called it a “disaster,” while Hillary Clinton, who leads the polls among the Democrats, is also against the deal.

Indeed, Laura Dawson, director of the Wilson Center’s Canada Institute, called the TPP “the poster child for a challenging international issue.”

“I’ve been doing trade policy for 20 years now, and none of these agreements are beautiful” in the beginning, Dawson said of the trade pact recently hammered out among the 12 signatory nations. “These were not easy negotiations. I don’t think anyone left completely satisfied, but a really strong agreement with great potential emerged.”

The TPP is the focus of controversy not just in the United States but in two other economic heavyweights as well: Japan and Canada.

Laura Dawson, director of the Wilson Center’s Canada Institute, called the TPP “the poster child for a challenging international issue.”

“I’ve been doing trade policy for 20 years now, and none of these agreements are beautiful” in the beginning, Dawson said of the trade pact recently hammered out among the 12 signatory nations. “These were not easy negotiations. I don’t think anyone left completely satisfied, but a really strong agreement with great potential emerged.”

Even though the Obama administration is pushing hard to get TPP approved by Congress, it faces considerable opposition from some Republicans and most Democrats. Leading GOP presidential contender Donald Trump has called it a “disaster,” while Hillary Clinton, who leads the polls among the Democrats, is also against the deal.

The TPP is the focus of controversy not just in the United States but in two other economic heavyweights as well: Japan and Canada.

Kanji Yamanouchi, minister of economic affairs at Japan’s embassy in Washington, said that even before his country officially joined the negotiations, local media was intensely interested in the TPP.

“They know this is a big game-changer for the Japanese economy,” Yamanouchi said. “If you take a taxi in Tokyo, the cabbie will know everything about TPP. If you ask people about the USTR, they will know the name Mike Froman. In the U.S., they don’t even know much about TPP, so that tells you something about Japan’s interest in it.”

Yamanouchi conceded that Japanese small and medium-sized businesses are skeptical about the TPP, but he countered that the trade pact will open up bigger opportunities in Southeast Asian countries like Vietnam, Singapore and Malaysia.

“Not everybody likes it, so it’s important to redouble our efforts to explain TPP’s meaning and significance. It has very strong strategic and geopolitical implications,” he said, adding that he’s visiting both urban and rural communities throughout the United States as much as possible.

“Last week I went to Delaware and met with chicken producers. They pay a lot of attention to chicken. That’s the conversation out there,” he said. “What we need to do is explain the very specific benefits for certain industries.”

Gary Doer, Canada’s soon-to-depart ambassador to the United States, said he and his fellow diplomats from TPP countries have “gotten together from time — sometimes with the U.S., sometimes without” in order to discuss the accord’s progress.

“We were in the middle of an election campaign,” he explained. “Everything we did during the election would be subject to what the people decided, with the mandate ultimately provided by Parliament.”

After former Prime Minister Stephen Harper’s defeat Oct. 20 by Liberal leader Justin Trudeau, the new government announced that it favored free trade in general, “but that the specifics of TPP would have to be debated and discussed with the public, the provinces and Parliament. And they’ve maintained that view,” said Doer.

“Any trade agreement has pain and gain for any country,” he told the audience. “The people of Canada will be consulted, and Parliament will decide.”

In Vietnam’s case, the communist government was initially “very reluctant” to join the talks, according to Pham Quang Vinh, Hanoi’s ambassador to the United States:

“But now we see that the TPP has both trade and strategic importance,” said Vinh, citing polls showing that 80 percent of the Vietnamese public supports the accord.

“We face a lot of technical barriers and high tariffs. This will help us. At the same time, there will be incentives to further attract foreign investment,” he said. “A lot of companies in Vietnam want market reforms. People are discussing how they can compete in the new environment.”

Vinh said the TPP could encourage innovation and reform while boosting worker productivity and exports. In fact, a recent study by Credit Suisse found that Vietnam would benefit the most of any of the 10 members of the Association of Southeast Asian Nations (ASEAN), with Malaysia coming in second. The report estimated that over the next 10 years, Vietnam would see an additional 11 percent GDP growth thanks to TPP, while Malaysia will experience an additional 5 percent growth.

On the other side of the Pacific is Peru, where 90 percent of the country’s lawmakers opposed the TPP when it was first discussed 10 years ago.

“But now the numbers have flipped,” said Luis Miguel Castilla, Peru’s ambassador to the United States. “Now we have 80 to 90 percent approval in Congress. We believe that through free trade, we’ve transformed our economy.”

Castilla outlined four main benefits the TPP would bring Peru. The first is access to new markets; out of the 12 TPP countries, Peru already has free-trade agreements with six, so it would be adding five.

“Secondly, in Latin America, the only country that has been able to achieve insertion in the value chain has been Mexico, through NAFTA. So the part on rules of origin is very important to us. It will enable our firms to insert themselves in value chains, which is one of the main advantages of this agreement,” he explained.

Third, he said, the TPP encourages “trade facilitation” and the adoption of phytosanitary standards, among other things, which would further promote trade and investment.

“And finally, this is a strategic decision for Peru,” he said. “Twelve of the 21 TPP countries are members of APEC [the Asia Pacific Economic Cooperation trade group], so this will enable Peru — with its neighbors — to look at the Pacific as a source of growth and employment.”

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