President Obama suffered a rather embarrassing defeat at the hands of his own party when they rejected granting him fast-track authority (also called Trade Promotion Authority) on the Trans-Pacific Partnership; a trade deal ten years in the making involving twelve Asian nations. All told, the participating nations make up 40 percent of the world’s GDP.
Yet, with Democrats facing pressure from environmental and labor groups–their biggest allies–they decided to shoot down granting their own president greater authority to seal this agreement. It could be the first time in decades that this power has been denied to a sitting president:
Senate Democrats handed President Obama a stinging rebuke on Tuesday, blocking consideration of legislation granting their own president accelerated power to complete a major trade accord with Asia.
The Senate voted 52-45 on a procedural motion to begin debating the bill to give the president “trade promotion authority,” eight votes short of the 60 needed to proceed. Republicans and pro-trade Democrats said they would try to negotiate a trade package that could clear that threshold.
But the vote Tuesday presented Mr. Obama what might be a no-win situation. He may have to accept trade enforcement provisions he does not want in order to propel the trade legislation through the Senate, but those same provisions might doom the Pacific trade negotiations that legislation is supposed to lift.
That is especially true for a measure demanding a crackdown on currency manipulation, which is strongly opposed by Japan and Malaysia, two of the 12 nations trying to complete the Trans-Pacific Partnership, the largest trade accord in a generation.
“It creates a whole new monster set of arguments and debates that we don’t need,” Senator Orrin Hatch of Utah, the main author of the trade bill, said of the currency language.
“I offered to have them bring up a bill later, do everything I can to give that a fair hearing because I have concerns sometimes too. But on this bill we just can’t have it on there.”
Yet, it’s also a humbling moment for Mr. McConnell as he sought to “flex" his muscles in the Senate with this vote, according National Journal’s Alex Rogers. Something that was made harder to do when Democrats decided to lump four other bills, along with the TPA vote. One bill, the customs enforcement bill, included the currency manipulation provisions that Japan and Malaysia oppose, thus adding more land mines to the negotiations.
Some Democrats—including those who, like Reid, oppose the trade deal—have called for four trade bills to be considered at the same time in the same package. Besides TPA, the other bills include trade adjustment assistance [TAA], which helps those who lose their job as a result of expanded trade, a customs enforcement bill, and a bill designed to strengthen trade agreements with developing countries.
On Thursday [May 7], the Senate Democratic caucus cheered Wyden during lunch after he urged Democrats to not support proceeding onto the bill unless Republicans agree to do all four bills first, according to an aide. California Democratic Sen. Dianne Feinstein, a potential yes vote who talked trade last week at the White House with Obama and five other senators—Wyden, Tim Kaine of Virginia, Patty Murray of Washington, Jeanne Shaheen of New Hampshire, and Chris Coons of Delaware—announced the four-bill package demand as her condition to vote aye Tuesday [May 12]. It's now an open question whether McConnell can get enough votes to even get on the bill.
"I think that's going to depend on whether Republicans agree to put all four trade bills together or not," said a Senate Democratic leadership aide. "Many members of our caucus, including those who support TPA, absolutely want to see China currency and TAA pass as part of this process. If Republicans aren't willing to do that, they're going to find it difficult to get the ball rolling."
Speaker of the House, John Boehner had this to say on the Senate’s vote today:
“More trade means more jobs for the American people. This has always been a difficult issue for the president’s political party, but I hope that Democrats in both the House and Senate will put politics aside and do what’s best for the country. The House will continue to work to advance trade promotion authority, but success will require the president and his party to rethink their approach to this important issue.”
On May 6, the Speaker’s Office listed the various ways trade helps our economy:
- Puts more money in your pocket: Trade agreements reduce the tax you pay on imports to the United States. Trade has lowered prices and increased the purchasing power of an average American family of four by $10,000. Our imports have lowered the costs of goods such as televisions and computers by more than 70 percent.
- Higher wages for American workers: Jobs supported by exports to our trading partners pay between 13 percent and 15 percent in higher wages compared to non-export supported jobs.
- More American-made goods, services, and agriculture products are now sold around the world: Between 2003 and 2013, exports of U.S. farm and food products to our free trading partners has increased 130 percent. Demand for American-made cars and SUVs is growing with a record two million cars and trucks exported around the world last year. This also includes exporting more bacon. As a result of our trade agreements, the U.S. has increased its exports of our high-quality bacon and other pork exports by more than 1,000 percent and has directly supported more than 100,000 U.S. jobs.
- Enables the U.S. to lead in technological innovation: Tech companies and other manufacturers are able to use the revenue they gain from exports to pour back into research and development and help create jobs. By supporting technological innovation, trade makes the U.S. more globally competitive and helps U.S. companies create the next smart phone, software advancement, or medical devices.
These are just a few examples of how the 20 trade agreements we have with countries around the world benefit American families and workers. And, currently, the U.S. is pursuing ambitious trade agreements with our allies in Europe and Asia that would further benefit American families, farmers, ranchers and businesses. Combined, these agreements could result in 1.4 million new American jobs.
Lastly, organizations, like the American Action Forum, have noted the economic benefits of the TPP, including 550,000 jobs over the next ten years and a $77 billion boost in GDP
Politico’s Burgess Everett noted that this recent vote showed that Reid has "an iron grip” on his caucus, especially when it comes to procedural votes. Additionally, it seems McConnell wouldn't give Democrats the assurances they needed to pass the bill. Sen. Wyden said, "The group is concerned about the lack of commitment to trade enforcement, which is specifically the customs bill... Until there is a path to get all four bills passed … we will, certainly most of us, will have to vote no.”Republicans also had troubles on their own side. Sen. Richard Burr (R-NC) recently voted against the TPA measure when it was taken up in the Finance Committee. Senators Richard Shelby (R-AL), Sen. Jeff Sessions (R-AL), and Sen. Shelley Moore Capito* (R-WV) all voted against granting the same authority to President Bush when he was considering a slate of trade agreements. Nevertheless, Bush was able to gain TPA authority.
Everett noted that with the Memorial Day recess and several expiring laws also on the docket, Obama’s legacy on trade could be pushed into uncertainty. That’s not a good sign for the American economy. At the same time, polling on free trade is a more or less divided issue among Americans, with 37 percent saying it helps our economy, while 31 percent say it doesn't.
*Shelley Moore Capito was a member of the House of Representatives at the time, but voted against TPA during the Bush administration.