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POLITICS

Battle over the TPP: Part 2— Negotiations controlled by the Congress

  • 2015-04-30 15:00:00
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(Chunichi Shimbun: April 22, 2015 – p. 1)

 

 The Minister of Economy, Trade and Industry Akira Amari, who is in charge of the Trans-Pacific Partnership (TPP) agreement, said “That’s ridiculous,” raising his voice in the ministerial meeting held last September in Washington when the U.S. Trade Representative (USTR) Michael Froman suddenly withdrew a pledge to immediately abolish tariffs on automobile parts.

 

 The U.S. side changes its policy at every negotiation session. The reason is found in the system peculiar to the U.S. in which trade authority lies with the Congress rather than with the government. The Obama administration is not entrusted with comprehensive negotiating authority; therefore, the USTR is vulnerable to pressure from Congress or industrial organizations.

 

 It was not until late March this year that Amari began to look cheerful. There reached Tokyo the news that “President Obama had finally become serious and begun calling on Congress members for assistance.”

 

 As a result, it was decided that the Congress will begin deliberating a bill to entrust the president with trade authority. Encouraged by the development, President Obama issued the statement that “It is the U.S., not China, that makes the rules for the global economy.”

 

 However, the bill has a 50% chance of passage, because although the Republicans, the opposition party, supports Obama on the TPP, the ruling Democratic Party is divided over the free trade agreement. The trade unions, a traditional support base for Democrats, strongly oppose the TPP.

 

 Thea Lee, Deputy Chief of Staff of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), said: “The TPP is good for multinational companies but undermines the position of workers. We suggested a plan for improving the trade agreement, but the government has ignored it.”

 

 Lee’s biggest concern is exchange manipulation, as seen in the sudden drop of the Mexican peso against dollar in 1994 immediately after the North American Free Trade Agreement (NAFTA) was enacted among the U.S., Canada, and Mexico. Lee suspects that the Mexican authorities purposefully lowered the value of the peso to advantage the country’s trade and to attract American corporations to Mexico.

 

 A similar suspicion falls on the Japanese auto industry, which is making unprecedented profits from exports to the U.S. due to yen’s depreciation. The U.S. continues to impose on automobiles and parts a 2.5% tariff. Japan demands its abolishment. This is one of the difficult issues in the bilateral negotiations. Lee said: “The tariff is one of a few countermeasures to Japan’s nontariff barriers and the policy of letting the yen fall in value on foreign exchange markets. We will not support its abolishment.”

 

 The economist Phil Levy, who worked for trade policy under the Bush administration during 2003 through 2006, sees Hillary Clinton “who will run the next presidential election” as a key figure in the divided Democratic Party. If she moves toward criticizing the TPP for the sake of distinguishing herself from President Obama, the group of Democrats who support TPP will be thrown into disarray.

 

 The bill to give the president trade authority is expected to be put to a vote at the end of May. In order to gain understanding from labor, groups supporting the TPP are maneuvering to win a majority of votes.

 

 “Unless the bill is passed, Japan cannot disclose its final stance,” said Amari, who will have to endure tough negotiations for the time being while keeping an eye on developments in the Congress. (Abridged)

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