For many, TPA is the international airport code for Tampa.
But to the world’s traders and policy makers, TPA stands for trade promotion authority – U.S. legislation that holds the key to almost every major trade deal in play right now.
The Trans-Pacific Partnership free-trade deal? It might not happen at all if the U.S. Congress fails to pass a new TPA bill in coming months.
The same goes for U.S.-European free trade, as well as global trade negotiations at the World Trade Organization.
The TPA is pivotal because of a quirk in the U.S. political system. Constitutionally, it is the job of Congress to regulate trade. But that’s not practical in the real world. So, since the 1970s, Congress has periodically granted the president trade-negotiating authority. This allows the administration to make deals, confident the legislative branch won’t later rip them apart.
The most recent TPA expired in 2007, leaving President Barack Obama in an awkward spot. He, along with trading partners such as Canada, have no certainty that Congress will sanction what he negotiates.
The doubt over Congress approval is doubly problematic with complex modern trade deals such as the TPP that go far beyond tariff reductions to encompass regulatory regimes and intellectual property.
The Trans-Pacific Partnership and other negotiations will meander along. But countries aren’t likely to bring their best offers to the table until they know that Congress and Mr. Obama are on the same page.
A new TPA bill is now before Congress. But the odds of it being approved don’t look good. Mr. Obama’s popularity has been dented by the Obamacare debate and its troubled implementation. It’s tougher for him to get what he wants.
Many key Democrats in Congress, including Senate Majority Leader Harry Reid, along with a key slice of Mr. Obama’s voter base – environmentalists and labour unions – are opposed to the legislation.
Free-trade advocates and political watchers say Mr. Obama has been slow to use his political muscle to push the TPA bill.
“This should have been driven by presidential leadership a year ago, and as a result it’s going to be an enormous challenge,” said Philip English, a former Republican House member from Pennsylvania and now co-chair of government relations at the Arent Fox law firm in Washington, D.C. “The White House and [the U.S. Trade Representative] will have to expend political capital to make the progress necessary.”
Mr. English reckons the chance of passage may be less than 50 per cent. Mr. Obama will need at least 50 Democratic votes in the House of Representatives and whole lot more co-operation from allies in the Senate, including Ron Wyden, the incoming chairman of the Senate finance committee.
“There are a lot of moving parts in TPA and a lot of legitimate cause of concern,” he added.
Compounding the murky outlook of the TPA bill, the United States is now negotiating entry of Canada, Japan and perhaps soon South Korea into the trans-Pacific pact, which would tie 12 countries around the Pacific rim into a massive free-trade area.
As Mr. Obama trolls for votes in a skeptical Congress, he is being forced to push other countries to make deeper trade concessions. Getting those votes might involve pain for Canada.
U.S. Trade Representative Michael Froman, for example, wants Canada to put more on the table in the TPP negotiations, apparently including looser dairy-import controls. He told Dow Jones last week that he’s still looking for a “high level of ambition in market access” from both Canada and Japan – coded language that suggests he isn’t satisfied with what the two countries have put on the table so far.
Last month, Ottawa angered a coalition of House representatives from dairy-producing states when it moved to close a loophole that has allowed mozzarella pizza kits to enter Canada duty-free for years. Those legislators want Mr. Froman to play hardball with Canada. They are also upset about a threatened clampdown on imports of milk protein from the United States.
It is not clear if the United States is also pushing Canada to lower the massive tariff wall that protects the supply managed dairy, poultry and egg sectors, or to increase the small amount of duty-free imports of chicken and dairy that Canada allows.
But it is clear that the TPP has become hopelessly tangled in the thorny politics of TPA in Washington.