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November 6, 2015

Can We Trust Obama on Trade?

His performance over the last seven years doesn’t inspire.

It’s a hefty book that won’t be a bestseller, but among those inside the Beltway and in certain corners of the financial world, the secretive deal that is the Trans-Pacific Partnership will be devoured like a hot romance novel over next few months. Congress must approve or deny the deal, and the political divide is not the usual one. With 30 chapters and multiple side agreements, the 12-nation pact is a compilation of years of negotiations. Proponents bill it as a way to open up the Pacific Rim economically and counter China’s growing influence in the region. Notably, China is not among the nations included in the pact.

Naturally, Barack Obama thinks it’s the best thing since sliced bread. “When it comes to Asia, one of the world’s fastest-growing regions, the rule book is up for grabs,” he explained. “And if we don’t pass this agreement — if America doesn’t write those rules — then countries like China will.”

He’s not wrong about that. But having seen his negotiating skills and red lines in action over the last seven years, it’s understandable that Republicans, who generally like free trade deals, are skeptical of the bargain. Appearing on “Fox News Sunday,” House Speaker Paul Ryan protested that they hadn’t seen the full agreement to schedule a vote. “I don’t know when that vote is going to happen,” said Ryan. GOP backing is vital since Democrats are split on the issue, but Republicans aren’t exactly eager to campaign for Obama’s deal.

And there’s really no rush. While it’s a sure bet that Obama will sign the agreement and send it to Congress at the earliest opportunity, Congress has up to two years to approve it. If all 12 nations don’t ratify the agreement within that time, the pact will still take effect if six nations that represent 85% of the total GDP among the 12 nations approve. In essence, the United States has veto power because it represents about 65% of the total GDP. Japan is right at the 15% threshold to hold veto power as well.

If the deal isn’t approved by this summer, though, it’s likely that “fast-track” will become “wait and see” until the presidential election is decided. Donald Trump is against TPP, as is Hillary Clinton — at least now. She formerly called it the “gold standard” of trade deals, but shamelessly flip-flopped once she saw her Democrat primary opponent Bernie Sanders pan the deal. Democrats in general oppose the deal (and any free trade) because Big Labor doesn’t like competition.

Some think the time for passage will be the lame-duck session after next year’s election, when Democrats may decide it’s time to give Obama a parting gift. With the Trade Promotion Authority passed earlier this year, Congress can vote only on the deal as it stands, without amendment.

Depending on who one talks to, the Trans-Pacific Partnership is a giveaway, whether to big multi-national corporations, polluters, or the other 11 partners who have economies far smaller than our own — many of them have an annual GDP less than 2% of ours. Or the pact opens the door for American goods and services to be competitive in the region, strengthening our economy and our influence.

There’s certainly a point to be made about being the counterweight to China, but as the largest partner it’s truly worth questioning what advantages the average American worker would have with TPP’s passage, when millions of their jobs have been outsourced over the last half-century. The American people have heard “trust me” from Obama far too many times. We’re told to believe his trade pact is great, but his track record with ObamaCare and the Iran deal in particular make that a hard sell.

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