JHI on the Issues 2016: Does the Trans-Pacific Partnership (TPP) Set the Gold Standard in Trade?

Candidate Statement:  At Monday’s debate, Hillary Clinton spoke about the Trans-Pacific Partnership saying, “The facts are—I did say I hoped it would be a good deal, but when it was negotiated...which I was not responsible for, I concluded it wasn't. I wrote about that in my book...” This contrasts with what she said in 2012 about TPP in Australia: it “sets the gold standard in trade agreements to open free, transparent, fair trade, the kind of environment that has the rule of law and a level playing field.”  She did not say she “hoped” it would be the gold standard (as she claimed at the debate); she said it “sets.”

Summary: Both presidential candidates oppose TPP and seem to oppose any new trade agreements.  Over the past year, political support for free trade has taken a beating.  But as a matter of policy, TPP is crucial to U.S. economic and national security interests since it would draw in U.S. allies, counter-balance China’s aggressive economic and military policies, and re-write the region’s economic rules based on American interests.   

Talking Points:

  • Opposing TPP paves the way for China to displace the U.S. in Asia and this will ultimately hurt American workers and businesses.
  • China is aggressively pushing its own Asia trade agreement and is very happy to see the U.S. back away from its Asia allies.
  • TPP will limit China’s ability to set the rules of commerce in the world’s fastest growing region.
  • The currency manipulation provisions are well constructed and exceed the requirements of any prior bilateral or regional trade agreement.  For more on currency manipulation in trade, read the trade chapter from our book, Choosing to Lead.
  • TPP creates the political room for many signatory governments to reform their economies and open their markets to more competition.  In fact, TPP would supersede NAFTA, essentially improving that agreement as it relates to Canada and Mexico.
  • For Chinese neighboring states, who all want to diversify away from China as their largest trading partner, TPP provides an opportunity to stand up to Chinese bullying on trade and security.
  • But we do not support passing TPP in the lame-duck session.  Trade deals passed in the dead of night without strong bi-partisan political support will, over the long-haul, damage the effort to open new markets through free trade.  It is important that the new Congress, whatever its make-up, has the opportunity it needs to evaluate and vote on TPP.

Analysis:  

  • Hillary Clinton has backed away from her own views on TPP.
  • While Secretary of State, her key diplomatic initiative was the “Pivot to Asia.”  This effort was so important that she penned an article published in Foreign Policy on October 11, 2011, titled “America’s Pacific Century.”  In that article she noted that she “hoped” to make TPP a trade standard.  She took an even stronger view while visiting Australia in 2012 as quoted above.
  • Candidate Clinton in an interview on PBS in October 2015 stated two main objections to the agreement:  1) it does not have sufficient currency manipulation language and 2) its treatment of drug patents is problematic.
  • The facts belie her claims.  After Secretary Clinton left office, TPP adopted the strongest anti-currency language in any bilateral or regional trade deal since World War II.  It met Congress’s requirement that TPP members avoid manipulating exchange rates to gain an unfair competitive advantage over other parties to the agreement.  It also permits tougher regulation of future entrants such as China.
  • As for pharmaceutical patent protection, the least favorable change in the new agreement sides with Australia against the United States to lower the patent barrier to trade of bioequivalent pharmaceuticals.  Efforts to lower patent protections damage U.S. competitive positions because we lead the world in high-value production and intellectual property creation.  In fact, since saying that “TPP set the gold standard,” the U.S. position under the current administration moved from 12 years of intellectual property protection to 5-to-8 years. With this change, Clinton helps erode a key American competitive advantage by setting a precedent for undermining IP protection. 

Questions the Press should be Asking:

  • What do you say to our allies in Asia who are looking to the U.S. to outweigh China’s growing influence through TPP?
  • If TPP was the gold standard when you were Secretary and new provisions were added to address your concerns about currency manipulation and patent protections, how can you now oppose TPP?
  • How does alienating our Asian economic and security partners help compel China to change its many unfair trade practices?
  • To what extent has the dramatic shift on TPP influenced the actions of key U.S. allies in the region, such as the Philippines?
  • If this TPP is no longer the gold standard, would a renegotiated TPP 1) be less unfavorable to our Asian economic and security partners, and 2) ultimately drive them towards further economic integration with China? If not, why not?
  • Don’t your efforts to erode intellectual property protections set a bad precedent for other industries to seek similar relief? Given America’s significant lead in intellectual property creation, how is eroding patent protection on any industry ever a good idea?