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Why TPP Might Pass, And Why it Might Not

To pass or not to pass the Trans-Pacific Partnership has been the question on opposing sides of the trade deal, but President Obama is committed to getting TPP passed.

The Obama Administration submitted a draft statement of administrative action (SAA) on the TPP earlier this month, which is the last necessary step in getting TPP to Congress for consideration.

Based on put in place timelines, the earliest day the TPP could now be submitted to Congress is Sept. 11.

“The draft SAA gives us a glimpse of how the administration intends to implement the agreement and serves as a strong reminder that TPP remains a top priority of the Obama administration,” Steve Lamar, executive vice president of the American Apparel and Footwear Association (AAFA), said. “The president’s team is now working with Congressional leadership to resolve final issues, which will be reflected in a final SAA and a final implementing bill. If they can accomplish that, those documents, along with other supporting materials, will be transmitted to the Hill to begin the formal consideration of the TPP in Congress later this year.”

That’s the general hope, at least. Some have said TPP won’t go to Congress that soon because the votes aren’t there.

“It is absolutely true that there are a number of obstacles to getting TPP done this year,” Bill Jackson, assistant U.S. Trade Representative for textiles at the Office of the U.S. Trade Representative (USTR) said during a presentation at Sourcing at Magic last week. “While it’s absolutely true that there’s some hurdles to getting it done this year, it is also absolutely true that there are some windows for getting it done this year. Will it be easy? Probably not, but it can definitely be done and I can tell you that the president and his cabinet are committed to doing everything we can to make it happen.”

If passing TPP doesn’t happen this year, though, it’s going to cost the country big bucks.

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An earlier report by the Peterson Institute said putting TPP off by even just one year would cost the U.S. economy $94 billion. The benefits, on the other hand, according to the International Trade Commission’s (ITC) report on the potential impact of TPP, could be big bucks for the country. U.S. exports stand to increase by $57.2 billion each year by 2032 if the deal gets passed, the ITC said.

“The textile and apparel sector has a stake in TPP,” Jackson said to an audience of brands and retailers. “I hope as this national debate continues in the coming months, you will make your opinion known because it will affect your bottom line.”

Turning a touchier cheek, the second part of the seminar brought to light the impacts the upcoming election might have on trade—and politics is the reason TPP won’t be up for a vote before the election, at least according to David M. Spooner, partner at Barnes & Thornburg law firm and former chief textile and apparel negotiator for USTR.

“Even though both House Speaker [Paul] Ryan and Senate Majority Leader Mitch McConnell worked with Obama to get TPP closed, both said TPP wouldn’t come up anytime soon because the votes aren’t there.”

The currently Republican House won’t likely flip Democrat, and in the Senate, where Republicans lead Democrats 54-46, Democrats appear to be leading in terms of taking the seats that are up for grabs. What becomes problematic, Spooner said, is that McConnell would have to force Senators in states where TPP is unpopular to vote for TPP.

Off the Hill, stakeholders in the rice, dairy, cars, pharmaceuticals, tobacco and computer data sectors are all unhappy with TPP.

“You don’t need to be a full-time lobbyist to know the amount of votes these sectors influence,” Spooner said. “There’s quite a lot of hand holding that needs to be done before we can have a vote on TPP.”

He added, “In my humble opinion, TPP will pass but it’s going to be an agonizing wait. I think there’s a very strong chance that it will happen when President Clinton wins, and I say that as a Republican because I think Donald Trump is in the midst of crashing and burning right now.”

It tends to take a new president—regardless of who it ends up being—five to six months to put their trade appointees in place, so even making adjustments to the deal before it goes forward will take some time.

“I would guess that it passes after it’s ‘fixed’ and it passes after the 2018 [Senate] election,” Spooner said, as Democrats will have to defend more Senate seats.

This election is the first in a while where trade has been at the forefront of discussions, said Jon Fee, senior counsel for Alston & Bird, who focuses on customs and international trade and has been named among the best lawyers in America, but the votes to get TPP passed may really just not be there.

“I am one of the people who believes that a TPP vote in a lame duck session [the period in Congress after the new president is elected but before he or she officially takes office] has very little probability of occurrence,” Fee said.

Three major TPP wild cards, or things that would further hinder the deal’s passage, according to Fee, are:

  • “If China’s Regional Comprehensive Economic Partnership (RCEP) [a proposed free trade agreement between the 10 ASEAN nations] gets passed, some believe TPP will be left on the sidelines.”
  • “Republicans could regain the Senate in 2018.”
  • “The House, in my view, will remain in Republican hands as long as I’m alive.”

When asked the chances of TPP passing this year, Fee said “remote” and Spooner said “5, maybe 10 percent.”

In short, as Fee put it, “The prospect for adopting TPP anytime soon at least, are about as likely as pictured on that slide,” he said pointing to an image of a frozen sign reading “Hell.”