Although conversations about TPP usually focus on Asia, we should also examine its potential impact in the Western Hemisphere.
Trade is never a popular topic in a presidential election year, but 2016 may prove to be an inflection point. For the first time since the Depression, the presumptive candidates of both major political parties have spoken skeptically about trade, one even suggesting that he would renegotiate existing agreements including NAFTA.
Anti-trade sentiment in both Houses of Congress is growing, as the Bernie Sanders wing of the Democrat party expands, the traditional isolationist strain within the Republican party re-emerges, and the center disintegrates.
“Trade is one topic that seemingly unites both sides of the political spectrum.”
Ironically, trade is one topic that seemingly unites both sides of the political spectrum, even as the American public decries the deep divisions in Washington.
If George Carlin were still alive, by now he would surely have increased his list of dirty words from seven to eight.
A small window
The Obama administration is attempting to navigate passage of its signature trade agreement, the Trans-Pacific Partnership, through this political maw.
It won’t be easy, with numerous observers predicting that the best time for passage may be in a lame-duck congressional session after the Nov. 8 elections.
If that particular window closes, the next best opportunity may not come around for several years. This would be a significant setback for U.S. policy in the Western Hemisphere.
Bigger than Asia
Most analysts consider TPP to be an initiative focused on Asia, the economic leg of the administration’s so-called pivot, and an alternative to China’s growing regional influence.
Indeed, that is how the administration itself has framed the agreement.
This is accurate, but incomplete. Of the 12 parties to TPP, five are located in the Western Hemisphere (Canada, Mexico, Peru, and Chile in addition to the United States), including two of our top three trading partners.
Successfully advancing U.S. foreign and commercial policy interests in the Americas requires the passage of TPP and indeed its expansion to include additional countries in Latin America.
Effects on trade agreements
Without TPP, the three nations of North America have no effective means to upgrade NAFTA, an agreement that was cutting edge when implemented in 1994 but which is now asked to organize a regional economy including entire sectors which were not previously contemplated, where technology has fundamentally changed existing sectors, where sectors such as energy are no longer excluded from the North American discussion and where integrated supply chains have fully redefined the definition of what it means to be made in the USA.
Without TPP, it would also be more difficult for the United States to unify existing regional free trade agreements including NAFTA, Chile, Colombia, Panama, Peru and DR-CAFTA, ensuring that the conduct of regional business and the further development of integrated supply chains remains complicated, costly and inefficient.
“U.S. credibility on regional economic and political matters would shatter.”
From the foreign policy perspective, without TPP, Washington has little new to offer the outward-looking, reforming nations of Latin America that have purposefully sought closer economic and political relations with the United States, even when it has not been popular to do so.
Since the beginning of the 21st century, in fact, market-friendly globalizers and populist protectionists have fought an ideological battle for the hearts and minds of the region.
Passage of TPP would provide active support for reformers while also creating an important, meaningful new path to offer as an incentive to others.
First up on the expansion list must be Colombia, a party to the Pacific Alliance (which includes the other three Latin American nations in TPP) and a strategic U.S. partner that should have been included in TPP negotiations from the start.
Other potential parties to the agreement over time could include nations on the Atlantic coast of Latin America, such as Argentina and Brazil, Uruguay and landlocked Paraguay, particularly as those nations become more sympathetic to closer economic relations with the United States.
Finally, without TPP, U.S. credibility on regional economic and political matters would shatter, and Washington would needlessly cede further influence to China and other economic and political rivals.
China has moved aggressively into Latin America and is now the top trade partner of Brazil, Chile and Peru, and the second trade partner of Argentina, among others.
Walking away from TPP would be an entirely unnecessary and counterproductive goal.
There should be no doubt: TPP would give Washington a much stronger strategic position in the Americas, particularly at a moment when much of the region is looking for a closer relationship with the United States.
This article first appeared in Latin Trade Magazine and was republished with permission.
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