Obama Advisers Rally on Trade as Pacific-Rim Talks Falter

Some of President Barack Obama’s top advisers made a forceful case for his trade agenda today, signaling continued interest in the topic even as the president left Japan without an agreement he had hoped to announce.

“It’s one of the most important things that we’re undertaking,” Commerce Secretary Penny Pritzker said of the proposed Trans-Pacific Partnership, a 12-nation Pacific trade accord. “The TPP agreement is foundational for our economic growth policy.”

Pritzker was flanked at a panel discussion at the Export-Import Bank’s annual conference by Energy Secretary Ernest Moniz and Agriculture Secretary Tom Vilsack, who called the Pacific deal “vital.” Secretary of State John Kerry made the case for the accord at the Washington conference yesterday, taking a break from negotiations aimed at punishing Russia for its disputed incursion into Ukraine.

The presence of top administration officials illustrates the weight the White House is putting behind its promotion of U.S. exports and proposed trade deals. What’s unclear is whether it will be effective, with opposition in Congress, particularly among Democrats, to the president’s trade agenda.

Some lawmakers and opponents of the Pacific accord say previous pacts, including the 1994 North American Free Trade Agreement and the 2012 U.S.-Korea Free Trade Agreement have led to a deterioration in U.S. economic conditions.

Trade Watch

Lori Wallach, director of the Global Trade Watch Program at Washington-based Public Citizen, an opponent of the Pacific talks, said in an e-mail that “the same old trade pact model” won’t be able to muster support in Congress.

“Speechifying by high-level officials cannot overcome the reality of those past pacts’ records of increased U.S. trade deficits and job loss,” she said today in an e-mail.

The Pacific accord would link an area with about $28 trillion in annual economic output, around 39 percent of the world total, and is a centerpiece of U.S. efforts to retain economic and security influence in the Asia-Pacific region.

In addition to the U.S. and Japan, the nations brokering the deal are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

The TPP goes beyond usual deals that focus on tariffs and traditional goods such as agriculture. It would establish rules for digital commerce and include environmental standards and protection for companies that compete against government-backed businesses.

Competitors Vie

“If we don’t set the rules for trade in a significant part of the world, then our competitors are going to do that,” Pritzker said.

Vilsack said the U.S. risks losing out on setting the rules as other nations move ahead with their own bilateral and regional pacts.

“We’ve got to move forward here very quickly because the rest of the world’s not waiting,” he said.

Japan and the U.S. have been at odds over market-access rules in the agricultural and auto sectors, and Obama’s meeting this week with Japanese Prime Minister Shinzo Abe failed to resolve all the differences.

The two countries in a statement said “there is still much work to be done” on outstanding issues, which relate to the agricultural and auto sectors. Japanese Finance Minister Taro Aso told reporters there was also no guarantee any pact would pass the U.S. Congress.

Negotiation Flurry

U.S. and Japanese officials held a flurry of negotiations before and during the trip. In the statement, issued as Obama left for Seoul on the second leg of his Asian tour, both governments said they were marking a “key milestone” in their talks, which are crucial to concluding the broader pact, with discussions set to continue at a lower level.

“In any case, there will be no resolution on TPP until after the midterm elections” in the U.S. in November, Aso said. “Obama does not have the domestic power to pull it together. I don’t think they can reach a conclusion before the mid-term elections. I think they will continue all kinds of talks in the meantime.”

Akira Amari, the Japanese minister leading the talks, told reporters he had not struck an accord with his counterpart, U.S. Trade Representative Michael Froman, because the issues involved were “a matter of life and death” to both nations. He said there was progress, without an agreement, on autos and five areas of agricultural produce Japan has designated as needing protection, such as pork and rice.

Market Access

The Tokyo talks led to a breakthrough on market-access issues, according to a senior Obama administration official who spoke with reporters flying with the president to Seoul on Air Force One. Negotiators reached a set of parameters and trade-offs on agriculture to work with in further talks, the official said.

Japan and the U.S. found “a path forward,” Abe told reporters today. “I want Japan and the U.S. to take a leading role from now on in encouraging other countries to reach a conclusion on the TPP negotiations.”

The lack of a deal shows the need for Obama and Abe to show bold leadership and for both sides to make serious compromises, according to Tami Overby, the Washington-based U.S. Chamber of Commerce’s vice president for Asia.

“Without further progress from the United States and Japan it will not be possible for the overall TPP negotiations to advance, as the other countries are watching and waiting for a conclusion of the bilateral negotiations,” Overby said today in a statement.

Japan and the U.S. are not the only countries with outstanding issues on the TPP. Malaysia, which Obama will visit next week, has expressed concern about matters such as resolving investor-state disputes.

Negotiators have no target date to conclude talks and may meet in mid-May, Malaysia’s International Trade and Industry Minister Mustapa Mohamed told reporters April 22.

Before it's here, it's on the Bloomberg Terminal.