Trade Backers Pin Pacific-Pact Hopes on Lame-Duck U.S. Congress

  • Trans-Pacific Partnership a potential liability for GOP, Dems
  • Business lobby pushes `as far and fast as we can' on the deal

Shipping containers sit stacked among gantry cranes in this aerial photograph taken above the BNCT Co. container terminal at Busan New Port in Busan, South Korea, on Thursday, July 30, 2015. South Korea is scheduled to release trade figures on Aug. 1.

Photographer: SeongJoon Cho/Bloomberg

Election-year protectionism has trade supporters and some lawmakers eyeing the lame-duck session of Congress late this year as the last chance for the U.S. to approve the Trans-Pacific Partnership before a new administration waters down or scuttles a deal.

Opposition to trade has emerged as a rare area of bipartisan agreement in the 2016 election campaign, with leading candidates opposing or criticizing a pact that would boost trade among nations making up 40 percent of the global economy. A tough battle for congressional seats in states where economic concerns loom large makes supporting deals such as TPP a political liability.

In such a hostile environment, where anti-trade rhetoric resonates among voters in key manufacturing regions, congressional leaders point to the legislative session just after the Nov. 8 election as the earliest a deal could be considered.

"I think we’ll probably get it through, but it’s shaky," Senate Finance Committee Chairman Orrin Hatch, a Utah Republican, said in an interview. "It will probably have to be after the elections. I think we have a better chance to passing it after, but we’ll see” what Senate Majority Leader Mitch McConnell wants to do, he said. 

McConnell, a Republican from Kentucky, has indicated plans not to pursue it “certainly before the election," leaving the door open to a vote in the lame-duck session, according to trade analysts. A spokesman for McConnell said the senator has nothing to add to his previous comments on TPP, and has not announced a schedule for consideration yet.

GOP leaders’ support is critical to the deal’s passage. President Barack Obama is counting on them to mobilize the same coalition of lawmakers that helped give the president fast-track authority in June to conclude the 12-nation deal. This time around, Republicans are less committal, having raised opposition to some of the provisions in the newly signed deal.

Presidential Campaign

Presidential politics complicates the picture. Hillary Clinton, the front-runner on the Democratic side, said she no longer supports it. Donald Trump, who leads the race to be the Republican nominee, has slammed the agreement and called for 45 percent tariffs on Chinese imports.

Thomas Donohue, chief executive officer of the U.S. Chamber of Commerce, said in an interview Friday on Bloomberg Television that such tariffs would backfire politically and ultimately hurt “the citizens that go to Wal-Mart and Target.”

The hyperbole against trade has helped fire up crowds and rack up primary victories, but it’s heightening anxiety among multinational companies dependent on exports and global supply chains. So they’re mounting a push on Capitol Hill to get it done as soon as possible.

Expeditious Passage

Business groups are “going to put a lot of pressure on McConnell to make sure this doesn’t fall through, and they have influence,” said Julian Zelizer, a presidential historian at Princeton University.

After the 12 nations signed the trade deal in early February, five major American business groups joined the leadership of the U.S. Coalition for TPP -- whose members include Apple Inc., Microsoft Corp. and Wal-Mart Stores Inc. -- to push for passage.

"Our intention is certainly to push as far and fast as we can on the agreement now and work with Congress and administration to get a vote as soon as we possibly can to make sure we get this turned into law in 2016," Doug Oberhelman, CEO of Caterpillar Inc., who serves as chairman of the Washington-based Business Roundtable, one of the co-leaders of the coalition, said on a conference call March 15.

Obama said on Feb. 22 that the administration plans to present the TPP formally to Congress “at some point this year and my hope is that we can get votes.”

Senate Elections

Republicans have their own calculation to make as their try to retain control of both chambers in Congress. While the GOP has a firm hold on the majority in the House, it’s defending 24 seats in the Senate this year. Democrats need a net gain of five seats to win outright control of the Senate.

"They don’t want to do anything that might jeopardize their majority in the Senate in the upcoming elections," said Joshua Meltzer, a senior fellow at the Brookings Institution in Washington and a former Australian trade negotiator. Republicans need to work out what a TPP vote would be for them, and "that’s the key political issue which will sort of determine ultimately whether they do move forward with this or not," he said.

Lawmakers fearing a voter backlash may be more apt to stay quiet on the issue through Election Day and take controversial votes during the lame-duck session, which can last as long as a month after the election and before a new Congress convenes in January, according to Bloomberg Intelligence analyst Caitlin Webber.

Lame Duck

But history shows mixed results. Congressional Research Service records show that only three trade-related bills have been voted on in a lame duck.

The Trade Act of 1974 created fast-track authority for the president to negotiate trade agreements that Congress can approve and disapprove without amendments.

The Uruguay Round of 1994, which led to the creation of the World Trade Organization, was approved by a Democratic Congress in the 1994 lame duck session, after Republicans won control of both the House and Senate in the November elections.

During the 2006 lame-duck session, a Republican House defeated a measure backed by President George W. Bush to normalize trade relations with Vietnam. The bill was cleared a month later, however, and allowed Vietnam to join the WTO in 2007.

For a TPP vote in the lame duck, "a lot of work would have to be done between now and then," Meltzer said. "But trade has been done in the lame duck -- it’s definitely doable."

— With assistance by Erik Wasson, Steven T. Dennis, and Angela Greiling Keane

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