Are the Administration’s Claims of Progress on TransPacific Partnership Negotiations in Japan Credible?

As readers may know, the mislabeled trade deal known as the TransPacific Partnership hasn’t looked like it has great odds of being consummated. The Wikileaks publication of two important draft chapters showed considerable opposition from America’s counterparties on numerous important provisions. As we’ve reported, the Japanese press has said, in pretty direct terms, that the US has not been willing to bargain and Japanese aren’t interested in being ordered about.

In the US, Congress is in revolt. Congress had over time abdicated much of its responsibility for these treaties by giving successive Administrations “fast track” authority, which would allow them to negotiate a trade pact, then present it to both Houses for a yea or nay vote. But the TransPacific Partnership, and its evil sister, the TransAtlantic Trade and Investment Partnership, have been shrouded in so much secrecy as to raise Congress’ hackles. House Speaker Boehner has said he doesn’t have the votes to pass fast track authority, and Senate Majority Leader Harry Reid has stated he won’t table the bill.

But the Administration has not given up. We warned that it might try pushing a bill through in the lame duck session at the end of this year. And it’s also trying to get those difficult Japanese in line. A plugged-in DC contact wrote, clearly concerned:

[US Trade Representative Froman] is in Japan NOW trying to grease the skids for Obama’s “heroic” deal storyline during April 23-25 AND he is making some headway! No breakthroughs apparently but Ambassador Rude is getting stuff his team who has been there for 3 weeks straight has not. AND if the Ways and Means hearing were not sufficiently intense for a Japanese audience, Froman did a news conf when he landed Tuesday night Japan time and blasted the bilateral trade pact that Japan has just signed with Australia to great fanfare in Japan…. Go figure?

At the same time, the Administration also appears to be ramping up its PR war in the US. As Public Citizen points out in a new paper, it’s become hard to sell the pending trade deals using the usual “free trade” dog whistle. Some of the media has wised up to the fact that past trade pacts such as NAFTA cost the US jobs. And when unemployment is high and most of the jobs being created are low-quality, badly paid service work, ordinary people are more concerned than in the past about preserving employment at home.

So the new pitch for these deals is to sell them as important to foreign policy. But the problem, as Public Citizen points out, is that these hoary old arguments have been shown to be canards. Some of them are actually funny when you think about them, for instance, that trade deals are proof of America’s manhood.

Another bizarre set of arguments surrounds China. Remember that the TPP was first meant to be an “anybody but China” deal, to bolster waning US power in the region. But Obama missed a key Asia-Pacific Economic Co-operation session in Bali, when he was busy trying to start a war with Syria. So what happened? As noted in an October post, Chinese President Xi Jinping used the opportunity to take a swipe a the TPP. From Agence France Presse:

But China and even some developing nations included in the TPP have expressed concern that it will set down trade rules primarily benefiting the richest countries and most powerful firms.

“China will commit itself to building a trans-Pacific regional cooperation framework that benefits all parties,” Chinese President Xi Jinping said in a speech following Kerry at the APEC business forum.

“We should enhance coordination… deepen regional integration and avoid the spaghetti bowl effect so as to build closer partnerships across the Pacific.”

So what happened next? The official Administration party line is that China could (presumably “later”) join the TPP. Huh?

The Public Citizen report on how 20 years of bogus policy arguments in support of trade deals are being invoked to justify these toxic trade pacts is very much worth reading. For example:

Past free trade agreements (FTAs) failed to counter the rising economic influence of China (or Japan): From 2000 to 2011, U.S. FTAs with eight Latin American countries were sold as bulwarks against foreign economic influence in the hemisphere. The U.S. pacts were implemented and China’s exports to Latin America soared more than 1,280 percent, from $10.5 billion to more than $145 billion, while the U.S. saw only modest export growth. The U.S.-produced share of Latin America’s imported goods fell 36 percent, while China’s share increased 575 percent. Similarly, under the North American Free Trade Agreement’s (NAFTA) first 20 years, the U.S.-produced share of Mexico’s imported goods dropped from almost 70 percent to less than 50 percent, while China’s share rose more than 2,600 percent. Similarly, after hysterical claims that Japan would seize U.S. market share in Latin America by signing its own free trade agreements unless the United States approved NAFTA and other FTAs, such Japanese FTAs were signed anyway.

But what about Japan? Is the US really making headway?

I was skeptical as soon as I read the insider’s summary, that senior level talks between Froman and Economic Policy Minister Akira Amari made progress where talks at the staff level (and even between the USTR’s Wendy Cutler and Vice Minister Hiroshi Oi) were stalled.

Why? Deals are never done at the senior level in Japan, outside of owner-controlled companies. The real decision-makers are a cadre of upper middle level officials, typically in their early 40s. The more senior official serve in a ministerial/external relations capacity. So in a Japanese context, Amari does not have the authority to deal. Anything he and Froman discuss will have to be signed off on by the real power structure in the ministry.

I asked our regular reader of the Japanese-language press, Clive, if he has seen anything that was in keeping with optimistic talk from the Administration. His comments:

Do I buy it (this report of sudden, miraculous TPP negotiations progress)? No, not for one second! Whenever someone talks about achieving a “breakthrough” in the context of US/Japan TPP negotiations, I ask myself “why? what’s changed all of a sudden?”. All the factors that were there three weeks ago (actually, right since the start of negotiations) are still there now. What exactly could a sweet talking US representative bring to the table? Nothing, apart from US concessions.

The only possibility is that the US is talking tough in public (Froman in Congress last week and at the press conference in JP on Tuesday) but caving in big time in private during the negotiations. There’s been absolutely nothing to substantiate that in the Japanese language press though, which is all still going on about “Japan wants to do a deal but serious issues remain” etc. etc. The language would have changed if some major shift had happened and I’ve just not seen that.

However, that is something I wouldn’t discount entirely. Japan would be more than delighted to do a TPP deal that meant that Abe could say he’d delivered an “important wide ranging economic reform” but in reality did nothing substantive. That would allow everyone to claim a success without actually having to change anything – i.e. classic Japan modus operandi!

Now my knowledge runs dry so I can’t really comment on the following with any sort of accuracy – but I wonder. Is there any possibility that the Obama administration is so desperate that it would consider a Potemkin TPP – something that contains little, if anything, in practice but looks or can be spun into something that sounds good? Would Congress pass such a thing? Would US politics see through that or would it be fooled? Is Obama really *that* concerned about his “legacy”? Is he that shallow?

Similarly, I really don’t know what’s with the Australia meat “deal”. When I first read of this in the JP language press, I had to check I wasn’t misreading because I thought it sounded exactly like a – long standing – existing deal. It is a very mildly tweaked version – if youcheck the details, you realise just how meaningless it is: – e.g. an 8% immediate drop in frozen beef tariffs then 18 years (!!!) to fall another 11%. That’s well within what you might expect exchange rate fluctuations to deliver. And the “anti dumping” cap which is enforced by punitive tariffs once imports to Japanese reach a specified level hasn’t been touched from what I can tell.

I can understand Japan wanting to portray the Aussie meat deal as some sort of triumph – and yes, it does allow Japan to say to the US (with Kabuki mask firmly in place) “hey, we can negotiate, here’s a huge transformative breakthrough we’ve achieved” which is exactly what they’re doing in the press now. But what’s in it for Oz ? That, unfortunately, I can’t work out at all.

Having said that, the Japanese are attentive to the need to not embarrass Obama when he visits later this month. So expect to hear some more noise of progress in the negotiations. But there is still no reason to think that anything has progressed beyond managing appearances.

This piece is cross-posted from Naked Capitalism with permission.