A GROUP of politicians in Washington wants to stop President Barack Obama from doing what he wants. Same old story, you might think. This time, though, it is not Republicans who are proving obstructive, but members of the president’s own party. Mr Obama itches to sign the Trans-Pacific Partnership (TPP), a trade deal that would link 11 economies of the Pacific rim—including Japan and Singapore, but not China—with America. The deal would reduce tariffs and, more importantly, harmonise regulations between the countries to make trading easier. Most Republicans love the idea. But many Democrats don’t. Sandy Levin, a Democratic congressman, growls that he is “out to defeat” Mr Obama’s plans. What is the disagreement all about?
Congressional Republicans and Mr Obama argue that by boosting exports, the deal would make America richer. According to one estimate, by 2025 the TPP would raise American incomes by 0.4% per year. The public largely agrees with the president: 58% of Americans see free trade mostly as an opportunity—a figure that has risen 17 percentage points since the recession—with Democrat voters keener on free trade than Republicans. (This may be because Democrats are more likely to be in jobs that benefit from globalisation.) There is a helpful geopolitical component, too: the TPP could help America retain its sway in Asia. If the 12 TPP countries plump for common trade standards, then those rules—crucially, not China’s—could function in effect as global ones, given the big chunk of world GDP they would govern.
Many Democratic politicians are less trade-friendly than those that vote them in (the influence of trade unions may have something to do with it). They fret that imports from low-cost countries such as Vietnam will hurt American workers in industries such as carmaking and textiles. This is not a foolish worry. Trade has probably held down blue-collar workers’ wages. One paper found that if there had been no imports, median real wages in America in 2008 would have been 3% higher than they actually were. For workers in menial tasks, they would have been 15% higher. However, it is difficult to pin the blame on trade deals for this: improved communications and rapid productivity growth in poorer parts of the world have done much more. Though many Democrats see NAFTA, a deal with Canada and Mexico that Bill Clinton signed in 1993, as a disaster for America’s workers, the consensus among economists is that it did not have much impact on the labour market.
The TPP might not be so controversial if talks were conducted openly. In fact, crucial details are kept under lock and key. Trade experts argue that making the negotiations public would make it difficult to balance the demands of competing interest groups, who would jostle for influence. However, secrecy may now be so strict that it ends up irritating everyone. That is a problem. If there is a mass revolt by Democrats, Mr Obama will find it impossible to conclude TPP and an even bigger proposed pact with Europe, the Transatlantic Trade and Investment Partnership. And with so many Democrats in Congress either anti-trade or seeking to build a post-Obama identity, a revolt cannot be ruled out.
Dig deeper:
Barack Obama faces a showdown with his party over a big trade deal with Asia (April 2015)
Why a whiff of panic has entered America's Pacific trade negotiations (March 2015)
