The United States may be on the verge of walking away from a trade pact, the Trans-Pacific Partnership (TPP), that it virtually wrote. When President Barack Obama said that “the TPP means that America will write the rules of the road in the twenty-first century,” he was not speaking metaphorically. Scholars Todd Allee and Andrew Lugg have documented the incredible extent to which the TPP draws on past U.S. Free Trade Agreements (FTAs)—around 45 percent of the language in previous U.S. FTAs can be found copied verbatim in the TPP, and that figure rises to 80 percent for the TPP’s investment chapter, which is of particular interest to the United States.
Yet the United States did not offer to open its market very much in return for the concessions that it was able to wrest from others. According to the U.S. International Trade Commission (USITC), by 2032 the TPP would boost U.S. imports by a negligible 0.2 percent of GDP compared to baseline projections. The pact does even less for U.S. exports.
In short, the United States has gained more on its priorities, such as investment, finance, and intellectual property, than it has given to its negotiating partners on theirs. And yet, after years of arduous negotiations, the normally pro-trade Republican leadership in Congress is now pushing to reopen settled issues, largely to please special interest groups such as pharmaceutical and tobacco firms. No wonder, then, that U.S. trade partners, after resisting some of their own domestic interest groups to reach a deal, are expressing outrage.
Senate Majority Leader Mitch McConnell (R-Ky.), for instance, has voted for every free trade agreement in the last two decades, but has said that he’d rather see TPP fail than allow it to pass in its current form. His major objection is over the exemption of cigarettes from the Investor State Dispute Settlement system, which allows investors to sue governments in special arbitration panels for, among other things, changes data exclusivity for a special class of pharmaceuticals called biologics. U.S. law currently protects companies’ regulatory test data for 12 years, compared to eight in the TPP. Speaker of the House Paul Ryan declared, “they [the Obama administration] have to fix this agreement and renegotiate some pieces of it if they have any hope or chance of passing it.” He added, “I don’t see how they'll ever get the votes for it.”
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