BUSINESS

TPP Trade Deal In Limbo As Democrats Hand Obama Stinging Defeat On 'Fast-Track' Powers

05/12/2015 05:29 EDT | Updated 05/13/2016 05:59 EDT
MANDEL NGAN via Getty Images
US President Barack Obama (R) speaks during a meeting with leaders from the Trans-Pacific Partnership at the US Embassy in Beijing on November 10, 2014 in Beijing. At left is US Trade Representative Mike Froman. Top leaders and ministers of the 21-member APEC grouping are meeting in Beijing from November 7 to 11. AFP PHOTO/Mandel NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)
WASHINGTON - U.S. President Barack Obama was dealt a stinging setback Tuesday in his attempt to reach a free-trade deal — and his own party delivered the blow.

Democrats voted en masse against granting fast-track negotiating authority, which would have helped clear considerable obstacles to achieving a 12-country Trans-Pacific Partnership trade deal.

A late-stage round of negotiations is scheduled for this month. Several countries, including Canada, have described fast-track as a necessary condition for completing a deal.

Only one Democrat in the U.S. Senate joined the majority of Republicans who agreed to open debate on the measure, so it fell eight votes shy of the 60 per cent required to override a filibuster.

The White House played down the significance of Tuesday's vote: "A procedural snafu," said Obama spokesman Josh Earnest. Democrats cast it as a simple disagreement over a broader, four-bill legislative package.

But the vote left the president's trade agenda in limbo. It exposed deep divisions among Democrats, after days of increasingly pointed barbs between the president and members of his party's progressive left.

"What we just saw here is pretty shocking," Republican Senate Leader Mitch McConnell said after the 52-45 vote.

"Other countries are taking a look at us.... (This is) not the headline we want to send around the world — that America can't be depended upon. That America can't deliver trade agreements...

"Hopefully there'll be an opportunity to think this over."

Under the U.S. Constitution, Congress has power over international treaties. Lawmakers can relinquish some of that power to the president by granting so-called fast-track — where they would forego the right to amend a deal, and just vote yes or no after negotiations are over.

The fate of the 12-country Trans-Pacific Partnership could hinge on it. The Canadian government, for instance, has said it won't make concessions on agriculture imports if there's a chance the deal could still be carved up later with amendments presented by 535 U.S. lawmakers.

Some Democrats are dead-set against fast-track on principle.

Sen. Elizabeth Warren, a leader of the party's progressive wing, has challenged the president in recent days. She says the trade process is rigged by corporate interests — with 85 per cent of the people on the U.S. government's trade-advisory committees representing industry lobbies.

Virtually everyone else is excluded from the process, she says. Even lawmakers who want a briefing on the negotiations have to hand over their cellphones when entering the briefing room, and agree not to take notes away with them.

"A rigged process leads to a rigged outcome," Warren wrote in an open letter with her congressional colleague, Rosa DeLauro.

"Powerful corporate interests have spent a lot of time and money trying to bend Washington's rules to benefit themselves, and now they want Congress to grease the skids for a TPP deal that corporations have helped write but the public can't see."

Lawmakers like Warren are particularly concerned that dispute-resolution mechanisms might allow companies to sue countries over health and environmental laws.

Other Democrats insisted they were merely contesting the fast-track bill on procedural grounds.

They said they wanted the Senate to consider four related trade bills simultaneously, including one that would allow retaliation against countries that manipulate their currencies.

The Republicans and the Obama administration say that's a non-starter: those currency-manipulation measures could scuttle the entire TPP negotiations, they say.

Republicans accused some of their opponents of finding excuses to scuttle trade talks. The anti-trade Democrats have certainly been vocal in recent days.

California Sen. Barbara Boxer said she regretted voting for fast-track on the original NAFTA agreement, and quipped that it would meet the definition of insanity to make the same mistake twice.

Manufacturing jobs have plummeted by almost one-third in the U.S. since NAFTA came into effect in 1994. And the wages of working-class Americans have stalled in an era of job outsourcing.

But defenders of free trade argued that the per-capita income has continued to grow, trade-related jobs pay better than non-trade ones, and protectionism can't undo the technological forces that have undermined U.S. manufacturing.

The Canadian government declined to comment on Tuesday's vote.

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