Trans-Pacific Partnership: A Framework for U.S.-Latin America Relations?

By Eric Hershberg
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President Obama’s desire to move forward with the Trans-Pacific Partnership (TPP) appears likely to founder amidst Congressional resistance to granting him “fast-track” authority, but it does signal a noteworthy initiative by an administration eager to grow trade relations with some Latin American countries.  Originally formed by Chile, New Zealand, Brunei and Singapore in 2006, TPP is currently negotiating the accession of five new members, including the United States and Peru.  Mexico, Colombia, Costa Rica, Panama, Canada, and Japan are also considering joining.  U.S. Undersecretary for International Trade Francisco Sanchez said last year that agreement on a framework for the United States to join TPP represents “a landmark accomplishment because it contains all of the elements of a modern trade accord.”  It eliminates all tariff and non-tariff trade barriers; takes a regional approach to promote development of production and supply chains; and eases regulatory red tape.  The White House’s senior official responsible for Latin America has also emphasized the importance of the Partnership.

The Administration for the most part has tried to sell the pact as a domestic economic issue – the argument being that more trade and harmonized regulations translate into more jobs – or as integral to a strategic focus on strengthening economic ties to the dynamic economies of Asia, rather than as a policy that has the potential to redefine economic relations with Latin America.  But lobbying on Capitol Hill has so far been ineffective, and Obama’s own Democratic Party has denied him the “fast-track authority” needed for an effective negotiation.  The Administration’s diplomatic strategy has not progressed smoothly either.  During Obama’s recent four-nation swing through Asia, he and Japanese Prime Minister Abe failed to sign an agreement widely seen as crucial for moving ahead with TPP.  Negotiators from all 12 TPP countries met in Vietnam last week, and – despite claims of progress – press reports generally suggest a gloomy prognosis for progress soon.

President Obama has made much of his “pivot” to Asia, and the push for TPP situates Latin America relations in Washington’s wider foreign policy agenda.  The emphasis on the TPP signals that liberalizing trade remains the core principle guiding U.S. thinking about economic relations in the hemisphere, in effect continuing a paradigm that has reigned for decades and that is embodied by proposals such as the now-abandoned Free Trade Area of the Americas.  Unable to secure broad South American buy-in for that U.S.-minted vision for economic cooperation, the administration seems to have settled on trying to work with a “coalition of the willing” comprised of Chile, Colombia, Mexico and Peru.  For governments elsewhere in the region, however, the not-so-particularly-new approach has elicited scant enthusiasm.  One could imagine ambitious proposals from Washington for hemispheric cooperation around energy, climate, infrastructure, technological innovation or even, eventually, labor market integration. But that would require visionary leadership, a commodity that is in strikingly short supply nowadays in the U.S. capital.  Rather than leading the articulation of a novel, shared agenda for a 21st century economic transformation of the Americas, Washington has chosen for now to repackage the last century’s prioritization of trade.

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  1. Hershberg writes, “One could imagine ambitious proposals from Washington for hemispheric cooperation around energy, climate, infrastructure, technological innovation or even, eventually, labor market integration.” One could, and that would be wonderful. And certainly there are problems with the TPP, especially its NAFTA-like emphasis on obligatory and rapid liberalization of trade in financial services, which benefits countries with highly competitive, globalized financial services exports (that is, the U.S.), but arguably leaves Latin American and Asian economies more exposed to the next international financial crisis. However, constructing and deepening international trade today remains more important than ever, for two reasons.

    First, the expansion of merchandise trade since the end of World War Two is strongly and causally associated with strong global growth. Multilateral agreements that expand trade, in general, are a good thing. Preferentially, trade agreements should be global, not regional, but public policy making has always been about accepting compromise and second best choices.

    Second, international relations rapidly are becoming more multilpolar, and thus more uncertain and risky. China and Russia, each increasingly anti-Western in the past couple of years, have seen opportunity in the ongoing Ukraine crisis to strengthen trade–and political–ties with one another, most notably by the $400 billion natural gas deal signed this week, which the New York Times (May 21, 2014) termed the “the biggest natural gas deal Russia has sealed since the collapse of the Soviet Union.” In this context, with international politics possibly hurtling toward a world of competitive regions, the U.S. and Latin America, as well as China’s neighbors from Japan and South Korea to Vietnam, need strong links to one another, both economically and politically. President Obama should be more honest with Congress about his reasons for wanting to retain “fast track” authority: strong trade links in the Pacific Rim enhance both economic and political security throughout the Americas.

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