Little Progress on U.S. Trade Agreements

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After multiple holdups, a new trade agreement has been reached between the EU and Canada. The Comprehensive and Economic Trade Agreement (CETA), for which negotiations began in 2009, was signed on October 30 after the EU bridged differences among some constituencies. Before the agreement is wholly implemented, it must go through Europe’s national and regional parliaments. By one estimate, it will advance trade between Canada and the EU by 20%, add an annual C$12 billion and €12 billion to their respective economies, and eliminate almost all tariffs.

The U.S., meanwhile, has not concluded a trade deal since 2012, despite having two in the works for years. What’s holding them up?

Trans-Pacific Partnership (TPP)

The Trans-Pacific Partnership is a proposed deal among 12 countries, including the NAFTA nations and Japan but not China. Following years of development, the text was finalized in February 2016; ratification by each country is the next step. According to the White House, the deal would remove 18,000 tariffs, with particularly positive implications for U.S. exports of manufactured products, agriculture products, automotive products, and information and communication technology products.

President Obama says he is a “strong supporter” of the deal, but both Hillary Clinton and Donald Trump view the TPP unfavorably, with Clinton commenting that what she has seen of the potential deal doesn’t meet her standards for improving employment, wages, and national security. Trump prefers that the U.S. withdraw from the deal. Back in August, House Speaker Paul Ryan said he didn’t think Congress had the necessary votes for ratification before the next president takes office.

As the MAPI Foundation has previously noted, the U.S. already has free trade agreements with 6 of the 11 other participating countries; among the remaining 5, Japan is the largest trade partner with which we don’t have an existing agreement.

For the TPP to be implemented, at least six countries with an aggregate GDP of at least 85% of the 12 nations’ GDP must ratify it—all within two years of the signing. So far, not a single country has completed ratification. Vietnam recently decided to delay its ratification process, though the deal has positive support among its citizens.

Transatlantic Trade and Investment Partnership (TTIP)

TTIP is a proposed deal between the U.S. and EU that the USTR describes as “a cutting edge agreement aimed at providing greater compatibility and transparency in trade and investment regulation, while maintaining high levels of health, safety, and environmental protection.”

Back in 2014, a third of surveyed MAPI members predicted that TTIP, if put into force, would have benefits for their operations. It could be a long wait, however. More than three years after President Obama announced the launching of negotiations, the end is not in sight. As EU Trade Commissioner Cecilia Malmström commented recently, “There is no realism in concluding TTIP right now.” She expects that efforts will recommence after the U.S. election.

At an October press conference for the 15th round of negotiations, Dan Mullaney, the chief negotiator for the U.S., was fairly optimistic, saying that “the United States remains fully engaged in these negotiations and is as committed as ever to their success.” It appears, however, that the administration puts a brave face on an otherwise failing enterprise.