Washington Insider-Wednesday

Longer-Run TPP Implications for Latin America

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

Next Steps for TPP

President Barack Obama must wait at least 90 days after notifying Congress of the Trans-Pacific Partnership (TPP) deal before he can sign it and send it to Capitol Hill, and the full text of the agreement must be made public for at least 60 of those days. Congress is expected to receive the legal documents to start the 90-day clock later this week, but this timeline has slipped in the past. Lawmakers will then have 30 days to review the deal before it is made public. The next step will be for the U.S. International Trade Commission to conduct a full economic review of the deal. The agency has up to 105 days to complete that work.

U.S. Trade Representative Michael Froman said he did not know when President Obama would officially notify Congress that he intends to sign the accord, but once he does, that notice will give Congress 90 days to first consider it. Additional time most likely will be needed, congressional and administration officials said. This is key because it may take far longer than most think before the TPP comes to a vote in Congress. Some sources are not even ruling out a vote after 2016 elections in a lame-duck session of Congress.

While initial indications look pessimistic for a TPP vote in Congress, this would be another signature issue for President Obama and he and his top officials will likely pull out all stops to get the necessary votes. But this topic is far from settled at this time, and it could take months to get a clear picture. The longer it takes for the White House to seek a vote, the stronger the odds this vote will be after 2016 elections.

On Oct. 5, Obama gave a hint on how he will sell the TPP to lawmakers. "When more than 95% of our potential customers live outside our borders, we can't let countries like China write the rules of the global economy," President Obama said in a statement. "We should write those rules, opening new markets to American products while setting high standards for protecting workers and preserving our environment." That argument -- that the Pacific pact would be a bulwark against China's power and a standard-setter for global commerce -- will be central to the president's hard sell to Congress, administration officials said.

Under the terms of Trade Promotion Authority legislation approved by Congress this summer, lawmakers will not be able to amend or filibuster the TPP pact. The only leverage they have is to fully approve the deal or reject it in its entirety. Fast-track also ensures that it takes only a simple majority to pass the deal, but that majority support is far from guaranteed.


Speaker of the House Race Far From Settled

On Thursday, the House Republican conference will hold a secret ballot to select a candidate for Speaker of the House, who will then be put before the full House on Oct. 29 for a roll-call vote among all House members.

There could well be a difference between how Republicans vote in secret ballot versus an open, roll-call version. Reason: fear of being "primaried" in state elections by arch conservatives wanting more change.

Current Majority Leader Kevin McCarthy, R-Calif., was widely expected to become the next speaker shortly after current Speaker John Boehner, R-Ohio, announced his resignation come Oct. 30. But a key McCarthy misstep has caused a reassessment -- especially when all House members vote.

If McCarthy falters, it could take several ballots to see the eventual Speaker choice.

If not McCarthy, then who? No one seems to know. Someone like Rep. Paul Ryan, R-Wis., who has said he doesn't want the job, could be pressured by the "establishment" to run for the slot should McCarthy or anyone else not be able to corral the necessary votes come Oct. 29. Rep. Daniel Webster, R-Fla., and House Oversight Chairman Jason Chaffetz, R-Utah, have thrown their hats in the ring.


Washington Insider: Longer-Run TPP Implications for Latin America

The main thread of the conversations on the new Trans-Pacific Partnership (TPP) deal are still focused on who gets what and when, and what the future political alignment means for Congressional consideration. At the same time, the Washington Post raised a very different set of questions concerning the potential benefits of "the biggest trade deal in history" for Latin America, especially for the three countries that are part of the deal.

Chile, Peru and Mexico already have free-trade deals in place with the United States, the Post notes -- but, their leaders are among Latin America's weakest and least popular. "These countries had a tough time getting their respective trade deals passed at home, and will face stiff difficulties again as they have had to sign on to deeper rules for intellectual property, pharmaceuticals and finance," Kevin Gallagher, a Latin America trade expert at Boston University's Frederick S. Pardee School of Global Studies told the Post.

Still, the Post thinks the TPP agreement matters for another reason. The article argues that it solidifies the emerging ideological split in a region where the old left vs. right divide has grown more and more meaningless.

A generation ago, as much of Latin America emerged from Cold War-era military autocracies, the region was split between conservatives who pushed the privatization of infrastructure and services, and leftists who demanded a bigger state role in alleviating poverty, a debate that is now largely over, the Post said.

With the exception of a few smaller states like Honduras and Paraguay, Latin America no longer has any conservative or right-wing governments. Left-leaning candidates and centrists have won elections repeatedly and have implemented populist social welfare programs and nationalist messages.

The most significant difference now is how Latin American countries view their place in the global economy and their relationship to the United States. Several nations in the region, especially Venezuela, Cuba, Ecuador and Bolivia, continue to blast the United States as a meddling imperial bully while courting China as their preferred commodity market and creditor.

In this alignment, the TPP nations -- including Chile, Peru and Mexico -- are so-called pillars of the region's other bloc, where debates about free trade vs. protectionism have largely been settled, and relations with the United States are viewed more as an opportunity than a threat. Thus, a key question is whether those countries in the TPP economically outperform others in the region who have edged closer to China.

Now, as global economic tensions grow and prices weaken, Latin American governments on both sides of the split are facing a new period of austerity and potential instability. Thus, "The TPP could open up new markets for these three Latin countries and help alleviate the impact of the slowdown in the Chinese economy," said Michael Shifter, president of Inter-American Dialogue, a Washington, D.C., think tank. "It is hardly a silver bullet that will offset the deceleration, but could give the economies a slight boost over the medium and long term."

Other countries in South America will be watching Chile and Peru closely to gauge the trade agreement's economic impact and political challenges. Colombia, which has a free trade agreement with the United States, is also looking to join TPP as it opens up to new members, and other nations could also sign on later, according to Shannon O'Neil, a Latin America scholar at the Council on Foreign Relations.

"Embracing the TPP means that you're betting your economic growth will come from exports, imports, and exposure to the rest of the world in ways that some of these other countries, which have chosen more protected, state-led industrial policies have not, at least yet, decided to do," she wrote.

Another question is, once the TPP is in effect, who else will want to join, since the agreement is open to additional members if their populations and governments feel that would be beneficial.

Clearly, the TPP is still in its earliest stages, with many tough battles and hurdles ahead. What is beginning to emerge, though, is some idea of the potential stakes of creating new, powerful trade alliances that can help create a more rational world of markets and investments, as opposed to worsening trade and currency fights and stagnant, internalized markets. Agriculture as a key stakeholder in this battle; one U.S. producers should watch carefully as it emerges, Washington Insider believes.

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