Trade and Obama’s Visit to Asia

This week, U.S. president Barack Obama will travel to Asia, beginning with Japan and followed by South Korea, Malaysia, and the Philippines. The visit comes as Asian leaders are increasingly worried about the Obama administration’s dedication to the Asian “pivot.” The administration’s tepid response to the crisis in Ukraine has intensified these questions, but the visit will give President Obama an ideal opportunity to reassure our partners that the United States has staying power in Asia. Because the Trans-Pacific Partnership is the vehicle that will functionally bind the Asia-Pacific region, a commitment to move forward on TPP will provide a tangible reassurance.

Q1: What is the current status of TPP?

A1: Negotiations are continuing and chief negotiators will meet in Vietnam on May 12-15. U.S. Trade Representative Michael Froman and his Japanese counterpart, TPP minister Akira Amari, have met in Tokyo and Washington in the past few weeks, and acting deputy USTR Wendy Cutler has done the same with her Japanese colleagues, describing the progress as “slow but steady.” Even so, the remaining issues to cover such as market access for services and agricultural products, non-tariff barriers, and more, are not only complicated but are politically contentious for each leader.

Q2: What can the United States and Japan do to get to a final agreement?

A2: TPP is a new experience for Japan which to this point has focused on smaller, more limited free trade agreements than a high-standard, comprehensive agreement like TPP, making Japan an outlier among large economies. One of their biggest difficulties has been in exempting Japan’s agricultural sector from the free trade regime, not least because the sector is politically powerful and resistant to liberalization. TPP gives Prime Minister Abe an opportunity to open up this sector but the political fight will be daunting and is just one of the challenges that Prime Minister Abe faces as energy costs increase and consumers deal with a new value-added tax.

For the United States, trade promotion authority (TPA) has stalled in the run-up to the mid-term elections. In order to succeed post-election, President Obama needs to sell his domestic audience on TPP, preparing the ground now as a precursor to making a push when he tries to get the legislation in late 2014 or early 2015. USTR Froman’s remarks at the Center for American Progress did a good job of explaining how trade has evolved since NAFTA and this is a message that the administration must continue to carry, especially if trade debates are on hold until after the elections. Getting trade agreements through Congress is difficult but not impossible—in 2011 the House and Senate considered and passed three free trade agreements (Colombia, Panama, and South Korea) in less than 48 hours. Granted, TPP is a much larger proposition, but that only means that the sale needs to be made more assertively. In short, President Obama could secure TPP if the administration gave it the effort that President Clinton gave NAFTA in 1993-94.

Asian leaders understand the constraints that an election year imposes as well as beltway insiders, but privately they are extremely anxious about the administration’s commitment to getting TPP through Congress. Some Japanese observers have voiced gentle frustration with the United States, believing that Abe is carrying all the risk while Congress and the administration avoid “speed bumps” before the November elections.

Q3: What can be expected from this week’s meeting?

A3: At this point the focus should be less about the agreement itself and more about the steps that the parties are taking to get to an agreement, both among themselves and with their domestic constituencies. President Obama can assure his hosts that he is committed to TPP and will take tangible steps to achieve it, and Prime Minister Abe can assure the President that Japan will commit to meaningful reforms to achieve the goal of a high-standard TPP.
After a series of foreign policy setbacks in Europe and the Middle East, successful progress on TPP would bring the President closer to a significant victory on economic integration and establishing rules for trade liberalization and would also demonstrate that the Asian pivot is supported by concrete policy. To get to that goal, President Obama needs to assure his Asian counterparts that he is serious about TPP and that the pivot is on course. Anything less and he will have undermined his own strategic priorities.

Scott Miller holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C. Paul Nadeau is program manager and research associate with the Scholl Chair at CSIS.

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