Travels in Canada — Beyond BREXIT: The Global Economy and Local Politics

BREXIT will have no measurable impact on the pending US trade agenda. There, I said it. While the UK vote has probably put on hold comprehensive trade agreement negotiations involving the UK and the EU – T-TIP in shorthand – the forces pushing US free trade will continue and perhaps be strengthened as a result of events happening across the Atlantic.
 
What we should really be talking about is the Trans-Pacific Partnership, the “other” pending comprehensive trade agreement involving the US. The TPP’s membership includes, as its name suggests, major Asian-Pacific countries, such as Japan, but does not include the UK or any other EU country. Given the UK vote, one can just imagine what the first staff meeting post-Brexit must have looked like at the offices of the US Trade Representative. Certainly its top agenda is the TPP. And I would further venture that the marching orders at the end of those meetings were clear: line up the votes in Congress.
 
I am not so bold as to say we are not in a period of uncertainty. But consider this. Since 1994 when the NAFTA entered into force, the United States has concluded 12 trade agreements. Since 1994, the US electorate voted five times in presidential elections and chose winners from both parties. And during that same time, there have been 12 new sessions of Congress.
 
Yes, the US is in election mode and yes, there has been much said on the campaign trail about the TPP and the general evils of trade agreements. But my goal here is to serve as a sober reminder and point to the last two decades of US trade policy. Starting with 1992 when billionaire independent candidate Ross Perot first uttered the “tweet worthy” sound bite of the “great sucking sound” that would be NAFTA, almost every campaign since has been littered with some version of free trade = bad.
 
Has the US turned protectionist? There are arguments to be made on both sides. But inward looking sentiments here in the US have manifested themselves in many ways over the decades, largely via US domestic spending bills. But on trade and global competitiveness, when push comes to shove, Americans have been persuaded that fair trade is in their longer term interests.
 
This most recent primary cycle has been particularly (nay, excruciatingly) long. The candidates “playing to their base” have garnered attention by focusing on import competition and rarely to export opportunity. Supporters of trade are more muted, at least for now, before the votes are cast in November. But their voices are no less effective. Business groups such as the American Farm Bureau, the National Association of Manufacturers, the Business Roundtable, the US Chamber of Commerce and the Small Business Association have lined up in public support of the TPP. 
 
How did the 12 trade agreements make it through five Presidents and 12 sessions of Congress, many during equally tumultuous times? Horse trading.
 
It’s what American politicians do best. And the TPP will be no different, especially now that the text has been negotiated and signed and will soon be heading to the steps of Capitol Hill where each Member will have a vote.
 
Having moved from trade policy, the Obama Administration knows it has to win trade politics.
 
In the words of the revered House Speaker Tip O’Neill Jr, “all politics is local.”  As in most cases, members of Congress will want something in return for their vote to approve the TPP. Want a new bridge built in your State or district, let’s talk. Want a coveted seat on Air Force one, you bet. At the risk of sounding flippant, this is what it comes down to. US law making has been described as a sausage grinder and for good reason. That is how the NAFTA survived, how the US/Korea Agreement came into force and all the other trade pacts of recent years. And remember, each of these negotiations was first “blessed” by those same members of Congress when they voted to give the Administration the authority to even begin TPP negotiations.
 
The current Congressional leadership, especially in the House, has expressed their eagerness to “work with the administration” on the TPP.  Even in the chaos of BREXIT, House Ways and Means Chairman Kevin Brady (R-TX) released a statement that the UK vote should be seen “as an opportunity” to continue trade talks with the EU and possibly bilaterally with the UK. Bottom line here: American leaders will act on what is in the best interest for Americans.
 
Let’s face it. The real prize on the US trade front has always been Asia. Earlier this month, the ASEAN nations are negotiating with China and others to finalize the Regional Comprehensive Economic Partnership.
 
The world has not stood still. A few days ago, the Panama Canal celebrated the completion of its massive new locks to accommodate ever growing container ships. And the first ship to enter the locks? A 158-foot-wide, 984-foot-long, Chinese-owned container ship.