THE TTALK QUOTES
On Global Trade & Investment
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No. 65 of 2016
MONDAY, NOVEMBER 7, 2016
Filed from Washington, DC

Click here for Friday's Brexit quote from the UK's High Court.

JAPAN TO RATIFY TPP

"[This] will send a clear signal to the U.S. that Japan has no intention of renegotiating the agreement."

Tomohiro Yamamoto
November 4, 2016
CONTEXT
Last Friday, November 4, a key committee of the Diet, Japan's parliament, voted to approve the Trans-Pacific Partnership Agreement. That set the stage for the full House of Representatives - the lower and more powerful of the Diet's two houses - to vote this week. Tomohiro Yamamoto is a member of the House of Representatives. He made this comment at that key committee meeting last Friday.
COMMENT
The expectation, then, is that there will be critical votes tomorrow in two TPP countries. Members of Japan's House of Representatives will vote on ratification of TPP, and in the United States, voters across the country will go to the polls to decide who will be the next President and Vice President, the make-up the House and Senate, numerous state officials, and countless ballot measures. As days and hours are measured throughout the world, Japan's Tuesday will happen first. Indeed, it has already begun. As for the TPP vote in the Diet. It is not a cliff-hanger. Japan will ratify TPP.

We make no predictions as to the outcome of the U.S. Presidential election. We will only express the hope that, by Wednesday morning, it will be settled. 

As for the issue of TPP in the United States, it is complicated, but the analysis of it does have a certain binary simplicity. Either there will be a vote on the agreement in the lame duck session of Congress, which begins next week, or there will not. 

The Lame Duck Option. For a vote to happen, lots of judgments need to be made very quickly, including a calculation by the leadership that a TPP bill could pass. Procedurally, the first step would be for the Obama Administration to send an implementing bill to Congress. Bear in mind that in the United States, trade agreements are not self-executing but are rather given force through separate implementing bills. The Administration has yet to send such a bill to Congress. And, what may be just as important, it is unlikely that many members have a good feel for what that bill will contain. 

In a note on the TPP process published last October, the highly respected Peterson Institute for International Economics wrote: "While the president is required to submit the draft legislation to Congress, in practice the bill is crafted in Congress with input from the executive branch." 
 
That was a good description of how the process has worked historically. Our impression, however - and we could be wrong about this - is that the TPP bill has been drafted almost entirely by the Executive. If that is the case, it could lead to a new set of objections, stemming from the fact Members are not familiar with it. Those objections to the implementing bill could be in addition to the divide over TPP itself. 

In short, a TPP bill in the lame duck session is at best a long shot. If, however, procedural and substantive issues can be resolved and the legislation passed, President Obama would, of course, sign in. And, more to the point, those concerns about "renegotiation" being expressed by Japan and others would become moot. 
 
Or TPP in the Next Administration. Both Mrs. Clinton and Mr. Trump have set ambitious agendas for themselves for the first or first one hundred days. Unless TPP is passed in the lame duck - and possibly even if it is - the new team is going to have to face the issue of what to do about it before their Administration is very old. Today's logic and the rhetoric of the campaigns suggest that the next President will want to renegotiated TPP, however, marginally; that he or she will want to be able to show that their administration had improved the deal before going ahead with it. 

But in this topsy-turvy world we rule out nothing. Whether it be Mrs. Clinton or Mr. Trump, the next President will be the 45th, not the first, chief executive of the United States, and will inherit some obligation to follow-through on America's promises and American-led initiatives, like TPP.
SOURCES & LINKS
Japan to Ratify takes you to the Wall Street Journal Story that was the source for today's featured quote. 

From the Peterson Institute is a link to the October 2015 article on the TPP process mentioned above.

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