By Lambert Strether of Corrente.
Sadly, or not, the TPP sausage made in Maui proved unpalatable to many trade ministers; not merely the casing, but the filling. Here’s the “Joint Statement by TPP Ministers” emitted by the United States Trade Representative. I’ll quote most of it so you can savor it:
We, the trade ministers of Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam announce that, after more than a week of productive meetings, we have made significant progress and will continue work on resolving a limited number of remaining issues, paving the way for the conclusion of the Trans-Pacific Partnership negotiations.
Ministers and negotiators leave Hawaii committed to build on the momentum of this meeting by staying in close contact as negotiators continue their intensive engagement to find common ground. Negotiators will also continue to work to formalize the achievements that have been made this week.
In this last stage of negotiations, we are more confident than ever that TPP is within reach and will support jobs and economic growth.
The flaccidity of the language — “more than a week of,” as opposed to X days, “productive meetings,” as if there were ever any other kind, “paving the way,” “intensive engagement,” “within reach” — is remarkable even by American standards, and matched only by the superb irony of “committed to build on the momentum of this meeting.” What momentum?
Crucially, note that the text isn’t even agreed at staff level! (“continue to work to formalize”). And as Inside Trade tartly notes, the ministers “ended a four-day meeting without even an agreement in principle.”
How did the TPP fail in Maui? And why? And what next?
How the TPP Failed in Maui
The TPP failed badly and the Administration lost ugly. Crucially, the negotiators set no date to resume the negotiations.The Japanese say that others say August:
Ministers at the talks in Hawaii shared the view the negotiations should resume before the end of August, Japan’s Economy Minister Akira Amari told reporters, according to the Kyodo news agency.
But International Business Times and the Australian each say November. An agreement in August would make TPP an issue for Canadian Prime Minister Stephen Harper, whose election is October 19, meaning that the campaign starts now, but a November agreement would make TPP an issue for the Iowa caucuses in the United States, tentatively set to take place January 18, 2016, with the New Hampshire primary to follow a week or so later. (These dates are still fluid, i.e. contested, but if 2008 is any precedent, campaiging in both Iowa and New Hampshire will be well under way in November, even if the Iowa primary is kicked back to February 1.) Both the August and November dates, therefore, put the unanimous agreement required to conclude the negotiations at risk. And that’s before we get to the requirement for ratification in the midst of a United States Presidential campaign, where the traditional kick-off coming on Labor Day.
Moreover, it isn’t clear that the negotiators themselves know what the remaining sticking points are (more on this below). The voluble Australian Trade Minister Andrew Robb, quoted in the Guardian:
[ROBB:] The sad thing is, 98% is concluded.
Robb, quoted in Japan’s Mainichi:
[ROBB: The ministers] have taken provisional decisions on more than 90 percent of issues
Ignoring the backspin of “provisional,” which is it? 98% or 90%? Anyhow, any project manager knows that if the lead developer says the project is “98% done,” that means the project is really not done, and it’s time to toss out the Gantt chart and start thinking triage.
Finally, the Japanese noises, even in English, are not encouraging for advocates of TPP passage. Channel News Asia, Akira Amari, Japan’s minister in charge of TPP negotiations, advocating the August date:
“If we can’t conclude it next time, it’s going to be very hard.”
An expert on Japanese diplospeak I am not, but I think that translates to: “If you think you can do this deal after the next 29 days have gone by, you’re demented.” Pleasingly, that requires Obama to throw Harper under the bus. So the Japanese are sitting in the catbird seat, aren’t they? (Yves parses a previous “wonderfully ambiguous” statement here, concluding: “It’s only about US eagerness, not about where the Japanese are.” Exactly.)
Why the TPP failed in Maui
When negotiations take place in secret on a secret text, blame and responsibility are hard to assign. It’s true that both Obama and Michael Froman are terrible negotiators — when your opposite number shouts that they “aren’t a U.S. colony” it’s clear that there are, well, trust issues, which tend to persist — but historians generally label the idea that one general can lose a war the “Man in the Dock” theory, so I won’t treat Obama or Froman as the only parties to be accused in history’s courtroom. The failure of a major international negotiation between “Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam” must of necessity be complex and multicausal, and mono-causal “Industry in the Dock” theories (“Dairy!!”) and “Country in the Dock” theories (“Australia walks away!!”) theories have insufficient explanatory power. They are easy to write on deadline, though, and allow the quoted sources to throw shade on the unquoted ones, and so mono-causal theories abound. Here’s how that works in short form:
There were some signs of tension in the press conference, as ministers showed signs of having been pushed on areas of special interest to their economies. The Mexican minister defended its position on automobiles, and the New Zealand minister defended its stand on dairy, remarking that his country started the negotiation and “will not be pushed out of this agreement.
Each minister puts another industry or country in the dock!
I believe the causes for failure are to be found in the “domestic politics” — read, nation-states that continue to function — of the potential signatory countries. For each, significant and immediate domestic pain outweighs vague future benefits and creates a humongously intertwingled hairball of irreconcilables:
The “final” ministerial meeting on the Trans-Pacific Partnership Agreement (TPPA) [that’s what they call the TPP in the Antipodes] in Maui has failed. Not opting to stay another day shows the gridlock is serious and potentially intractable’, according to University of Auckland law professor Jane Kelsey.
‘Everyone is blaming each other in Maui’, Kelsey said. ‘But the underlying reason for the gridlock is the domestic opposition in almost all the TPPA countries.’
‘People simply don’t believe a deal that raises the price of medicines and handcuffs the right of governments to regulate is in their national interests’.
‘Despite erecting a shroud of secrecy around the negotiations, politicians know they can’t sign a final deal that they can’t sell at home.’
I’ll summarize a little of the intertwingling here. (Readers knowledgeable on Mexico, Brunei, Chile, Peru, and Vietnam please chime in!) Here’s why a few countries will have a hard time “selling” TPP to their variously sovereign peoples (or “electorates,” as we like to call them):
New Zealand: Dairy is 30% of New Zealand’s exports, and they want more. (There’s also huge domestic opposition based on sovereignty issues.) No deal on dairy, no deal for New Zealand. But speaking of dairy:
Canada: Dairy is huge in Quebec, and Harper won’t want to fan the flames of separatist sentiment before an election by taking away protection from it. Also, the much-loved CBC is a State-Owned Enterprise (SOE), and Canadians don’t want to privatize it under TPP rules. And speaking of SOEs:
Malaysia: Malaysia controls the Straits of Malacca, a global world trade chokepoint, so they really don’t have to do anything they don’t want to. The good folks at State who work for America’s First Black President made Malaysia’s little slavery problem go away by upgrading them to Tier 2 status under the Trafficking in Persons Act, based on prosecutions (as opposed to convictions), and the Malaysians carved out exceptions for themselves on SOEs, but it’s not clear the Malaysian government has the legitimacy or the will to sign anything, enmeshed as it is in humongous corruption scandal. ($700 million is alleged to have circled the globe and landed in a private account controlled by the Prime Minister, which also gives you a good idea of project scope if the United States was simply thinking of bribing them.) And since the Malaysian political system is built on ethnic preference and SOE employment, I can see the Malaysian electorate feeling a little iffy about any deal. And speaking of iffy electorates:
Japan. Here’s an exchange between Clive, our Japan maven, and me:
Lambert: It has occurred to me that Abe already got what he really wanted from Obama; permission to remilitarize. So wouldn’t it make more sense for him not to screw over his rice and beef industry, let TPP die, and then point the finger at the other guys?
Did Abe ever really go to the mat for TPP domestically in Japan? Or, if things are less personal and more subtle, did the powers that be?
Clive: No, you’re right Lambert I think. [Abe] got what he was after with the revised memorandum for military cooperation with the U.S.
He played Obama like a violin — giving just enough ground in the TPP negotiations to fool Froman (not saying much; my mother-in-law’s cat could fool Froman), get the revisions to the memorandum in place and then play for time in the rest of the TPP negotiations by floating deal-breakers for the U.S. like massive agricultural tarrif protection grandfathering.
Abe did diddly squat in terms of groundwork for getting the TPP established in Japanese domestic political circles. Abe practically handed Japanese agricultural lobbying the very tools they needed to force the LDP into prevarication.
I don’t have any time for Abe and his “strong Japan” posturing. But in terms of political skill, he runs rings round Obama and his inept failed ex-bank execs inner circle of cronies like Froman.
And then there’s this little nugget on auto from Fortune:
Japan and the United States had largely agreed on the rules of origin for cars, which determine when a product is designated as coming from within the free trade zone and therefore not subject to duties. But they ran into problems trying to get buy-in from Canada and Mexico, which are closely tied in to the U.S. auto industry.
Mexican Economy Minister Ildefonso Guajardo said Mexico was the world’s fourth-biggest auto exporter and he made no apologies for standing up for his country.
Japanese automakers source many car parts from Thailand, which is not a member of the TPP, and strict rules would upset existing supply chains.
So, auto is “largely agreed” but totally not? Because Canada and Mexico want strict rules that would put Japan’s supply chain at risk? Why do I think that Japan — again, sitting in the catbird seat — is pushing for an August date to shove a deal over the cliff that has nothing in it for them? (And if we’re thinking of bringing in Thailand, we’ll have to make another little Tier 3 problem go away, just as we did with Malaysia.)
And all this is before we get to IP, pharma, agricultural products like beef, pork, rice, and sugar, and ISDS, none of which are agreed either. At this point, one asks “90”- or “98%” of what, exactly?
Finally, I’d like to draw attention to the mischievous — by which I mean the highly constructive — role played by Wikileaks in publishing chapters of the text: The ISDS chapter published this spring inflamed activists in all of the Five Eyes countries, the SOE text leaked during the Ministerial (!) was aimed like a dagger at both Malaysia and Canada, and the fact that our own NSA had been bugging the Japanese negotiators, also leaked during the Ministerial (!!), can’t have made that Not-a-U.S.-colony! too happy. (Of course, everybody knows that’s what the NSA does, and every other country does it, too, but such things should not be spoken of, and timing counts.)
What Next for TPP?
What next? The ash heap of history, one hopes, but things like TPP just don’t magically appear in the ash heap; they have to be put there. Here is the perspective I would like to share:
The TPP is a long-standing project of the global elites. I believe — as do Yves and others at NC — that the fundamental purpose of the TPP puts our national sovereignty at risk; the “lost profits” to be compensated for under ISDS are, after all, not a side effect of state regulation of markets, but essential to it; the regulation of cigarettes is a prime example of how government can protect their people by taking profits away from bad actors. Making sure that corporations lose profits from marketing and selling cancer sticks is a very good way to make them stop doing it. Policies like the Tobin Tax are another example; if, as two links today argue, 99% of trading is pointless, why not tax that industry out of existence? And if a government cannot do that because it faces ginormous fines from the (rigged, corrupt) ISDS system, is it really sovereign?
So what to do if you wish the United States people to retain their sovereignty? I think it’s useful to conceptualize the TPP fight — both for and against — as a war. In war, there are three levels of abstraction. Starting at the highest level:
- War: One salient feature of war — I mean, besides killing lots of people — is that war can take years. Citizens, as well as activists, need to conceptualize the war for sovereignty, and against global elites, on that time frame. Americans can accept, apparently, that a baseball team can take years to rebuild, but have a hard time transferring that idea to politics, for some reason. The elite has all the time in the world, and can manipulate both financial and political time. Activists and citizens need to accept this, and roll with it. (Eyes on Trade has done this superbly; ditto Wikileaks; but American citizens are not yet engaged, en masse.)
- Campaign: Campaigns take place in multiple theatres and multiple fronts, on different terrain, with different leadership, and troops and materiel of differing qualities. American citizens, especially, really need to stop thinking of the Beltway, the Washington political class, and electoral politics (and petition drives, etc.) as the only campaign that matters. Remember: TPP must be decided unanimously. Wikileaks rushed aid to the Five Eyes with the ISDS leaks, to New Zealand and Malaysia with the SOE leaks, and to Japan with the NSA bugging leaks (aid to the citizens of those countries, that is; not the negotiators trying to sell them out). We need to do likewise.
- Battle: One battle is not a campaign is not a war. I sensed, rightly or wrongly, a falling off of reader interest in TPP when the administration managed to ram Fast Track through Congress. That was a defeat (and may yet prove costly, in Fast Track applies to both TTiP and TISA). Nevertheless, the anti-TPP/pro-sovereignty forces seriously damaged the administration; for Obama and Froman, it was a Pyrrhic victory, and for us, I would argue, it made the victory in the next battle, in Maui, possible. First, the credibility of the United States negotiators was put at risk, because it wasn’t clear that the U.S. could deliver on the deal; and second, politicians were encouraged to check with their own citizens. The moral: Don’t get discouraged or lose interest when a single battle is lost; in baseball, to lose a game or even a series is not the same as a losing season.
That said, the good guys won a big battle in Maui. Let’s break out the champers, because winning should taste sweet. And let’s hope — and plan — for victory in this campaign, and that we end the war with victory. Meanwhile, every delay helps, and if there’s no Ministerial agreement on TPP this month, it’s going to be much more difficult in the Fall.
Readers know I very rarely wave pom-poms… But “Yay!”
 “Capt. Spaulding: All right, send it that way and tell them the body will follow. Horatio Jamison: Do you want the body in brackets? Capt. Spaulding: No, it’ll never get there in brackets. Put it in a box” (Animal Crackers).
 I mean, come on. We’re talking Southeast Asia, here.
 Australia, apparently, was the hold-out on ISDS. Intellectual property watch:
In the area of investment, Australia continues to fight for several footnotes or provisions on investor-state dispute settlement (ISDS) that are opposed by other countries. Sources said these objections have prevented TPP countries from concluding the investment chapter, as everything else is basically agreed.
“Basically agreed.” Well, that’s alright then.
 Here one thinks of the European elites bringing Greece to its knees through control of the payments system. I’m sure that episode will provide many valuable lessons for ISDS enforcement in future.
I’m leaving comments open because I’d especially like to hear from readers on how TPP is playing in their countries; TTiP and TISA, too!