Orrin Hatch holds cards on trade deal
One of Congress' strongest trade boosters is critical of the landmark Asian-Pacific deal — and well-positioned to delay or kill it if he decides to do so.
No one fought harder to give President Barack Obama trade promotion authority to complete a landmark 12-nation deal than Senate Finance Committee Chairman Orrin Hatch. Now, no lawmaker may be more disappointed with the result — or better positioned to torpedo the deal if he chooses to oppose it.
Days after the Obama administration announced a Trans-Pacific Partnership agreement after nearly six years of negotiations, Hatch offered a stinging review and warned that the administration may have ignored congressional marching orders in a number of areas, including securing strong intellectual property protections for a new, cutting-edge class of drugs called biologics.
"The negotiating objectives we included in our TPA law aren’t just pro forma," Hatch said on the Senate floor. "They aren’t suggestions or mere statements of members’ preferences. They represent the view of the bipartisan majority in Congress.”
Just how far Hatch might go to register his disapproval is unclear. The Utah lawmaker said he’s still waiting to read the full text of the agreement before he decides how to proceed. But his harsh early remarks, coming from one of Congress’ strongest trade advocates, raises a red flag for the trade deal that represents a top priority for the Obama administration. Hatch was a driving force behind trade promotion authority to streamline congressional approval of the deal — it requires only a straight up or down vote with no amendments or filibusters to pass. In fact, Hatch fought to make it more difficult to unwind that process.
Despite fast-track rules, though, congressional approval of the deal is far from certain — even if the White House and Republican leaders decide to hold it until the lame-duck session after the 2016 election. By securing language sought by Democrats — settling for far less than 12 years of monopoly protection for biologics, for instance, and barring tobacco companies from being able to sue countries for financial losses related to antismoking laws — the administration managed to tick off Republicans, among them Hatch, who accounted for the bulk of support for fast track authority.
The administration is launching a full-court press, confident it can persuade a majority of lawmakers that the economic and geopolitical benefits of the agreement are bigger than any concern about individual provisions.
“Once we get folks to assess the agreement and make their judgments, I’m confident that we’ll have strong support for it because the TPP gives American businesses of all sizes … unprecedented access to vital markets in the Asia-Pacific,” said U.S. Trade Representative Michael Froman, who visited Delaware this month to build support. “We’re going to be sitting down with members on both sides of the aisle to make the case that the TPP will benefit the economies of their states and communities.”
Still, one former Senate aide said that if Hatch decides to oppose the deal, he would easily get backing from other Republicans, who "won't take much convincing to believe that President Obama negotiated a bad deal, no matter the substance."
Gregory Mastel, another former Senate aide, now at Kelley Drye & Warren, said the administration will likely need to get creative to get the deal passed.
“Particularly given that TPP is likely to have to pass with very few Democratic votes, I suspect the administration will have to do some careful calculations with regard to Sen. Hatch,” Mastel said. “There are usually a number of ways to solve a problem — renegotiation, side agreements, changes in U.S. law.”
There is a long history of administrations going back to the drawing board to address congressional concerns about trade deals that have already closed.
Bill Clinton negotiated labor and environmental side agreements with Mexico in 1993 to build Democratic support for the North American Free Trade Agreement. George W. Bush struck the “May 10, 2007” deal with congressional Democrats, requiring multiple changes to agreements with Peru, Colombia, Panama and South Korea. Obama, meanwhile, sat on Panama, Colombia and South Korea agreements for two years, then negotiated new provisions to make the deals palatable to congressional Democrats. When he finally submitted the pacts to Congress in October 2011, all three won bipartisan support.
But Froman has ruled out renegotiating TPP, saying it would upset carefully balanced concessions among 12 trading partners.
"This is one where every issue is tied to every other issue, and every country's outcome is balanced against every other country's outcome,” Froman said Thursday during a call hosted by the Council on Foreign Relations.
Many trade experts agree that pulling one thread could unravel the whole deal.
“That pretty much is a poison pill for the TPP,” Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics and a former U.S. negotiator, said of renegotiations.
One of the most controversial compromises — the length of time granted for monopoly protections for biologics — would also be one of the most difficult to change. U.S. drugmakers’ demand for the 12 years they receive under U.S. law bedeviled the talks for nearly six years. The compromise establishes a baseline of five years protection for the drugs, with language that could eventually bring the protection period up to eight years.
“It clearly was one of the hardest issues — if not the hardest issue,” Froman said in an interview.
It is also the issue about which Hatch has expressed the greatest discomfort.
Ultimately, fast-track authority is only a procedural agreement, and Congress can honor or ignore it. Then-Speaker Nancy Pelosi proved that in 2008, when she moved a resolution through the House that stopped the clock on trade promotion authority for the U.S. trade deal with Colombia. The clock wasn’t restarted until 2011, after Obama had negotiated a labor plan with the Latin American country that enabled him to win the support of 31 House Democrats.
In the case of TPP, if Hatch decides to oppose it, the White House would probably think twice about submitting it for a vote. But if the administration went forward anyway, Hatch could pursue two options to force it back to the negotiating table by stripping “fast-track” protections from the deal.
Both options are built into the TPA law. One allows both chambers to adopt a "procedural disapproval resolution" within 60 days of each other, asserting the White House did not adequately notify or consult Congress, or that the Asia-Pacific trade deal “fails to make progress in achieving the purposes, policies, priorities, and objectives” of the trade promotion law.
The second option would allow either the House or the Senate to strip "fast track" procedures in that chamber only. To begin that process, the Senate Finance Committee or the House Ways and Means Committee would have to send the pact to the floor with a "negative recommendation," urging it be rejected, which would be subject to normal rules.
Short of those nuclear options, the trade promotion law stacks the deck in the White House's favor. Once Obama sends the TPP deal to Congress, lawmakers have 90 legislative days to approve or reject the agreement without making any changes.
Hatch's committee in the Senate and the Ways and Means Committee in the House, chaired by Paul Ryan, will run that process and therefore exert some control over how it unfolds. If either were to bottle up the deal, however, the legislation implementing TPP would go to the floor after 45 legislative days for a vote anyway.
Hatch has laid out three criteria for making up his mind on whether to support the deal.
First, he said, the deal must be balanced and meet the U.S. negotiating objectives established under TPA; second, the administration needs to prove to Congress that countries will live up to the commitments made under the agreement; and third, the agreement must be subjected to a rigorous congressional review, including in-depth consultation with the administration.
“If countries want to trade with the U.S., we should demand that they respect and enforce the intellectual property rights of American businesses and individuals,” Hatch said last week. “That means including strong provisions protecting intellectual property in our trade agreements and a requirement that intellectual property rights commitments be implemented before allowing the agreement to enter into force for our trading partners.”
He also emphasized that Congress must have access to the full text, including annexes and side agreements, before the president even notifies lawmakers that he intends to sign the deal in 90 days.
National Foreign Trade Council President Bill Reinsch said it's too soon to tell how hard Hatch will push back once he has details on the entire package.
"The real question is whether the president would submit it knowing that Hatch was against it," he said. "My guess: Froman will talk to him, and he'll come around in the end."
