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Last updated: January 30, 2014 12:45 am
President Barack Obama’s push to strike trade deals with the European Union and 11 Pacific Rim nations was put in jeopardy after the top Democrat in Congress quashed the idea of giving the White House congressional approval to negotiate the pacts.
Harry Reid, the Senate majority leader, said he opposed legislation known as Trade Promotion Authority, which sets a swift timeline for trade bills and prevents amendments that would slow them down or modify their contents.
“I’m against fast track,” Mr Reid told reporters, less than a day after Mr Obama had called for TPA in his State of the Union speech. “Everyone would be well advised just to not push this right now, ”he added.
Mr Reid has often been sceptical of trade deals, and is wary of their potential to divide his party in a year of midterm congressional elections during which his control of the Senate is at risk.
“Leader Reid has always been clear on his position on this particular issue,” a White House official said, dismissing the significance of Mr Reid’s comments.
Others, however, saw his intervention as a defiant rebuff to the president that threatens to chill hopes of making progress this year on the biggest global negotiations to liberalise international trade.
“Harry Reid’s decision to block these deals cripples America’s historic role as the global leader in advancing free trade, and it is a personal embarrassment to the president,” said Tony Fratto, a former US Treasury and White House official under George W Bush, and a partner at Hamilton Place Strategies, a consultancy.
Mr Obama’s words on trade in Tuesday night’s address to Congress were cautious, reflecting doubts that he has built enough political support for his expansive second-term agenda of trade liberalisation.
Mr Obama said the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership would help generate employment among small businesses seeking to export around the world.
“We need to work together on tools like bipartisan Trade Promotion Authority to protect our workers, protect our environment, and open new markets to new goods stamped ‘Made in the USA’,” he said.
But Republicans said this was far from the more heavy-handed public and private White House campaign that was needed to win over sceptical Democrats. Orrin Hatch of Utah, the top Republican on the Senate finance committee and an architect of a bipartisan TPA bill introduced this month, said he was “extremely disappointed” by the administration’s efforts and message.
“The president barely mentioned his trade agenda. He certainly didn’t call on members of his own party to set aside their differences and support renewing TPA,” Mr Hatch said. “This administration needs to do better,” he told an audience at the US Chamber of Commerce on Wednesday.
Securing a TPA bill has been an uphill struggle for the administration since last year, and its prospects looked bleaker after Mr Reid’s comments.
A spokesman for the Senate finance committee said Max Baucus, the Democratic committee chairman who brokered the TPA compromise with Mr Hatch this month, would “continue to push forward on efforts to secure TPA”.
But it is highly unlikely the existing compromise can be voted on in the Senate finance committee any time soon.
Moreover, Mr Baucus will start as US ambassador to Beijing as early as next month, removing him from the picture. He will be replaced at the helm of the committee by Ron Wyden of Oregon, who has also signalled that the TPA legislation is not acceptable as written. His wish to renegotiate some of the bill’s terms clouds its fate.
“My bottom line is that America needs a better TPA framework so our people can benefit from better trade agreements. These agreements must expand the winner’s circle, so that it includes more Americans with good-paying jobs,“ Mr Wyden said in a statement late on Wednesday. “Global commerce has changed dramatically since the last time TPA was authorised and Senators are telling me they want the chance to examine those changes and have an opportunity to weigh in on a variety of issues,” he added.
America’s trading partners are tracking the fate of TPA with increasing anxiety. European officials were reserving judgment on Wednesday about Mr Obama’s speech and how it might affect transatlantic trade talks. But they said it was clear that, mindful of political difficulties, the White House had decided not to use the speech to press its case for TPA forcefully.
“There is no sense of urgency,” one European official told the FT. But “we’d love him to push hard on trade/TPA. That will keep the momentum, also on this side of the pond.”
“If Obama makes a run for TPA and doesn’t get [it], I think the TPP is going into Doha-like hibernation,” added Fredrik Erixon, a trade analyst at the European Centre for International Political Economy. “It is already a big issue with other countries in the TPP negotiations and they don’t look keen to close a deal on US terms if there is uncertainty about the administration’s capacity to actually get the deal through Congress,” he added.
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