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May 13th, 2015:

US-Asia trade deal in tatters after senators target Chinese currency manipulation

US President Barack Obama’s ambitions to pass sweeping new free trade agreements with Asia and Europe are in tatters after Senate Democrats rebelled, having been rebuffed on their demands to curtail Chinese currency manipulation.

A vote to push through a bill on the trade deals failed on Tuesday as 45 senators voted against it, to 52 in favour. Obama needed 60 out of the 100 votes for it to pass.

Failure to secure so-called “fast track” negotiating authority from Congress represents a huge blow to the president’s top legislative priority.

White House officials dismissed the Senate vote against fast-track as a “procedural snafu” but without this crucial agreement from lawmakers to give the administration negotiating freedom, it is seen as highly unlikely that international diplomats can complete either of the two giant trade deals currently in negotiation: the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).

The Senate fast-track legislation, known as Trade Promotion Authority or TPA, was facing even tougher opposition in the US House of Representatives.

Opponents have been emboldened by the growing influence of liberal senators Elizabeth Warren and Bernie Sanders and were joined by all but one Senate Democrat in voting against moving forward with TPA.

Even Hillary Clinton, the Democratic frontrunner for the 2016 presidential race and historically a supporter of free trade, has been cautious amid growing concern over the effect of globalisation on middle-class jobs, warning against “trade for trades sake”.

But the failure to persuade even the half-dozen Democrats needed to join Republicans in the Senate is a shock reversal from earlier consensus in the finance committee, which had included an agreement to soften the impact on US jobs with Trade Adjustment Assistance (TAA).

Oregon senator Ron Wyden, who had led Democrat efforts to find a compromise with Republicans on the committee, said he had withdrawn his support because they refused to guarantee passage of another additional bill to prevent currency manipulation by China.

White House trade negotiators fear that provisions in this bill would prove impossible to introduce into trade talks at this late stage and Republicans have dismissed the issue as a wrecking tactic by Democrats.

Utah senator Orrin Hatch, the Republican sponsor of the TPA bill, accused Wyden and other Democrats of betrayal in a speech on the Senate floor.

“I am shocked that after all we have done, the bipartisan vote in committee and the importance of TPA and TAA to the president that, we now have damaging procedural mechanics that can make this impossible,” he said. “It is hard for me to believe. We had an agreement and I am concerned about that agreement being broken.”

Hatch later told reporters the issue must be resolved quickly but was uncertain of the pathway forward. The congressional drama over the TPA, he added, “creates a whole new monster set of arguments and debates that we don’t need” in negotiations over the broader Trans-Pacific Partnership.

But Democratic critics heralded the vote as a breakthrough moment.

“We need to fundamentally renegotiate American trade agreements so that our largest export doesn’t become decent paying American jobs,” said Sanders.

Business leaders expressed disappointment in the vote. The Business Roundtable, Washington’s top business lobby group, had urged the Senate to pass TPA “without delay” arguing the trade pact would support US jobs and spur economic growth.

Last week Obama chose Nike’s headquarters to call for Congress to support the deal. Nike chief executive Mark Parker has claimed the deal would allow it to create 10,000 new jobs in the US.

Source URL (modified on May 13th 2015, 8:21am):