White House Making Last-Ditch Efforts for a Trade Deal With Asia

The White House on Thursday estimated that more than $5 billion in U.S. exports and millions of jobs could be threatened if Japan strikes a new trade deal with China without a similar agreement in place with the United States, part of the administration’s last-ditch efforts to push President Barack Obama’s politically embattled plan to deepen economic ties with Asia.

Japan is the largest country to sign on to Obama’s signature free-trade agreement with 11 nations along the Pacific Rim, known as the Trans Pacific Partnership, or TPP. Under the deal, Japan would eliminate tariffs on key U.S. industries, such as beef and tobacco, that are expected to drive much of the $357 billion increase in exports forecast over the next 15 years.

However, the agreement requires congressional approval – a prospect that appears increasingly dim amid the anti-globalization rhetoric that has fueled the presidential campaign. Candidates Hillary Clinton and Donald Trump have vowed to block the deal if elected.

That leaves Obama with a narrow window in which to seal the deal during his last months in office. Now, the administration is not only touting what it believes are the broad benefits of an agreement, but also warning that America could be left behind if it falls apart. In particular, officials have cast the deal as a counterweight to China’s growing economic ambitions.

“In the absence of TPP, countries have already made it clear that they will move forward in negotiating their own trade agreements that exclude the United States,” the report from the White House’s Council of Economic Advisers said.

The analysis singled out the potential losses to the United States if Japan and China agree to new trade terms as part of the broader Regional Comprehensive Economic Partnership, which involves 16 countries accounting for roughly a third of the global economy. The White House estimated that 35 U.S. industries, making up $5.3 billion in exports to Japan, could suffer a loss in market share. The biggest impacts would be on manufacturing, food production and fishing, and more than 5 million jobs could be affected, the report said.

Still, the deal faces widespread opposition from both parties and questions about its potential consequences. Analysis by the left-leaning Economic Policy Institute found that minority workers would be disproportionately hurt by the deal and that trade with member countries cost the U.S. economy 2 million jobs last year. An estimate this year by the independent U.S. International Trade Commission found that TPP has limited economic benefits, boosting growth by just 0.15 percent through 2032 and adding 128,000 jobs.

“Given the modesty of net benefits and the large, regressive redistribution of income created by growing trade flows, it is puzzling why TPP is such a priority for the Obama administration – especially when it, like trade agreements before, is quite likely to do disproportionate harm to the people who make up his and his party’s political base,” Robert Scott, a senior economist at EPI, wrote in a blog post recently.

In recent weeks, administration officials have tried to drum up support for the agreement in speeches across the country. U.S. Trade Representative Michael Froman visited Nashville to tout the ways the deal could boost whiskey distilleries. Secretary of State John F. Kerry presented the deal as critical to national security – by containing China – at a foreign policy conference in Chicago. And Commerce Secretary Penny Pritzker emphasized the potential of opening markets to minority business owners in Illinois.

“Let’s face it: The rhetoric around trade is more heated than ever,” she said. “The Trans-Pacific Partnership is a historic opportunity to shape the rules of trade in the 21st century to advance our economic strengths and our values.”