American Rebound

In November 2012, the Obama administration seemed to be a political juggernaut. In sync with the upbeat rhythm of Stevie Wonder’s ‘Signed Sealed Delivered’, President Barack Obama strode to the podium to accept a second term victory. It was an endorsement from the electorate which put a resounding stamp of approval on his first term priorities and legislative successes.

Since his overwhelming re-election win in late 2012, it has not been an easy year-and-a-half for the United States’ President. The turbulent roll-out of his signature universal health insurance program paired with the Snowden revelations that made Europe’s leaders hesitant to click ‘Send’ on Gmail, along with other issues, have quelled the administration’s optimism following 2012’s historic victory at the polls. To use a metaphor as American as Coca-Cola: with its back to the basket, it is clear that the Obama administration is looking to pivot out of this trouble patch, and finish the last half of this White House term strong with some signature legislative victories.

Beyond the unprecedented success of the Obamacare turnaround in early 2014, the laundry list of administration priorities includes making the Transatlantic Trade and Investment Partnership, or TTIP, happen before the President’s term is out.

Recently, the Economist opined over TTIP that “the White House appears to have given up with scarcely a fight.” However, the words coming from the administration give credence to the notion that there is still some energy left to push the wagon forward. The actions of the administration and the United States Trade Representative, including yesterday’s visit to Brussels by President Obama, speak even louder.

What Washington is Saying

The Obama administration will push TTIP because it fits in with the administration’s broader goals of focusing on pro-growth policies that help rebuild the shrinking American middle class. During the campaign, the President promised to devote his energy to shaping “An economy that grows from the middle-out.” Obama’s Vice President, Joe Biden, outlined the connection between TTIP and the plan for middle class growth in the Financial Times on February 27th of this year, highlighting the benefits of the agreement in boosting the level of trade in high-quality goods between two economic titans. The fact that Vice President Biden would take to an international platform such as the Financial Times to speak directly about TTIP demonstrates the administration’s commitment to seeing a compromise hammered out to be passed in both Brussels and Washington.

In a weird twist on recent traditions in Washington, Republican officials are lining up behind the President on TTIP, with the loudest voices against the pact coming from the President’s own party on Capitol Hill. This has led to no guarantee that the U.S. Senate will ‘pre-approve’ of any deal U.S. and EU negotiators return from the bargaining table with. This back and forth culminated earlier this year in a clear ‘no’ from Senate leadership for the President to be given Trade Promotion or ‘Fast Track’ authority, allowing a vote in Congress without amendments that could scuttle any agreement. It was with this authority that free trade agreements have been negotiated under since the late 1960s, including the contentious NAFTA agreement.

Pessimists point to protectionist language by Democrats in Congress as evidence that TTIP may never receive Fast Track approval. One of the contentions among opponents is that voters did not send them to Washington to pass FTAs that “ship their jobs overseas,” which is consistently the usual knock against NAFTA and several other trade agreements with developing countries. What is overlooked by this point is that TTIP is not NAFTA.

Historic in Scope

The Obama administration clearly wants TTIP to be a landmark piece of legislation that will go down in the books as happening under its watch. The United States already has a free trade agreement with twenty countries worldwide. This is a diverse group of economies ranging from Singapore, to Panama, to Morocco. TTIP would more than double that number with a stroke of a pen.

Unlike NAFTA, there will not be an exodus of low-skill low-wage manufacturing jobs to Europe or vice-versa, namely because this will be an agreement between the two most developed common markets in the world. Instead, it will be an agreement over non-tariff, regulatory barriers, the details of which are obviously still under heated discussion. One sure thing in this situation is that in real-world terms, it is clear that large businesses have little problem, even today, in clearing hurdles set up by US and EU regulators while small businesses are disproportionally affected by the non-tariff barriers that will be eliminated with TTIP. Simply, this is a square deal for small and medium enterprises which politicians and economists on both sides of the Atlantic laud as drivers of the modern economy.

Rocky Road to TTIP

TTIP has its detractors in both the US and EU, and many contentious points still have not been resolved. Issues ranging from GMOs, to arts and culture ‘carve outs’ will continue to be on stakeholders lips in the months to come. Also, Fast Track approval from Congress in Washington will definitely not happen before the curtain closes on 2014. However, it is possible that Democrats in the Senate will be more amiable to help the administration deliver on the President’s priorities in 2015. The terms of any compromise negotiated between party leaders will be further proof that elections do matter.

This brings one back to the historic Election Day in 2012. As Barack Obama took the podium on a November night in Chicago, he declared that “we can seize this future together because we are not as divided as our politics suggests.” The same mantra should be applied when negotiators meet, and legislatures vote over the most ambitious trade pact in history.