Trade Compliance

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Clock Now Ticking on TPP Ratification

Posted February 05, 2016

The official signing of the Trans-Pacific Partnership this week in Auckland by 12 ministers of the agreement’s member countries sets in motion an uncertain and politically charged ratification process that could take up to two years.

At the signing ceremony, New Zealand Prime Minister John Key called the event “an important step” but noted that the agreement “is still just a piece of paper, or rather over 16,000 pieces of paper, until it actually comes into force.”

Under the final provisions of the TPP, the pact must be ratified within two years by no less than six “original signatories” of the agreement, which between them represent at least 85% of the total GDP of the original 12, in order for it to take effect.

Given that economic threshold, whether the TPP eventually becomes a reality will be primarily determined by events in the United States and Japan, which together comprise roughly 80% of the total GDP of the signatories. Accordingly, if either country fails to ratify the deal, it would then be impossible for all of the other countries involved to fulfill the necessary GDP requirement.

In a speech delivered this Wednesday, Finance Committee Chairman Orrin Hatch (R-Utah) outlined the path forward for the TPP, saying the Obama Administration must complete many more steps, as required by bipartisan Trade Promotion Authority (TPA), before the trade agreement can be submitted to Congress for consideration.

“No one should be under any illusions that, because the TPP is being signed today, an up or down vote on the agreement is imminent or that our oversight responsibilities are at an end,” Hatch said. “If history has taught us anything, it’s that this process can, and often does, take a very long time to complete. In fact, it’s not an exaggeration – or even all that remarkable – to say that it can take years to get an agreement through Congress AFTER it is signed.”

Under the terms of the TPA, the Obama administration can submit implementing legislation reflecting the final signed text to Congress along with a statement of administrative action no sooner than 30 days from the signing. Theoretically therefore, Congress could vote on the TPP as soon as early next month, but most pundits regard this as an extremely unlikely possibility in light of the complex politics involved. Even so, the Obama administration has signalled that it intends to press ahead with a strategy aimed at moving the TPP through Congress sooner than later, asserting that there are “real economic costs” to delay.

Pushing back against that approach, Hatch vowed a thorough evaluation of the trade agreement, saying there is a long history of rigorous Congressional review. “I’m quite certain the President wants to get a strong TPP agreement passed as soon as possible. I share that goal,” Hatch said. “But, Congress has a history of taking the time necessary to consider and pass trade agreements, and the process set out under TPA demands that we do so. Despite a number of claims to the contrary, Congress does not rubber stamp trade agreements and we will not do so in this case.”

Senator Hatch concluded his remarks by saying that the TPP is an “extremely important” agreement that needs to get done; and as such, “we need to focus more on getting it right than on getting it done fast.”