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LSCMS Blog

Blog for updates and happenings in logistics in the Asia-Pacific region

June 23, 2015

For Trade Agreement Backers, It’s a Slow Path to Fast Track

Filed under: Economics,News,Newsletter,Supply Chain Management — admin @ 11:27 am

forecasting tradeOn Capitol Hill right now, “fast-track” is the slowest thing going.

The House of Representatives voted last week to give President Obama the authority to negotiate free-trade agreements with minimal interference from Congress. Following legislative review, the pacts would be subjected to a simple yes-or-no vote, with no amendments permitted.

In reality, the lawmakers’ action wasn’t quite so straightforward. House Republicans decided to move forward on fast-tracking, or what is officially called Trade Promotion Authority (TPA), without the protection of Trade Adjustment Assistance (TAA), a mechanism for aiding U.S. workers who have lost their jobs as a result of trade pacts.

The reason? House Democrats, who have previously supported TAA as a necessary safeguard against the impact of free-trade agreements on the domestic economy, shot it down earlier last week, even as they voted in favor of TPA.

At issue are two big trade agreements currently under negotiation: the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), covering trade with Asia and Europe, respectively.

TPP, which includes 12 countries in the Asia-Pacific region, has been a particular lightning rod for criticism. Opponents charge the pact would result in the loss of U.S. manufacturing jobs, and place the interests of multinational corporations ahead of government policymakers.

U.S. backers argue that participation in TPP means an enhanced American presence in the Asia Pacific region. In its current form, the agreement pointedly excludes China, and it wouldn’t be farfetched to suggest that TPP is a calculated attempt to offset that nation’s growing economic and political clout.

This is supported by analysis from the Asian Trade Centre:

The process through which goods and services are produced and consumed is shifting rapidly. We are increasingly living in a world of global value chains (GVCs) or global supply chains. We’ve had supply chains of one sort or another in trade for centuries, as firms have traded with one another for raw materials, components, or final, finished goods. What is different now is that, with falling costs of communication and transportation, it is possible for companies to source exactly the right inputs from exactly the right geographic space to take advantage of different costs in materials, services, labor, and capital. The world is literally the “oyster” for global companies.

In this world, trade agreements have not kept pace with changes on the ground. The WTO agenda is nearly 15 years old. Bilateral agreements between two countries are not particularly helpful for value chains that span dozens of places.

Hence the drive to create larger trade agreements. In Asia, many governments have been very promiscuous, signing up to all sorts of trade deals. Singapore, for example, has more than 20 in force with more under negotiation. Such agreements can be helpful in spurring economic growth, especially for some companies or covered industries.

[Read more… Curated from Supply Chain Brain & the Asian Trade Centre]

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