Sunday, June 14, 2015

TPP

Some thoughts based on my experience with negotiation and mediation in general that may be relevant to the ongoing Congressional fight over passage of fast track authority for the Trans-Pacific Partnership (TPP) trade agreement (which suffered a major setback on Friday)

Critics of the TPP have thrown suspicion onto the deal because many of its terms remain shrouded in secrecy. But confidentiality is something we fight to preserve in mediation and other forms of negotiated conflict resolution. One reason is to allow negotiators freedom to make aggressive offers and demands without fear of being second-guessed by their principals until the deal is completed. Another is to try avoid unnecessarily angering those who have to approve the deal before they fully understand the trade-offs involved in the final agreement.

In addition to maintaining confidentiality, it is helpful to the negotiating process for negotiators to remain open-minded. Even if the other side makes what is considered an unacceptable proposal, that should not be a reason to scuttle the negotiation. Instead, it is more constructive to present a counter-proposal, or to present something the other side may view as equally unacceptable as a condition of acceptance of their outrageous proposal.  I always caution parties to settlement negotiations to try not to react too negatively to the other side's insulting offers or demands. Instead they should be treated as invitations to make counter-proposals. I also caution parties not to rush into an evaluation of the merits of the deal. Wait until the negotiators have made the best deal they think they can get before comparing that potential agreement to the alternative of no agreement.

Particularly with something as complicated as a multi-nation trade negotiation covering a wide range of issues, it is important to step back and look at the bigger picture rather than to pick apart provisions that appear harmful to one side. In general, when barriers to trade are reduced, industries that have trouble competing against foreign suppliers are going to face even greater challenges, while industries that are having success in selling abroad are going to have even greater success. The economy may benefit from lower prices for goods made abroad, as well as from greater revenues for increasing exports. The net positive and negative effects  have to be weighed against each other before the deal as a whole can be deemed harmful. This is why every modern president seeks and usually obtains fast-track authority for trade agreements: so Congress can evaluate the package as a whole, rather than pick apart the pieces and risk the destruction of an agreement whose benefits may outweigh its costs.

Another consideration that risks getting lost in evaluating the merits of a negotiated agreement: Let's not overlook the value of peace itself. Parties often focus on the substance of particular issues being negotiated, and fail to give sufficient consideration to the cost of failing to resolve the issue. They fail to put a high enough price on the cost of continued conflict. These costs and values are particularly dramatic in the context of international trade agreements. Trade can create greater understanding among the peoples of nations engaged in trade, as well as economic benefits. The alternative to free trade is suspicion, distrust, and even war. The first thing that countries suspend when they resort to war is trade. Thus, trade can be seen as one of the most effective deterrents to war, because when the economies of various countries benefit from trade, they are less likely to resort to war.

In the current round of negotiations over this trade deal, we see critics of the deal failing to consider all of the foregoing. They are suspicious rather than protective of the secrecy of the negotiations. They are unduly focused on the merits of particular parts of the deal, and unable to evaluate it in its entirety. And they fail to put a sufficient value on the virtues of making an agreement per se. I'm not arguing for or against the TPP. What I am saying is that there are good reasons for keeping negotiations secret; there are good reasons for the president to seek fast track authority to allow a vote up or down of the agreement as a whole; and there are a great many issues that must be considered in evaluating the benefits and costs of such a deal, including the value of resolving disputes by agreement instead of by more destructive means.

Politically speaking, it is noteworthy that the House managed to find the votes to pass fast track, but potentially derailed the TPP by voting to abandon a program that Democrats have supported for decades, a program that provides assistance to displaced workers. It is troublesome that Democrats, and their union benefactors, were willing to end a significant job training program to protect union members. While the unions do have legitimate fears, Democrats should be wary of being governed by those fears. There are much broader issues at stake. Democrats need to serve broader interests than protectionist unions, if for no other reason than that it would be political suicide for the Democratic Party to fall completely into the pockets of the unions. They must take into account, for example, the interests of consumers and producers who benefit from lower prices, as well as the interests of exporters, who benefit from the removal of trade barriers. The person who is supposed to balance all of the competing interests of the American people is the president, and it seems highly unfortunate that House Democrats chose not to support the president's efforts in this case to do that.