Trade Negotiator Michael Froman Insists TPP Will Work
STEVE INSKEEP, HOST:
In this country, we can now have a fully-informed debate about the Trans-Pacific Partnership. The United States has released the text of that trade deal. It includes the U.S. and 11 other Pacific nations, from Chile to Malaysia to Japan. Because it affects American jobs and America's place in the world, the debate cuts across party lines. And in the coming days, as Congress prepares to vote on the deal, we will hear more than one voice. The American who negotiated the deal is President Obama's Trade Representative, Michael Froman. He wants to reassure Americans who are worried about losing jobs to globalization.
MICHAEL FROMAN: Globalization exists but we shouldn't conflate globalization with trade agreements. Trade agreements is how we can shape globalization. And that's what we're trying to do.
INSKEEP: What do you mean by that? What do you mean?
FROMAN: Well, we already live in an open economy. Eighty percent of what we import from TPP countries already comes in duty-free. But we face much higher tariffs in other markets. And these are some of the largest and fastest-growing markets in the world.
INSKEEP: Froman argues the TPP, the Trans-Pacific Partnership, will give U.S. industries more access to foreign markets. Granted, there's a trade-off. Other nations get more access to the U.S. for their products. Froman contends that, at least, happens slowly as tariffs or import taxes drop.
FROMAN: The tariff on imported trucks from Japan, as an example, won't go away for 30 years. On apparel and textiles, we worked very closely with the textile manufacturers in the U.S. to come up with an outcome that they could be comfortable with, so that we'll let in clothes coming that are made Vietnam or made in Malaysia, but they've got to use U.S. fabric.
INSKEEP: Now lets talk about trade in the other direction. What are examples of products that are difficult for the United States to sell abroad that will be easier now, you would argue, under this agreement?
FROMAN: Really, it's across the board. So we're a major auto exporter now. We face a 70 percent tariff on autos going into Vietnam, a 30 percent tariff on autos going into Malaysia. All of those will go away. It'll increase our opportunity to sell autos in those countries. And in Japan - we negotiated an agreement with Japan to address their nontariff barriers to our auto exports, and it's got real teeth as well. Farm machinery - 50 percent tariffs. Some agricultural products - hundreds of percent tariffs. They're either going to be eliminated or greatly reduced through this agreement.
INSKEEP: That's the big picture of the Trans-Pacific Partnership. The debate over it, though, revolves around its precise terms. Presidential candidates have attacked the details. Republican Donald Trump claims that other nations can alter currency values to make their products cheaper.
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DONALD TRUMP: Almost everybody takes advantage of the United States. It's through currency manipulation. It's not even discussed in the almost 6,000-page agreement.
INSKEEP: What do you say to that argument?
FROMAN: First of all, this is the first trade agreement to actually have a currency agreement associated with it and...
INSKEEP: Associated with it because you agreed to negotiate that separately, right?
FROMAN: Well, we have an agreement among the 12 TPP countries. And it does three things, very importantly. It lays out what the criteria are for appropriate exchange rate policy. It enhances transparency so that we know when a country is intervening in the markets and how. And then it creates an accountability mechanism where the 12 countries will be able to hold each other accountable for meeting the criteria laid out for the exchange rate policy. First time it's ever been done. So it's a major step forward in that regard.
INSKEEP: Trade Representative Michael Froman faces criticism on another point - how companies and countries resolve disputes. Say a foreign company dislikes how it's treated in the U.S. That company can complain. Instead of suing in court, the company goes to arbitration and gets a decision from a panel of lawyers. It's called Investor-State Dispute Settlement, or ISDS. Within those details, a leading Democrat sees big trouble. Senator Elizabeth Warren says companies could take advantage of ISDS. She told NPR this year companies could attack U.S. environmental or labor protections they don't like.
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ELIZABETH WARREN: What really happens here is that big multinational corporations can look around and say, I don't like those regulations, I could make more money if I could beat down new regulations.
INSKEEP: That's Senator Elizabeth Warren. So is she right that foreign companies could use this process to drag down U.S. regulations?
FROMAN: So we've had ISDS in our trade and investment agreements for 30 years. ISDS doesn't create any new substantive rights beyond what exists in U.S. law. And similarly there's nothing - you cannot bring a claim under ISDS that changes a law or a regulation. The only remedy is compensation, where under U.S. law you can get either compensation or you can overturn a law or a regulation.
INSKEEP: Lets talk about that. You're saying that the regulations cannot change because of this arbitration panel that would be set up in a dispute. But the United States could be forced to pay some company $100,000, $100 million, $10 billion. Who knows?
FROMAN: Yeah. But once again, of course, that's true in U.S. court as well, right? We're sued every day in U.S. court...
FROMAN: ...By people challenging our regulations. One reason we feel comfortable is that in our agreements - and TPP goes further than any such agreement before - we have added safeguards, we've raise the standard by which a claim has to be brought. For example, we've made it clear that you can't sue because you lost profits. That's not a basis on which to sue. You can't sue because the regulations changed. You have no right to think that regulations will remain static. That's not a basis on which to bring a claim. If you're the claimant, you have to prove - the burden of proof is on you to prove all elements of the claim, including what is a violation of customary international law. So we've tried to take input, including from Senator Warren and others, and write those safeguards into this agreement.
INSKEEP: Does it bother you that you feel you've listen to Elizabeth Warren, you've listen to labor leaders - you argue that you've taken their concerns into consideration in negotiating this agreement - and they're still opposed?
FROMAN: Look, I think that all we can do is do our best to negotiate the strongest possible agreement. And then answer people's questions and concerns and build support for it. And let me just make clear - we don't operate in a vacuum. We're not the only country out there negotiating trade agreements. And it's not just about the status quo versus TPP, it's what happens if TPP doesn't move forward. You know, if China moves forward with its trade agreement, 16 countries ranging from India to Japan and there's nothing in there on labor and environment. And there's no commitment to the free flow of data and information across boarders. And the question is, what is the better world for American workers? It's got to be the TPP world than the world in which TPP is not there and these other initiatives move forward.
INSKEEP: Michael Froman, U.S. Trade Representative. Thanks very much.
FROMAN: Thank you.
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