Bipartisan Leaders Show the Way for US Business in Asia

A PublicAffairsAsia Report:

The Asia Pacific Council of American Chambers of Commerce held its 2015 Washington, D.C., door knock during the most consequential week for US trade and investment in Asia Pacific.

It was only fitting that during the week APCAC presented its annual awards to Rep. Gregory Meeks (D-NY) and Rep. Charles Boustany (R-LA), the Congress passed Trade Promotion Authority (“TPA”).

Reps. Boustany and Meeks were two of the co-chairs, alongside Representative Dave Reichert (R-WA) and Representative Ron Kind (D-WI), of the bipartisan Friends of the Trans-Pacific Partnership (TPP) Caucus.

Earlier in the year, Reps. Boustany and Meeks joined a Congressional delegation led by House Ways and Means Committee Chairman Paul Ryan (R-Wis.) and five other colleagues for a weeklong trip to Japan, Malaysia and Singapore, all countries participating in 12-nation Trans-Pacific Partnership (TPP) talks. During these meetings, the CODEL learned first-hand from APCAC members the criticality of the TPP from their point of view.

“APCAC is honored to name Reps. Boustany and Meeks as this year’s 2015 award winners,” said APCAC Chairman Jackson Cox, Founder and CEO of Woodmont International.  “Their bipartisan leadership will be the foundation for keeping America competitive in the Asia Pacific region and to encourage economic growth and job creation in the United States.”

“Those of us living and working in Asia are living on the front-line of globalization,” said Steven R. Okun, Vice Chair of APCAC for TPP and Director of Public Affairs for KKR Asia Pacific. “The TPP is critical to ensure that US businesses have a level playing field in Asia which is the best way to support the creation of US jobs.”

“Trade liberalization is moving forward in the region. Without the TPP, US companies will be at a competitive disadvantage. For example, since 2014, Australia has signed trade agreements with China, Japan and South Korea – that means Australia has signed more FTAs in the past 12 months than the US has in all of Asia. And that does not include everything happening in ASEAN, or the progress being made in RCEP,” added Okun.

While TPA is only a legislative procedure through which Congress defines U.S. negotiating objectives and retains the authority to review and decide whether any proposed U.S. trade agreement will be implemented, TPA is critical as a foundation before the US’ partners with enter into a trade agreement with it. This is because TPA requires the Congress to provide an up-or-down vote on the entire agreement. This is critical, because, as President Reagan’s Attorney General Edwin Meese III said, “It is extremely difficult for any U.S. President to negotiate significant trade deals if he cannot assure other nations that Congress will refrain from adding numerous amendments and conditions that must then be taken back to the negotiating table”.

Now that TPA has been passed by the Congress and signed by the President, APCAC will turn to advocating for the passage of the Trans-Pacific Partnership (“TPP”).

Reaching an agreement and then obtaining approval of the TPP is the key priority for US business in Asia. This is because the global economy will grow by $36 trillion USD over the next five years – and more than half of that growth will be in the Asia-Pacific region. The TPP will establish modern and high standard legal frameworks which will benefit American commercial interests and American jobs.

For example, the TPP is estimated to increase U.S. exports by $123.5 billion by 2025.

Advocating for the TPP has been a key focus of APCAC throughout the year.

During the annual APCAC meeting in Singapore in March 2015, U.S. Ambassador to Singapore Kirk Wagar summarized the importance of TPP to APCAC members in his keynote address:  “You Are the Rebalance”:

[T]he U.S. government’s vision is one in which we create the conditions and access that allow the U.S. businesses intimately tied to Asia’s success to succeed.  And that will only be possible because of you and your business’s role in promoting growth in Asia.  Your presence here, the products you deliver, the services you provide, and the innovative spirit you foster benefits untold millions in Asia every day.

The key components of the TPP include, which make this crucial to the US business community, include:

  • providing new and meaningful market access for goods and services;
  • strong and enforceable labor standards and environmental commitments;
  • new rules designed to ensure fair competition between state-owned enterprises and private companies;
  • commitments that will improve the transparency and consistency of the regulatory environment to make it easier for small- and medium-sized businesses to operate across the region; and
  • a robust intellectual property rights framework.

Now that the TPA is law, APCAC, its members and the AmChams of the TPP members will turn to how best to advocate for passage of the TPP once the agreement is signed and submitted to the Congress.

This version of TPA requires – for the first-time ever – that the agreement must be made public for a minimum of 60 days before the President signs the agreement and for additional months before Congress votes on it.

This means that there will be a great deal of focus, scrutiny and debate on the TPP when it becomes public – probably more than will have ever been given to any trade agreement.

APCAC will work hard to ensure that the facts around TPP will be well understood.  One of the key provisions which will likely receive the most debate is on Investor-State Dispute Settlement (“ISDS”).

As Greg Nelson, Senior Advisor to the President of the Unites States wrote, “ISDS is included in trade agreements to provide a neutral and impartial process to resolve conflicts between countries and foreign investors”. This provision is especially important when American businesses, from MNCs to SMEs, find investment opportunities in emerging markets.

As monumental as the week of the APCAC door knock was for US business in Asia, it will all be for naught if the TPP is not concluded, signed and ratified. APCAC has its work cut-out for it before the 2016 door knock.

“The TPP is an open architecture,” explained Jackson Cox. “Once the TPP is in effect for its first members, we look forward to supporting other economies joining the TPP, such as South Korea, Taiwan and Thailand. But, first, we focus on what needs to be done once the TPP is submitted to the Congress.”