Next month in Dallas, representatives from eight nations and the United States will meet to begin finalizing the Trans Pacific Partnership (TPP), a trade agreement that, depending upon the outcome of negotiations, could unlock huge new markets for American firms and help create more high-paying jobs for our nation’s workers.
The countries currently in the TPP have a combined population of 200 million, and that’s not including Japan, Mexico and Canada, also looking to join. Regardless of one’s position on trade matters, this is a lot of new customers for our firms to sell their products to, while stimulating the infrastructure and R&D investments needed to ensure America remains competitive in the 21st Century.
Sounds like a great idea, right?
Against the backdrop of a stagnant economy, it’s a bit puzzling that President Obama and leading congressional Democrats aren’t making a bigger deal out of it.
As both sides begin to shift gears into full-time campaign mode, prospects for a sustained economic recovery, and not coincidentally President Obama’s re-election, remain cloudy. With Mitt Romney inching closer to the Republican nomination, signs are pointing to a much closer race than 2008. Much like 2000 and 2004, a few key states will determine the outcome.
Touting the TPP and the benefits that go along with a new trade agreement should be a political no-brainer for the president: huge export potential, job growth, and lower prices for American consumers. That’s why the next round of TPP negotiations are so important for the president, and why he shouldn’t let the opportunity to score a big win slip away. The time is indeed ripe to do so; it’s our home turf and U.S. negotiators will be working from a position of strength on the key topics remaining to be finalized, an action in the near-term would help ensure that Congress takes action this year.
However, finalizing the TPP is not without hurdles. Certain labor unions have voiced their opposition, creating a potential problem for Democrats who want to be on record supporting free trade and the jobs the TPP would help create. But this kind of protectionist thinking is myopic and flawed: the innovation and opening of new markets the TPP is designed to spur would lead to exactly the type of jobs that labor craves, namely high-paying manufacturing and technology related jobs.
One of the final issues remaining to be agreed upon, intellectual property protection, could also present a sticking point. Yet the only way the TPP can be a successful multi-lateral trade agreement is if stringent and enforceable intellectual property safeguards are put in place to ensure a level playing field among all partners.
At the very least, the agreement must both reflect and respect current US law. American firms are spending vast resources to innovate and bring new products to market, but those investments will only continue if they are backed by strong IP guarantees. For the United States to maintain its position as the world’s leader in innovation, there can be no compromise on intellectual property.
Consider the following: it can cost well over a billion dollars over the course of 10-15 years to bring a single new biopharmaceutical drug to market, and that’s only for the drugs that receive FDA approval. In the case of a newer drug class called biologics, the cost could be even higher, as they are highly complex large-molecule medicines that cannot be easily produced. Given the great amount of time and cost needed to develop these drugs, innovating firms must be given adequate protections on data exclusivity to ensure they can recoup their investment and be able to continue with new drug development. However, while current U.S. law (agreed to on a bipartisan basis) grants 12 years of data exclusivity, certain countries only allow five years. With so many research, manufacturing and technology jobs hanging in the balance, the U.S. must tread very carefully in negotiations to ensure our firms are not put at a competitive disadvantage.
With rising gas prices, a weak economy and still-uncertain housing market, it’s easy to see why the president hasn’t focused his energies on a trade pact. However, locking up a strong agreement with the TPP nations will give him a big political victory heading into the elections. At a minimum, it would be a sign to swing voters that he still has his eye on the ball and can be trusted to shepherd our economy through another term. Given the latest jobs report, it’s in both Democrats’ and Republicans’ best interest to make it a priority.