With Election Day only 15 days away, it’s clear that economic issues will drive both President Obama and Governor Romney’s closing arguments. Despite unemployment dropping below 8 percent in the most recent jobs report, poll after poll shows that likely and registered voters rank the struggling economy as the top domestic issue. Nowhere is this more important than Ohio, Virginia, Wisconsin and other key battleground states. Barring any significant shifts, the better argument here will likely win the day.
As we’ve seen with the first two debates, trade in the broader context of economic growth is a key talking point for both sides (Governor Romney cites his intention to get tough with China, while the president reminds us that three major trade agreements were passed during his first term). However, largely absent from the broader narrative is the Trans Pacific Partnership, a free trade agreement currently being negotiated by the United States and 10 of its trading partners that will test either candidate as the next round of negotiations is set to take place in December. Although the TPP has the potential to be either a boon or a bane for our economy depending on its outcome, it also has the ability to become a political football for Democrats and Republicans if not handled correctly.
Consider the case of NAFTA. My former client, President Clinton, had to expend a tremendous amount of political capital to secure Congressional passage, ultimately cobbling together enough votes by relying on House Republicans as many Democrats were scared off due to organized labor’s stiff resistance. Although NAFTA opened the door for increased exports for U.S. firms, it also resulted in the exporting of jobs to Mexico and weakening a new president in the first year of his administration. The president and U.S. Trade Representative would do well to remember this particular history lesson as the TPP enters the final stages of negotiations.
Should Romney win the election, any attempts by a lame-duck president to ram through a trade deal will be met with fierce opposition from Congressional Republicans and a near-certain veto threat by a new administration. And should Obama be reelected (and right now the electoral math is certainly in his favor), he has a tremendous opportunity to score a big win right out of the gate if he can favorably conclude TPP. However, the biggest obstacle remaining to be overcome is also the most important: intellectual property (IP) protections for innovating U.S. companies.
Trade negotiations are confidential by nature: with so many competing interests, it’s a difficult, arduous process in the best of circumstances, and it’s usually in no side’s interest to agitate the myriad constituencies of stakeholders by leaking details to the public. What is concerning, however, is that the administration’s silence may be an indicator of its willingness to give up more than it has to in order to get a deal done quickly.
In the case of intellectual property, that’s risking a lot. Nearly 75 percent of our exports totaling about $1 trillion are dependent upon IP-intensive industries like technology and biopharmaceuticals. In the 21st Century economy, intangible assets like intellectual property comprise an increasing percentage of corporate valuation, making it imperative that these assets are protected in any new trade deal. Failure to do so means U.S. companies, who continue to lead the world in innovation, will have less incentive to invest in the R&D necessary to create the new products that will drive future job growth and put current jobs at risk. And the types of jobs created by IP-intensive industries are among our highest-paying, up to 30 percent higher than the national average.
Add to this discovery of next-generation medicines that will be critical to addressing health care challenges both here at home and abroad. One high-impact provision being debated is 12 years of data exclusivity protection for biologics, complex medicines that treat debilitating chronic diseases. Given our struggling economy and the fact that this was a bipartisan measure in the Affordable Care Act, seeing this through on the global stage is critical since we can’t afford to take a backseat to other nations in this critical growth area.
The president also needs to look at political reality: If he tries to send Congress a free trade agreement that doesn’t reflect current U.S. law, he could be in for a major headache. A majority of House Democrats (130) voted against the Korea free trade pact last year, and if IP concerns are not properly addressed, he will have a difficult time convincing even the most strident free-trader Republicans to go along.
If done right, TPP will serve as a model for future trade deals, providing a much-needed boost to our economy and creating the kinds of jobs that are critical for our long-term success. However, a poor deal for the U.S., carried out in the name of expediency, could be a weight on the shoulder of every Congressional Democrat and Republican defending their seat in 2014.