DRAFT: Trade letter 04/06/15

Open Letter on TPA/TPP

Any new trade agreement must pass two tests: First, does it protect and create more
good jobs at home than it displaces? And second, does it also strengthen our
national security?

The U.S. is now entering the final phase of negotiations on the proposed TransPacific Partnership (TPP). Ill be watching closely to see if this pact supports
middle class jobs, empowers workers, and grows small businesses at home, while
projecting American leadership and American values in a strategically crucial
region of the world. If the final agreement falls short of that promise, we should be
willing to walk away. The goal is greater prosperity for American families, not
trade for trades sake. And, as weve seen in the three years since the free trade
agreement with South Korea went into effect, even a strong deal can fall short on
delivering the promised benefits.

There are a number of pivotal questions to be decided in the coming months: from
protecting labor rights, the environment, public health, and access to life-saving
medicines; to cracking down on currency manipulation and unfair competition by
state-owned enterprises; to opening new opportunities for our family farms and
innovative small businesses to export their products and services overseas.
Getting these things right will go a long way toward ensuring that a final
agreement will be a net plus for everyday Americans.

The stakes are also high for our national security. The success of our pivot to
Asia, the security of allies like Japan and South Korea, and our ability to push
China to be a more responsible stakeholder all depend on continued strong U.S.
leadership in the Pacific. How we handle TPP will send a clear message about
Americas commitment to the region.

With so much hanging in the balance, U.S. negotiators need the strongest possible
hand to drive the hardest possible bargain. That should be the goal of renewing
Trade Promotion Authority (TPA). The right kind of renewed TPA authority would
direct our negotiators to fight for American jobs and workers, and to make it clear
to our partners and competitors alike that we mean what we say.

Among other things, this means getting dispute settlement provisions right. Socalled investor-state dispute settlement, or ISDS, lets individual companies bring
cases to enforce trade agreements. In the past, ISDS has benefited some American
companies by letting them challenge unfair actions by foreign governments. But

DRAFT: Trade letter 04/06/15

as I warned in my book, Hard Choices, we shouldnt allow multinational

corporations to use ISDS to undermine legitimate health, social, economic, and
environmental regulations, as Philip Morris has tried to do in Australia. The risks
associated with ISDS are increasingly outweighing the benefits, so pressing these
provisions doesnt make senseespecially when they distract from other, more
important negotiating priorities. We should address that in any new trade
agreement.

The right kind of renewed TPA authority only works if it is accompanied by strong
steps on currency manipulation and related concerns. By deliberately keeping their
currencies weak and exports cheap, some countries have tried to grow their own
economies by exploiting American consumer demand -- costing us a heavy price in
lost jobs, especially in manufacturing. The Obama administration has made steady
progress in curbing currency abuses by isolating and pressuring bad actors on the
global stage. But the President needs the ability to choose a sterner path when
necessary -- whether inside trade agreements or outside them -- through concrete
actions that increase our leverage against currency manipulators.
TPA should also be accompanied by more transparency and inclusiveness in the
negotiating process, including making sure that workers, advocates, and small
businesses are well-represented at every stage. Thats the right thing to do, and its
also the smart thing, because it will lead to a stronger final deal with broader
support. Especially if TPP and other agreements are going to be privileged with a
clean up-or-down vote in Congress, its crucial that the public has a chance to
understand and debate the details.

More broadly, its time for openness to become a hallmark of our approach to
trade. Just as we demand more open markets, we should also demand more open
negotiations.

Ultimately, a trade agreement is only as good as the rules governing how it will be
enforced. Sometimes even our close allies do not fully comply with their
obligations, and we need to be prepared to challenge any abuses. If we ultimately
do adopt the TPP, we need to see new resources applied to trade enforcement and a
genuine commitment to bringing more cases.

Finally, we cant close our eyes to the fact that even the best possible trade
agreements that boost exports, create jobs, and protect workers, will still come with
real downsides. We have a responsibility to do more to provide assistance and

DRAFT: Trade letter 04/06/15

retraining for Americans displaced by trade so they can land on their feet. We also
need to make sure that companies that benefit the most from expanding markets
abroad invest in their workers and communities rather than stash their profits in
overseas tax havens.

The recent debate over Chinas proposed Asian infrastructure investment bank is a
reminder that we are living in a new global economy with new challenges. It is
vital that the United States and our allies write the rules of the road for this new
era. Thats how we can take on unfair practices that have hurt American families,
workers, and businesses. If we cede our leadership role and allow China and other
state-dominated economies to write their own rules, then we will all end up worse
off.

When it comes to trade, we havent always gotten the balance right. But weve
learned a lot in recent years about what works for the American middle class and
what doesnt. Now is the time to apply those hard-earned lessons.

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