Two lines -- that's what the most ambitious trade agenda in two decades received in President Obama's State of the Union address.
Obviously, any issue receiving mention in a State of the Union is a big deal, as it's a signal of an administration's top priorities. But one gets the feeling that Michael Froman, U.S. Trade Representative (USTR), and therefore America's chief trade negotiator, wasn't exactly jumping for joy after the president's speech. That's because of the stiff resistance Mr. Froman has already encountered to the two most pressing parts of the president's agenda: trade promotion, or fast track authority, and the Trans Pacific Partnership (TPP), which is in the final stages of negotiations and could help reshape the nature and scope of future U.S. trade agreements.
Judging by congressional reaction to the trade elements in the State of the Union, President Obama still has his work cut out for him if he's going to sell his plan to reticent Democrats (who remain unconvinced of the benefits of trade) and Republicans (who may not want to give him a big "win" in an election year). The bottom line is that the president is going to have to become far more involved if he wants to see movement on his top trade priorities this year.
To be clear, there's plenty at stake. Apart from removing the most obvious barriers to trade, like tariffs, U.S. negotiators are pushing for the TPP to contain strong and enforceable protections for intellectual property (IP), as well as reductions in non-tariff barriers in order to help ensure the U.S. maintains its global edge in innovation. This push is especially important in areas such as life sciences and information technology, where growth in exports means growth in high-paying jobs. According to the Department of Commerce, IP-intensive industries account for over 27 percent of all jobs in the U.S. economy. By enabling U.S. innovation, we lay the groundwork for future innovation, as companies reinvest in the substantial R&D necessary to develop new medicines, software and other cutting-edge products that the world needs and wants.
Unfortunately, there's certainly cause for concern where IP rights are concerned regarding the TPP. Five participants in the TPP negotiations, Canada, Chile, Peru, Mexico and Vietnam, are on the USTR's Watch or Priority Watch List of the 2013 Special 301 Report, which annually reviews countries that maintain inadequate and ineffective intellectual property protection and enforcement. In addition, ITIF's Global Innovation Policy Index lists Chile, Malaysia, Mexico, Peru and Vietnam in either its lower-middle or lower tier of innovation policy capacity. In order to ensure we realize the potential of the TPP, our negotiators must guarantee IP rights and global trade rules will be respected, protected and enforced the way we do here in the United States. The only way we can do that is if the President shows he's serious about concluding a high-standard agreement.
How can this be accomplished in 2014? First, President Obama needs to personally lobby hesitant members of Congress to pass Trade Promotion Authority legislation with broad bipartisan support. This action will send a clear signal to the rest of the world that the United States is serious about its belief that open and fair trade benefits producers and consumers both in the United States and in our partner nations around the world.
Second, the president and USTR must use all their leverage to encourage an agreement that ensures robust IP rights and free trade enforcement mechanisms in the TPP. ITIF has written about what a "High-Standard" TPP would look like and, frankly, no deal on TPP would be better than a substandard one that fails to include these provisions. If the U.S. fails in this regard, not only does congressional ratification of TPP become far less certain, but the United States risks putting ourselves at a competitive disadvantage for many years to come.
Two lines in a major speech is certainly better than nothing. However, there's a lot more work to do before President Obama's growth-promoting trade agenda can be fully realized.
Robert Atkinson is President of the Information Technology and Innovation Foundation.