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TPP failure would cost the US trade dominance

The propsensity for GM cars to explode is what did it for me. I remember turning to my father after that and begging him not to buy me a used GM for my first car.

Hey I had a late '70s Malibu. I totaled it and my father got me a cheap 4 cylinder K car. That Malibu was a Rolls Royce compared to the K car.

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@Hu Songshan Can you please merge the thread Japan, U.S. blame each other for snag in TPP talks into this thread, so we have one place to discuss the TPP? Thank you.

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Minister-level TPP talks in homestretch, but hurdles remain- Nikkei Asian Review

October 25, 2014 2:39 am JST
Minister-level TPP talks in homestretch, but hurdles remain
TSUKASA HADANO, Nikkei staff writer

20141024_amari_article_main_image.jpg


Economic and Fiscal Policy Minister Akira Amari left for Australia on Thursday. © Kyodo

SYDNEY -- Ministers from 12 countries in the Trans-Pacific Partnership negotiations will meet here for three days starting Saturday to lay the groundwork for a basic agreement, but many differences still need to be resolved.

Minister-level talks last took place five months ago. "The final stage is the toughest part of negotiations," Akira Amari, Japan's minister in charge of the TPP, told reporters Friday night. "I hope we can create a tide toward a prompt conclusion."

U.S. President Barack Obama hopes to reach a basic agreement at a summit planned for early next month, but Amari cautioned that many hurdles still stand in the way.

Host country Australia's trade and investment minister, Andrew Robb, released a statement Friday urging ministers to "work hard with an eye to concluding the basic elements of the agreement."

In protecting intellectual property, for example, a sticking point is how long to allow the developer of a new drug to keep the data proprietary. Emerging countries, which depend on generics, want a preservation period of five years or less, while the U.S. -- pressured by drugmakers trying to maximize profit from their work -- favors a term of more than 10 years.

Preferential treatment of state-owned enterprises in emerging markets is another issue. While Malaysia, Vietnam and other emerging countries want gradual reforms and a longer grace period for their implementation, developed countries are arguing that businesses expanding into such markets face unfair treatment.

In the area of environmental conservation, negotiators are having difficulty reaching a consensus on which international treaties to apply to all parties involved.

Also, Japan and the U.S., the two biggest economies participating the TPP talks, have yet to resolve the issue of eliminating tariffs on farm products. The U.S. is pressuring Japan to abolish tariffs on dairy products, but no agreement is in sight yet. Amari plans to meet with U.S. Trade Representative Michael Froman as early as Saturday.
 
In protecting intellectual property, for example, a sticking point is how long to allow the developer of a new drug to keep the data proprietary. Emerging countries, which depend on generics, want a preservation period of five years or less, while the U.S. -- pressured by drugmakers trying to maximize profit from their work -- favors a term of more than 10 years.
Preferential treatment of state-owned enterprises in emerging markets is another issue. While Malaysia, Vietnam and other emerging countries want gradual reforms and a longer grace period for their implementation, developed countries are arguing that businesses expanding into such markets face unfair treatment.
In the area of environmental conservation, negotiators are having difficulty reaching a consensus on which international treaties to apply to all parties involved.
Also, Japan and the U.S., the two biggest economies participating the TPP talks, have yet to resolve the issue of eliminating tariffs on farm products. The U.S. is pressuring Japan to abolish tariffs on dairy products, but no agreement is in sight yet. Amari plans to meet with U.S. Trade Representative Michael Froman as early as Saturday.

So, what do they agree on, really? Agree to disagree?
 
The main sticking point is the tariff system. In the Japanese view, in regards to the farmers' coalition, they fear that Japanese domestic farming industry would be driven out of business. But I know there is active behind the scenes to find a compromise to this to salvage the TPP.

What I am not familiar with is the United States' own tariff system , Sir @LeveragedBuyout, would you happen to enlighten myself and others on this ? Advanced Thanks.
 
So, what do they agree on, really? Agree to disagree?

That's the rub. The US and Japan (and Australia and NZ) are on the same side in terms of IP, and face off against the developing economies. Then the US, Australia, and NZ team up with the developing economies vs. Japan when it comes to agriculture. This is a very, very difficult negotiation, and everyone has to sacrifice some of their sacred cows to get this done. I think a compromise will be reached, eventually, but time is running out (because political terms are coming to an end).

The irony is that the TPP started out small, just between Brunei, Chile, New Zealand, and Singapore. Then the US was invited in, and then the decision was taken to expand TPP into a major trade agreement, given the obstinate position of India in the WTO negotiations. Japan has been the last to join, which is why there is such pressure on it to compromise; otherwise, Japan will simply play the part of spoiler, as India did with the WTO agreement.

Another irony is that if TPP fails or experiences a major delay, then there is a possibility that it will turn into a far more successful and important treaty, because it will give China and SK a chance to join (both have said they are interested in joining).
 
The main sticking point is the tariff system. In the Japanese view, in regards to the farmers' coalition, they fear that Japanese domestic farming industry would be driven out of business. But I know there is active behind the scenes to find a compromise to this to salvage the TPP.

What I am not familiar with is the United States' own tariff system , Sir @LeveragedBuyout, would you happen to enlighten myself and others on this ? Advanced Thanks.

Long answer:

WTO | Tariff Download Facility: WTO tariff data base

Short answer:

25 American Products That Rely On Huge Protective Tariffs To Survive - Business Insider

Shortest answer:

It's very complicated, and beyond the scope of my ability to detail here. It depends on the products in question as well as the country of origin, since the US has bilateral and multilateral trade agreements that make for a non-standard answer.
 
@Nihonjin1051
My response to your question is in the moderation queue for some reason, but in summary, the tariff system is too complicated of an issue for me to give you a good answer.
 
Japan Can’t Ratify the TPP This Year | The Diplomat

Japan Can’t Ratify the TPP This Year
Despite positive spin from his allies, Abe cannot afford the TPP’s political backlash.

thediplomat_2014-05-12_02-47-30-36x36.jpg

By Clint Richards
October 29, 2014

The latest round of Trans-Pacific Partnership (TPP) talks between the prospective trade ministers concluded on Monday in Sydney. Despite the fact that progress on the TPP seemed to have stalled by late summer, the U.S. and Australian sides remained positive throughout the weekend-long discussions. The largest remaining sticking point for successfully concluding the agreement still remains Japan’s protection of its sensitive agriculture and automotive industries, both of which have powerful political lobbies that even the dominant LDP must heed. Despite Prime Minister Shinzo Abe stating early in his administration that Japanese membership in the TPP was a key policy goal, it does not appear that he currently has the political capital to push a decision through, despite his party holding a majority of seats (through its coalition with Komeito) of both houses in the Diet.

Before the three days of trade minister meetings began, Australian Trade Minister Andrew Robb said that there had already been substantial progress made this year, and that “we are working now to try and conclude this agreement by the end of this year.” He later said that despite TPP’s ongoing problems, “we are at a point where we are trying to make as many final decisions as we can and bring this thing to completion.” Aside from Japan’s concerns other potential members and observers have voiced concerns that the agreement does not adequately protect intellectual property (IP) rights, and that it could lead to higher prices for medicine, increased environmental damage, and even greater restriction to Internet access. During the meetings Robb said the biggest danger was that the talks may stall over these issues, but he remained hopeful that they would move “to a point where this thing can be completed sometime next year…”

On Monday the U.S. and Japanese ministers held bilateral talks, as their agreement on trade issues would facilitate Japan’s ability to meet the trade bloc’s larger requirements. However, even talks with Japan’s closest ally have not been enough to budge Tokyo on opening its protected industries to competition. Before the Monday talks began, Japan’s TPP Minister Akira Amari said the two countries had made some headway during working-level talks, and that their bilateral meeting was “designed to make headway toward resolving major issues.”

The statements coming from all sides, but particularly the U.S. and Australia, emphasized how much progress had been made by the time negotiations wound down on Monday. Robb said “there is a real sense that we are within reach of the finish line…” and that there is “preparedness to make some of the difficult decisions,” including those on IP market access (which was a nod toward Japan’s protected industries.) While U.S. Trade Representative Michael Froman also acknowledged remaining hurdles, he was perhaps more effusive. He said there are still “outstanding issues” and that “on agriculture, on autos… we are not done yet.” Yet he also praised Amari’s efforts, saying the challenge is “to translate the bold vision that Prime Minister Abe has laid out into similarly ambitions objectives,” and that he hoped Japan will continue to make compromises.

The statements from Amari himself were much less optimistic. While the U.S. in particular has remained optimistic that a broad agreement or framework for the TPP can be agreed upon by the end of the year, Amari indicated it would probably be delayed until next year. Specifically, he said “there is no prospect for an agreement on market access (between Japan and the United States) at the moment,” although he did say he expected both sides to eventually reach satisfactory results. He also indicated he will hold one more round of bilateral talks with Froman before the November APEC Summit in Beijing.

Indeed, with all 12 prospective TPP members attending the APEC Summit, Robb said they are considering holding a ministerial level meeting on the sidelines of those talks. However, as the trade group now stands, Japan would either have to be removed or the pact so watered down as to render it meaningless for an agreement to be reached. The U.S. is putting a positive spin on the talks as a whole and Japanese efforts in particular, but in reality the Abe administration is not in a position to make a bold decision on trade.

Right now Abe is beset by Cabinet scandals and declining approval ratings. Over the next few months he will have to make perhaps an even more unpopular decision over whether to further increase the consumption tax, and unlike the TPP talks, that choice cannot be put off without either significant political or financial consequences. While the TPP was a large part of his political agenda when he took office in December 2012, quite a bit has changed since then. In the interim the TPP has fallen out of public statements, especially as the economy took a large quarterly downturn following April’s initial consumption tax increase from three to five percent. As Abe is expected to decide on the follow-up increase sometime this December, he is unlikely to make an equally unpopular economic decision at the same time. Having Japan come to a broad agreement on the TPP, even by early next year, is looking ever more remote.
 
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Very interesting. Recently, I also see many news and reports about TPP. What attract me mostly is following 4 questions.

1. With the TPP startup, what will the positive and negative influences bring to America and other countries?

2. There is a negotiation for CJK FTA, the agriculture tarriff is also a problem when talk with Japan. How could TPP deal with it? are there any conflicts when CJK FTA and TPP both are started up?

3. What are the influences to ASEAN's 10+1 and 10+3 frameworks?

4. What's the negotiation schedule for TPP in the current stage considering tarriff problems?

@LeveragedBuyout

Could you please do me a favor and answer these questions?
 
America's highly competitive agricultural exports.

Didn't you forget to add that we really didn't want hormone treated cattle and genetically modified crops that have never been subjected to any long(er) term testing?
Except for that one study, in which mice fed exclusively with GM products (top selling brand!) had greatly increased chances for tumors and multiple organ damage, all in a timeframe of one generation.

Also, later some rules were established, non hormone treated cattle can be sold in EU and it's sales are increasing.
Anyhow, i don't see why you are geting so upset, as a tradesman(i presume) you should know all about supply and demand. And here in the case of a certain portion of America's agricultural exports, the supply wasn't up to par. Provide better supply and demand will rise as evident from the beef sales?
Same goes for chickens and chlorine and that one dip......

EU extends deal on beef imports from US | EurActiv
 
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Ok, there's a bit more background to this that explains American frustration. Again, sorry for the lack of links, as I am on a mobile device.

1). Japan knew going into the TPP that its agricultural tariffs would no longer be sustainable, so this pressure to eliminate tariffs is not a surprise. In his March 15, 2013 speech announcing Japan's entry into the TPP, Abe acknowledged this.

2). Japan has also been protecting its insurance market through subsidies and favorable regulation for Japan Post. This area is of special interest to the US, given our strength in financial services. Along with autos/auto parts, it is possible that the US stance is simply a hardball negotiating tactic, or an attempt at horse trading to gain advantage in these other two areas (note in your article the use of auto tariffs as a weapon). Remember, the US needs some political wins if this trade agreement has any hope of making it through Congress.

3). This issue with agricultural tariffs also concerns New Zealand and Australia. Since the US was not part of the original TPP grouping, but joined later an essentially took it over, it is under pressure from the other TPP members to look out for their interests.

4). There is a long-running bitterness in the US about the tactics that other countries have used (especially Europe and Japan) to exclude America's highly competitive agricultural exports. Example: back in the 1980s, during previous negotiations to allow more market access to beef, the Japanese trade negotiator claimed that Japanese intestines were different, and so Japanese consumers would not be able to digest American beef (I kid you not, google "Japan rice imports intestines" and the first hit will be a NYT article about this from 1988!). This was also used to block American pharmaceuticals ("you tested it on Americans, but Japanese are different, so we cannot accept your data to approve the drugs"). Americans have a sneaking suspicion, from previous experience in many other industries, that whatever advantages they gain in tariffs will be diminished by the use of non-tariff barriers, like the ridiculous ones above. Even today, more than a decade after the BSE scare, Japan still does not allow full market access to American beef. And Japan proposes that it will only reduce tariffs if it is allowed to reintroduce the tariffs should imports exceed a certain low threshold? How could the US (and Australia and New Zealand) accept that?

5). I know that the US has had a bad history of bullying Japan in regard to certain trade issues, but our relationship is a complex one. Remember as well the issue of gaiatsu (for other readers here, outside pressure) that Japan has used as a mechanism for internal reform. The Japanese agriculture industry is a basket-case, fragmented, inefficient, and uncompetitive. While this may enter tinfoil hat territory, it is possible that the tensions we are seeing are theatrics meant to enable Abe to overcome internal opposition from the agricultural lobby, and use the TPP as a lever to reform Japan's industry. I will feel vindicated in this position if the ultimate compromise is to reduce agricultural tariffs over a similarly long timeframe that the US has proposed to reduce its auto import tariffs. Alternatively, Japan may come back and demand that the US reduce subsidies to its own agribusinesses, which would help us reform as well, and provide Japan something it could take back as a win to convince its own agriculture industry.

6). India already destroyed the WTO talks by refusing to include agricultural issues, so the parties in the TPP are already agitated about the possibility of a repeat with Japan.

In any case, all countries have their favorite industries that they would like to protect, but the price of free trade is the sacrifice of those protections. In the end, consumers will benefit through lower prices, but we have to get it past the vested interest groups to make that happen. While I am certain that the simplistic common media portrayal of "it's all Japan's fault" is wrong, it is somewhat disconcerting that the other side of the story hasn't made it out there. It's possible that the US media is biased in this, and not exploring the issue sufficiently in order to explain Japan's position, but then why isn't Japan bypassing the US media to proactively explain?

What is the Japanese side to this story?

Sir @LeveragedBuyout ,

Very well written points , again, I thank you for your your well worded answers to all my inquiry. You go above and beyond my expectation explaining issues , and your mastery of economics and markets never ceases to amaze me. I had just read this now and have been waiting to reply because I wanted to research really the etiology for the almost tepid behavior of not only Japanese Government , but also the Japanese Media, in regards to the TPP talks.

As you and I know, the remarkable progress in the Trans-Pacific Partnership has been realized and only recently has the negotiation experienced a stall; due in part to Japan and the United States’ differences in basic trade agreements. The Liberal Democratic Party’s Chairman of the TPP Affairs Committee, Nishikawa Koya, recently had explained that it is the strategy of government to secure measures for sugar, wheat, rice and then to maintain the advantage within the negotations for dairy products, pork and beef. According to the TPP Affairs Committee , they wish to secure acceptable numbers that shall enable Japanese lawmakers’ promise to the people, which is to protect some farm products .

I’m sure you may already see that Japanese media have attempted to ascertain the nature of the disagreement. Some media sources have even assumed and have circulated that Japanese Government was considering special quota of imports wherein American rice imports would be given prioritization over the rice imports of other countries, some media sources have even tried to say that United States was making demands that Japan could not accept, one example was the effective exclusion of cars by taking more than 30 years to abolish tariffs on car imports.

It is understandable that the Japanese Media would correlate the issue of Gaiatsu, which basically means “Outside Pressure”, in context to the United States. The reason for this is because throughout the bilateral relations between Japan and the United States, the latter has always tried to implement Gaiatsu on Japan in order to prying open Japanese markets in bilateral and multilateral trade negotiations. In fact, in earlier times, the issue of Gaiatsu was a reality because it was used by progressive leaders especially when Japan was considered an industrial threat to the United States during the 1970s, 1980s. During earlier decades of bilateral trade friction, resolving dispute with the United States was the most important driver of Japanese trade policy; even multilateral negotiations under the GATT were accompanied by bilateral Japan – US discussions on the side. One then is left wondering, “If Gaiatsu worked so well in the past, then why is it not working so well now in the present time period?”

The answer to this is: WTO. Since Japan was part of the WTO, one method of handling any trade friction with the United States was through the WTO’s Enhanced Dispute Settlement Mechanism. By utilizing the legalized multilateral framework of the WTO, this had strengthened Japan’s bargaining leverage and bargaining power over time and had effectively weakened the US Pressure on Japan regarding any issues of trade.

A second point that I want to emphasize is that Japan no longer is considered a threat, specifically, an Industrial competitor to the United States as it once was during the 1980s. Besides the concept of Ishitsuron no longer influences negotiators from the United States.

A third issue that I want to mention is that from preliminary experience, any notion of tough stance is not taken seriously. As you remember during the preliminary consultation about Japan possibly joining the TPP negotiations in 2012, it was the United States that had announced a policy of not approving Japan’s participation in TPP talks unless all items, particularly rice and other agrarian goods were put on the negotiation table for tariff elimination. Then what happened? It then later backed off.

Japan places a significant premium on its participation on these TPP negotiations: in both strategic and trade terms. The participation of Japan only amplifies both the strategic and economic importance of the TPP for the United States. With the participation of Japan and its involvement in TPP, this enables the TPP to effectively compete with any of the China-led regional comprehensive economic partnerships that are already around, which, ironically, also involves Japan but not the United States. Absent of Japan, the TPP becomes a sideshow in the US strategic game against China and hardly the vehicle to facilitate the US rebalancing to Asia that America would like it to be. Hence, the threats to expel Japan from the TPP negotiations carry little weight. Besides, Japanese Government understands and is verily aware of the fact that TPP is hostage to any instance of discord in politics in Washington. Unless the Obama Administration has any fast-track authority from Congress, which from our understanding of the Democrats’ decreasing influence and the rising clout of Republicans in Congress and Senate, this is by no means assured. So, in our vantage point, American has to compromise , as we are willing to compromise.



Best,
@Nihonjin1051
 
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Didn't you forget to add that we really didn't want hormone treated cattle and genetically modified crops that have never been subjected to any long(er) term testing?
Except for that one study, in which mice fed exclusively with GM products (top selling brand!) had greatly increased chances for tumors and multiple organ damage, all in a timeframe of one generation.
Also, later some rules were established, non hormone treated cattle can be sold in EU and it's sales are increasing.
Anyhow, i don't see why you are geting so upset, as a tradesman(i presume) you should know all about supply and demand. And here in the case of a certain portion of America's agricultural exports, the supply wasn't up to par. Provide better supply and demand will rise as evident from the beef sales?
Same goes for chickens and chlorine and that one dip......

You should even research the growing organic food market here in the United States. Where I shop, Whole Foods, they sell only organic vegetables, fruits, meats, dairy products such as cheese, egg-based, et al. So the issue of genetically enhanced foods is a big issue in the United States, and there has been a trend here for organic food sources.

Second point; its also interesting that the United States utilizes pasteurization technique for milk and other dairy products (side info: Dr. Pasteur was french!). Interestingly enough, even the French don't pasteurize their dairy foods. I realized this when I went to Paris couple of years ago. Mon Dieu! Sure there are threats of meningoencaphalitis, but the milk tastes good, lol.

:P

PS. Here's Whole Foods Market !

Whole%20Foods_0.jpg


ptrcover.jpg
 
Very interesting. Recently, I also see many news and reports about TPP. What attract me mostly is following 4 questions.

1. With the TPP startup, what will the positive and negative influences bring to America and other countries?

2. There is a negotiation for CJK FTA, the agriculture tarriff is also a problem when talk with Japan. How could TPP deal with it? are there any conflicts when CJK FTA and TPP both are started up?

3. What are the influences to ASEAN's 10+1 and 10+3 frameworks?

4. What's the negotiation schedule for TPP in the current stage considering tarriff problems?

@LeveragedBuyout

Could you please do me a favor and answer these questions?

Whoa, @jkroo , that's an ambitious set of questions. From the start, I need to tell you that I have no idea about #2 and #3, as I am completely unfamiliar with the CJK FTA (since the US is not involved), and I am not sure how TPP will deal with the members of ASEAN + 3 who are not party to TPP. As for the others:

1) Here is the official line from the US Trade Representative, which is quite specific:

The Trans-Pacific Partnership: Economic Benefits | Office of the United States Trade Representative

On December 10, 2013, the United States and Australia, Brunei Darussalam, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, announced substantial progress toward the completion of the Trans Pacific Partnership (TPP) negotiations. The TPP is the most significant trade negotiation in a generation, and promises significant economic benefits for American businesses, workers, farmers, ranchers, and service providers.

According to an analysis supported by the Peterson Institute, a TPP agreement provides global income benefits of an estimated $223 billion per year, by 2025. Real income benefits to the United States are an estimated $77 billion per year. The TPP could generate an estimated $305 billion in additional world exports per year, by 2025, including an additional $123.5 billion in U.S. exports.
Number of Economies: 12 countries in total; United States, Australia, Brunei Darussalam, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

Market Size: 793 million consumers

Combined GDP: $28.1 trillion in 2012 (39.0% of World GDP)

U.S. Benefits from Trade with TPP Economies U.S.-TPP Trade: $1.8 trillion in goods and private services in 2012 (37% of total)

U.S.-TPP Trade Growth: Goods and services trade up 46% in the last 3 years (2009-2012)

Foreign Direct Investment From TPP Countries in the U.S.: $620.3 billion (23% of FDI stock in the United States)

TPP Foreign Affiliate Employment: 1.4 million Americans

Top U.S. Markets in TPP: Canada ($354 billion), Mexico ($243 billion), Japan ($116 billion)

Jobs Supported by Exports: An estimated 4 million jobs were supported by U.S. goods and services exports to TPP countries in 2012.

U.S. Small and Medium Sized Enterprise Exports in TPP: 97% of all goods exporting companies to TPP countries are SMEs (2011)SMEs accounted for 29% of the total value of goods exports to TPP countries in 2011

Goods Exports to TPP Countries: $689.1 billion (45% of total U.S. goods exports)Up 46 % from 2009

Key Export Categories:(Goods 2012)
Machinery ($109 billion)
Electrical machinery ($83 billion)
Vehicles ($82 billion)
Mineral fuel (oil) ($58 billion)
Plastics ($33 billion)

Manufacturing Exports: $619 billion
Up 52 % from 2009

Agricultural Exports: $59.2 billion in 2012
Up 36 % from 2009

Top Agricultural Exports: Corn ($5.7 billion)
Pork and Pork Products ($4.3 billion)
Soybeans ($3.6 billion)
Beef and Beef products ($3.3 billion)
Fresh fruit ($3.1 billion)

Services Exports to TPP Countries: $172 billion in 2012Over 27% of total U.S. services exportsUp 34% from 2009​

I should note that TPP will have some strange effects on trade as well. For example, these agreements often include a clause that says that the materials for products must come from one of the countries within the agreement, so even though the US may be purchasing jeans from Vietnam, Vietnam might be purchasing cotton to make those jeans from China. Since China is not part of the TPP, Vietnam's jeans would still face a tariff. It's unclear if that will cause Vietnam to try and source cotton from elsewhere, or if Vietnam will conclude that even with the tariff, China's cotton is so inexpensive that it's worthwhile to continue purchasing from there.

As far as the positive and negative influences on the other countries, I will have to do some research and let you know later. I've mainly been focused on the American side of things, and there are quite a few participants in TPP.

4) The current hope is that TPP will be concluded next year, so it's in the advanced stages. After it is negotiated, each participating country must pass a law recognizing TPP as a treaty with the force of law in that country. In the United States, due to the complexity of our legal process, there is a chance that even if the American trade negotiators are satisfied with the deal, Congress will derail the agreement by attempting to amend it before passing it (i.e. trying to add exceptions for special interest groups). Unlike previous major trade deals, Congress never gave the President so-called "fast track" authority, which means the ability to present a deal to Congress to vote on, either yes or no, without adding amendments. The mistrust between Congress and the President means that there is no guarantee that the US will actually ratify TPP even after the negotiations are done.
 

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