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Odds Worsen for TPP Trade Deal

The 2016 presidential campaign has dealt a potentially lethal blow to President Barack Obama’s signature Pacific trade agreement, with the chances of congressional passage now looking slim either after the election or under the next administration.

Business leaders and trade advocates just weeks ago remained optimistic that Congress would salvage the Trans-Pacific Partnership in a post-election lame duck session, despite both parties backing presidential candidates who said they would spurn it.

But the two parties’ political conventions revealed deeper reservations. Republicans, who have traditionally supported such agreements, approved a platform that says significant trade deals “should not be rushed or undertaken in a Lame Duck Congress.” Democrats almost included a platform provision to oppose approving the deal this year, and speakers in the convention hall were routinely interrupted by shouts of “No TPP.”

As a result, passing the accord in the final weeks of the year—likely the only chance at approval in the foreseeable future—would require a number of pro-trade lawmakers to override the incoming president and the populist sentiments coursing through the grass roots of both parties during a relatively short legislative session.

“You’re steadily seeing the nails being drilled into the coffin,” said Peter Cohn, a policy analyst at Height Securities, an investment research firm.

Supporters say that failing to ratify the deal would represent a further retreat from American leadership on the international stage, upending a pillar of Mr. Obama’s foreign-policy pivot toward Asia. Opponents say the deal would tilt the playing field too heavily toward large multinational corporations.

The deal’s backers say it is premature to abandon the legislative effort, and Obama administration officials insist there is a path forward. “The administration’s commitment to getting TPP passed this year has not wavered one iota. It is all hands on deck,” said Michael Froman, the U.S. trade representative, in an interview.

Negotiations on the Pacific trade deal between the U.S. and 11 other Pacific rim countries concluded in October. Within days, Democratic nominee Hillary Clinton, facing an unexpectedly strong challenge from trade critic Sen. Bernie Sanders of Vermont, announced her opposition to the deal.

Republican presidential nominee Donald Trump’s staunch criticism of the deal further scrambled the TPP’s prospects. Mr. Obama had relied heavily on GOP lawmakers to pass “fast track” legislation last year that paved the way for the TPP agreement and its eventual congressional consideration.

Some of the deal’s backers believed opposition from Mrs. Clinton, who supported the deal when she served as secretary of state, would fade if she became president. Her advisers explicitly and repeatedly shot down such talk at this past week’s convention in Philadelphia.

“Hillary Clinton is against the TPP now. She’s against it in the lame duck. She’s against it when she gets inaugurated,” said Gene Sperling, an adviser to Mrs. Clinton who previously worked for Mr. Obama and President Bill Clinton, at a meeting of manufacturing groups in Philadelphia on Monday.

The selection of Virginia Sen. Tim Kaine as Mrs. Clinton’s running mate further underscored the issue’s awkwardness. Mr. Kaine, one of just 13 Democratic senators to vote for the fast-track legislation last year, had made comments indicating support for elements of the trade deal just days before he was tapped to join the ticket. A spokesman said he now opposes it.

Indiana Gov. Mike Pence backed the deal before Mr. Trump made him the GOP running mate.

The grim outlook for securing passage under a new president has made business groups and other trade advocates focused on getting it done in the lame duck legislative session. But the prospects have dimmed there, too.

On Capitol Hill, GOP leaders have said approval appears unlikely this year. “The votes aren’t there,” said House Speaker Paul Ryan (R., Wis.) on Tuesday in Milwaukee.

Mr. Ryan said the Obama administration had “screwed up” a handful of provisions in the deal, including on intellectual property for pharmaceutical companies, to gain Democratic votes. “They didn’t get the additional Democrats, and they just lost the Republicans like myself,” he said.

Senate Majority Leader Mitch McConnell of Kentucky, a longtime trade supporter, said earlier this month he hadn’t decided on whether to bring the deal up for a vote this year. “The chances are pretty slim,” he said. “It’s probably not the best time.”

Labor unions have whipped up opposition to the agreement and are tentatively optimistic they can defeat it. “The appetite for taking that vote in November or December 2016 has got to be close to zero," said Thea Lee, deputy chief of staff at the AFL-CIO, the biggest U.S. labor federation.

Mr. Obama sold the TPP as a way to ensure the U.S. writes the rules of the commercial road in the fast-growing Asia-Pacific region. The treaty could make the difference between “either cementing our leadership in the region or handing it over to China,” Mr. Froman said. “I don’t think Congress is going to be responsible for handing the keys to the castle over to China.”

Moving the pact through the lame-duck session risks further fracturing both parties after a divisive election, pitting the outgoing president against the incoming one and splitting the GOP leadership from its grass-roots base.

“It would be inconceivable for both sides to abandon their standard-bearers’ thrust, hold their noses and sneak this through after the elections,” said Charles Gabriel, policy analyst at Capital Alpha Partners in Washington. It would also reinforce the worst fears of supporters of Mr. Sanders and Mr. Trump that “moneyed interests” have “rigged” the system, he said.

If the TPP isn’t approved this year, it wouldn’t be unprecedented for such an agreement to languish for a few more years. President George W. Bush failed to win support for a series of bilateral trade agreements with Colombia, Panama and South Korea before leaving office in January 2009. The Obama administration advanced the pacts with some modifications in October 2011.

—Kristina Peterson contributed to this article.

http://www.wsj.com/articles/tpp-trade-deals-odds-fade-1469822992