By Krista Hughes
WASHINGTON (Reuters) - Senior U.S. lawmakers reached agreement on Thursday on the wording of a bill aimed at giving the White House "fast track" authority to negotiate a Pacific trade pact that is central to President Barack Obama's strategic shift toward Asia.
The agreement, over six months in the making, sets the stage for a bruising legislative battle over Obama's proposed Trans-Pacific Partnership (TPP) and similar trade deals, with many Democrats opposed to the legislation along with a small but vocal contingent of Republicans.
The TPP, a potential legacy-defining achievement for Obama, would connect a dozen economies by cutting trade barriers and harmonizing standards covering two-fifths of the world economy and a third of global trade.
The bill gives lawmakers the right to set negotiating objectives, but would restrict them to a yes-or-no vote on trade deals such as the TPP.
The Obama administration announced in late 2009 that it was entering TPP negotiations with Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Japan, Washington's key partner in the trade pact, was cautiously optimistic after the agreement.
"You can say that we have just cleared one obstacle to TPP negotiations," Japanese Economics Minister Akira Amari said in Tokyo on Friday. "Japan is holding working-level talks with the United States today. Depending on how that goes, I want to decide today whether or not we can proceed to more formal minister-level talks."
The U.S. Trade Representative has called TPP the "cornerstone" of Obama's Asia-Pacific economic policy. It also is important to U.S. manufacturers and farmers eager to expand already significant sales to the region by winning lower tariffs and other breaks.
"This is a smart, bipartisan compromise that will help move America forward," Republican Senate Finance Committee Chairman Orrin Hatch said after leaders of Congress's tax-writing committees reached agreement on the legislation, which will be introduced in the Senate and House of Representatives.
U.S. labor unions that are active supporters of Democratic politicians fear the deal will favor big U.S. corporations at the expense of American jobs and tougher foreign safety and environmental standards.
While trade associations and companies such as Intel Corp (O:INTC), Emerson Electric Co (N:EMR) and Microsoft Corp (O:MSFT) welcomed the move, unions immediately announced a new advertising campaign to pressure lawmakers.
Similar arguments raged in the run-up to the 1993 congressional approval of the North American Free Trade Agreement between the United States, Canada and Mexico. Twenty-two years later there is still a debate over that deal, which badly split the Democratic Party and was passed in the House of Representatives by a narrow 234-200 vote.
AGREEMENT
The Obama administration has faced pressure to make progress on the bill ahead of a meeting between Obama and Japanese Prime Minister Shinzo Abe on April 28 in Washington.
The United States and Japan are the two biggest economies among the TPP countries and an agreement between them is central to the pact.
Japanese officials have said success in the TPP negotiations depends on whether the U.S. Congress approves fast-track measures to ease passage of trade deals, or trade promotion authority (TPA).
Japan and other TPP countries have said fast-track authority would give trading partners certainty that agreements will not be picked apart.
TPP must pass Congress this year to avoid being bogged down in the run-up to the 2016 U.S. elections where it could put Hillary Clinton, who is seeking the Democratic nomination for president, in a difficult spot.
As a former member of the Obama administration, she needs to walk a tightrope between supporting her former boss and warning of the need for tougher trade deals. Her husband, former President Bill Clinton, oversaw passage of the NAFTA deal that many unions loathe.
The deal between Hatch and the panel's top Democrat, Ron Wyden, to move Trade Promotion Authority ahead in tandem with a bill to extend support for workers hurt by trade is no guarantee the legislation will pass Congress.
Opponents are lobbying hard to defeat it and many Democrats are still undecided. The bill also faces opposition from some conservative Republicans opposed to delegating power to the White House.
"You bring up TPA in the House today, the best you would have is a handful of Democrats," Sander Levin, the top Democrat on the House of Representatives committee responsible for trade, said at a Bloomberg conference.
Still, 11 members of the New Democrat Coalition, seen as the most likely source of potential Democratic support, said the package included several of their priorities and they would work with colleagues to make the bill as strong as possible.
Chuck Schumer, tipped to become the Senate's Democratic leader after the 2016 elections, told a committee hearing he opposes TPA. He and other Senate Finance Committee Democrats said it is not fair to rush such an important issue.
"You can't fast track fast track - that's a complete abdication of our responsibilities," said Ohio Democrat Sherrod Brown.