Christopher Padilla is the Vice President of Government and Regulatory Affairs at the IBM Corporation.  He was the final speaker on the Business Panel at GBD's May 20 conference on Pacific Arrangements.  Today's quote is something he said in the latter part of his presentation, when he was assessing the outlook for Congressional approval of the Trans-Pacific Partnership Agreement.  We have chosen it for today's quote because it so clearly and concisely captures America's TPP dilemma.

It does not, however, capture the flavor of the rich and engaging talk Mr. Padilla gave on TPP and on America's engagement with Asia.  With a few small edits on our part, this is what he said:

For young people in the audience, I would say, one of the most important things in Washington to remember is, never throw away your files, because they are always going to be relevant.  When I was thinking about what to say today, I went back to look at a speech I gave eight years ago, when I was still in government, calling for a trans-Pacific economic partnership, involving the United States.

Reading through the speech, I realized that a lot of what I said then is still relevant today, eight years later, I'm sorry to say.  The main theme of that speech was something that Nick [Giordano of the National Pork Producers Council] alluded to, which was that the region is moving forward with economic integration without the United States.  And we are falling behind.  And that was eight years ago. 

A TREATY WITH SIAM
I told a story at the time that I think is still relevant today, one that puts things in historical perspective.  One-hundred-eighty-three years ago, the United States signed its first ever economic and trade agreement with an Asian Pacific nation.

	Edmund Roberts TradeDiplomat 1784-1836

  In 1833 an envoy named Edmund Roberts, who had been sent by President Andrew Jackson, signed the Treaty of Amity and Commerce with the King of Siam.  And that treaty, by the way, is still in force.  It was a very forward looking treaty.  It called for free trade in goods, free trade in exchange.  Interestingly, it was negotiated, according to Roberts diary:
 
There's a mental image for you.  USTR has it a little easier today.  But the treaty did call for free trade on both sides, to sell, buy, or exchange on terms or prices as the owners may see fit.

And it also had a clause - listen to this - "If hereafter the duties payable by foreign vessels be diminished in favor of any nation, the same diminution in duties shall be made in favor of vessels of the United States."  There are some trade nerds in this audience.  What is that?  It is a most-favored-nation clause, 183 years ago, and it has become the bedrock principle of the post-War trading system.

NO OTHER OPEN DOORS
The interesting thing from this little story from history is that, after Roberts signed the agreement with Siam, he traveled all up and down the Pacific Rim, seeking similar trade treaties with other countries and regions.  And he was unsuccessful.  He went to Canton.  He was unsuccessful. Went to Hong Kong.  The British threw him out.  Went to the Philippines.  The Spanish would have nothing to do with him. Went to Japan.  Japan was still closed. Commodore Perry would not show up in Tokyo Bay until 20 years later.  Had no success.  Went to Korea, and they sent an envoy to meet with Roberts.  But again, according to the diary, the envoy was of such inferior rank that when the captain of the Naval vessel discovered how low ranking this mandarin was, he was put ashore without further ceremony for having shown lack of respect to the United States.

The fact of the matter was, in 1833, that Asian countries had so little use for a weak nation such as the United States that they could afford to turn away our trade diplomats. 

Here we are, 183 years later, and we have eleven Asian nations who want to do a free trade agreement with the United States, including Japan.  And we're having a trade debate from the 1980s that is like a combination of Back to the Future and Scary Movie 2.

PLUS ÇA CHANGE ...
Eight years ago, I said in a speech that we have companies who want to do managed trade in automobiles with Asia.  We have China replacing Japan as the bogeyman responsible for all evils of the world.  And we have labor unions who want to cancel NAFTA.  Well, all of that is true today, except you could add to that the presumptive Republican nominee for President wanting to cancel NAFTA. So the situation has not gotten better in the last eight years.  It's gotten worse.

Yet, what has happened in the region?  It has continued, as Nick said, to move ahead to integrate without us.  And that is not going to stop.  

ELEMENTS OF TPP
If you look just at the technology provisions of this agreement, they are historic.  They are unprecedented:

These are ground breaking provisions, and the eleven countries that are partners in this agreement want to move ahead on that. 

TPP AND THE EU
I wish we could get the same kind of provisions in an agreement with the Europeans.  And one of the reasons we need to do TPP is that it would be a model for countries in Europe whose thinking is not as far along in terms of the cross-border movement of data and who want to throw up walls around the internet.  If you talk to ministers in Germany or France, they will talk to you today about digital sovereignty, about putting up walls to the movement of data. 

TPP OUTLOOK
So here we have - 183 years after door was slammed in our face - we have Asian countries who want to engage with the United States, and we cannot make up our minds.  In fact, not only can we not make up our minds about this agreement, we want to put up more walls across the southern border and cancel agreements that have been in effect for more than 20 years. 

It is, frankly, not encouraging.  And yet, the reason that I make the historical example is partly because I'm a history nerd, but also because I think you have to look at these across the long expanse of history.  The fact is the United States has been trading with Asia for almost all of its history and has been seeking agreements with Asian nations for most of its history.  And we now have an opportunity in front of us. 

The TPP started more than eight years ago, at the end of the Bush Administration, with the P4.*  Nobody even remembers who the P4 was at the time.  It was the germ of an agreement that the Obama Administration took up, embraced, expanded, included Japan, and now we are on the verge of concluding it. 

The only criticism I would have is that [the timing is off].   One thing you learn in trade - in addition to not throwing away your files - is that you have to strike when the iron is hot or when the moon and the stars and the planets align.  And the moon, and the stars, and the planets are not currently in alignment, politically, to get trade agreements done in this country.  I think this agreement, unfortunately, was concluded about 12 to 14 months too late.  Had it been concluded maybe a year, a year and a half earlier, I think it probably would have gotten done by now.  But it took us a long time to negotiate it.  Frankly, it took us a while for the Administration to come around to the idea. 

But remember that the agreement was embraced initially by the Obama Administration for strategic reasons, as a way to continue to show that the United States is engaged as a Pacific economic power, as part of a pivot to Asia.
 
So here we are, eight years later, with this enormous opportunity - clearly good for everything from the farm to the cloud.  I don't think there is much of a commercial debate about the benefits of the agreement, but the question is whether the political stars will align.  And whether the United States will seize an opportunity that it has now, 183 years later, to have free trade with nations of Asia who are not slamming the doors but opening them. 

I would conclude by saying that Edmund Roberts, the famous trade envoy, is buried in the Protestant cemetery in Macau.  And I was on a trip to Macau a couple of years ago, and I am such a history and trade nerd that instead of going to Sheldon Adelson's fabulous casinos, I went to the cemetery to see the grave of Edmund Roberts.  And I could swear that I heard his ghost saying to me, "What the hell are you waiting for?"

Clearly, Mr. Padilla is in no doubt about the value of TPP - both its individual provisions and its significance for America's relationship with the countries of the Asia-Pacific.  Understandably, he was less confident about America's ability to ratify TPP - at least in the short term.  At one point in the Q&A session, for example, he said, "It may well take a dangerous experiment in protectionism to get American people to recognize the value of trade," adding that he hoped it would not take that.

Thank You!
Editor's note.  We have now published TTALK Quotes from each of the on-the-record participants at GBD's May 20 conference Pacific Arrangements.  All of the speakers were great, and the result was a rich well of thought. Doubtless we will dip our TTALK bucket into that well on one or two more occasions.  In the near term, however, we shall move on to other issues, other views.  First, though, we need to say thank you - not only to the speakers but to everyone who made Pacific Arrangements a success. You were all great!

The Business Panel is a reference to the audio tape with speakers at the GBD May 20 conference Pacific Arrangements.  Chris Padilla of IBM was one of those speakers, and the referenced audio tape was the source for today's featured quote - indeed, for the entire entry. While this recording has not been posted on line, it is available to GBD members upon request.

About Edmund Roberts is an article about this envoy from the online encyclopedia America.Pink.  Candidly, this was our first encounter with this resource, but the article seemed fine, and we liked the picture.
 
*The P4.  This is a link to the Wikipedia page for TPP, which includes the following elaboration of Mr. Padilla reference to the P4: "Historically, the TPP is an expansion of the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4) signed by Brunei, Chile, New Zealand, and Singapore in 2005.