Dealmaking and the Trade Deal: Obama’s Uphill Battle with Congress

After closing a negotiation, winning over the folks back home can be the hardest part.

By — on / Dealmaking

Sometimes in dealmaking, reaching agreement would require us to make compromises that we know will displease those who need to authorize the deal, such as our superiors back at the office. Fail to compromise, and impasse may be inevitable. Compromise and save the deal, and accept the difficulty of closing the deal in negotiations with those back at home.

U.S. president Barack Obama and his administration faced this dilemma when finalizing negotiations surrounding the Trans-Pacific Partnership (TPP) trade deal in October 2015. Rather than choosing impasse at the negotiating table, they chose the uphill battle of trying to win Congressional approval of the deal.


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Toward a stronger coalition

Over the course of several years, trade representatives from the United States, Canada, Australia, Japan, Chile, and seven other Pacific Rim nations, comprising two-fifths of the global economy, hashed out common rules governing trans-Pacific commerce. Their dealmaking goals were to gain strength as a coalition against China and set standards for global commerce, as reported in the New York Times.

On October 5, 2015, the Pacific Rim nations reached a final agreement, the largest regional trade accord in history. The TPP deal would phase out thousands of import tariffs and other barriers to international trade, in addition to setting uniform rules on corporations’ intellectual property and enforcing tougher labor and environmental standards, according to the Times.

Controversial compromises

One challenging issue facing the negotiators was so-called biologics, described by the Times as “advanced medicines made from living organisms.” U.S. negotiators wanted to protect drug manufacturers from potential generic versions of the medicines by allowing them to withhold data on the drugs for up to 12 years. But most of the other nations fought for only five years of protection from data release. Negotiators reached a compromise that set a mandatory minimum of five years protection and no maximum, an outcome that both sides declared to be a victory.

But the dealmaking compromise was criticized by U.S. Senator Orrin Hatch, who chairs the Senate Finance Committee, which oversees U.S. trade. Hatch had opposed any compromise on the issue, and his disapproval could potentially lead him to oppose the TPP overall.

Similarly, the deal may lose the support of Republican lawmakers who object to a provision in the TPP that would bar tobacco companies from using the deal’s dispute resolution tribunals to challenge antismoking laws in other countries.

Yet without such compromises, according to the Times, “a final accord may not have been possible.”

Preparing his pitch

After the deal was announced, Obama faced the task of putting together a bipartisan coalition among centrists in Congress with the goal of quelling opposition from the left and right. Congress is expected to begin deliberating on the Trans-Pacific Partnership in the spring, a process that may last 90 days or longer.

Earlier in 2015, before the TPP deal was reached, the president had laid the groundwork to make his uphill battle with Congress somewhat less daunting. He convinced Republicans to support “fast-track trade authority” that will allow a Congressional vote on the TPP “without threat of amendments of filibuster,” the Times reports. When closing a negotiation regarding your own business contract, you may be able to improve your odds of winning support for controversial deal terms by negotiating the terms of approval to your advantage upfront.

When making his sales pitch to Congress, the president was expected to frame the TPP as a means of opening new markets to American products and leveling the economic playing field with China, administration officials told the Times.

As 2016 progresses, and the debate over the TPP heats up in Washington, we will find out whether Obama’s gamble—agreeing to concessions unpopular with many back at home—will pay off.

Related Dealmaking Article: Negotiation Skills in Business Communication – Use Chaos to Your Advantage at the Bargaining Table


Claim your FREE copy: Dealmaking

Discover how to boost your power at the bargaining table in this FREE special report, Dealmaking: Secrets of Successful Dealmaking in Business Negotiations, from Harvard Law School.

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