Pacific trade deal excites, worries Minnesota business

The U.S. Senate could vote this week to give President Obama authority to finish negotiating the Trans-Pacific Partnership, a trade deal between 12 countries that border the Pacific Ocean.

If that occurs, Congress would then have to accept or reject the trade deal with no changes — a prospect that is drawing mixed reactions in Minnesota.

Organized labor has come out strongly against both the negotiating authority and the overall agreement, arguing that a deal would push wages down for American workers. Although business groups are generally supportive of more international trade, Minnesota's business community is far from united on the trade deal.

Even though exports make up less than 10 percent of Minnesota's economy, for those businesses engaged in international trade the Trans-Pacific Partnership is a hot topic.

The state's biggest export sector is the medical device industry, with more than $3.7 billion in exports last year.

Shaye Mandle, chief executive officer and president of LifeScience Alley, a trade group, believes the Trans-Pacific Partnership would give Minnesota manufacturers more access to important markets.

"You have other countries that are growing rapidly, countries like Mexico, some of the South American countries, Singapore, where we think there's a lot more opportunity," he said.

Even more important, Mandle said, are greater protections for the patents and trade secrets of American firms.

"The lifeblood of medical technology, biotechnology, pharmaceuticals is intellectual property," he said.

Minnesota's soy and corn crops could see bigger markets overseas due to the Trans-Pacific Partnership, said Kevin Paap, president of the Minnesota Farm Bureau.

"Trade is very important and in this country we grow more than we can use, and we need those markets overseas," Paap said.

Still, not every Minnesota farmer has had a rosy experience with trade.

The 1994 North American Free Trade Agreement opened the door to more imports of Mexican sugar, which hurt sugar beet farmers in Minnesota's Red River Valley, said David Berg, CEO of American Crystal Sugar.

"It took 15 full years before it really hit us and when it hit, it hit like a ton of bricks," Berg said. "It was a disaster for the U.S. sugar market."

This time around, Berg said, the domestic sugar industry wants to make sure that import quotas that protect it stay in place. He's encouraged by what Obama administration officials have told sugar producers.

"I think the key phrase that they've used is that they won't do anything in this negotiation that would undermine U.S. sugar policies," Berg said.

Other industries are hopeful this agreement will pry open markets that haven't been very accessible.

Despite the NAFTA agreement, Canada's dairy markets remain relatively closed to American imports, said David Scheevel, a dairy farmer in southeastern Minnesota.

"In order to get Canada to the table and to get them serious about negotiating, we need the TPA to let them know we're serious," he said.

The taconite mining industry, which has a big presence in Minnesota, has grave concerns about the trade deal. More than 1,000 miners have been laid off this year as falling steel prices have led to a glut of lower-priced foreign imports.

Past trade deals allowed foreign trading partners to manipulate their currencies to keep their imports cheaper, said Scott Paul, president of the Alliance for American Manufacturing. The trade group includes the major steel makers and the United Steelworkers union.

Some U.S. politicians have blamed low steel prices on foreign companies, which they accuse of dumping state-subsidized steel in the United States.

"They're at least partially responsible for some of the poor jobs performance in manufacturing that we've seen over the past 20 years," Paul said.

In Minnesota, it's an argument the state's Democratic members of Congress have taken seriously. Nearly all of them are opposed to giving the president negotiating authority, on a variety of grounds, among them a desire to halt future trade deals and fear that the trade pact would cede too much power to the executive branch.

But Paul said those arguments so far haven't won wider traction.

"We don't have an import shortage," he said. "But we still have a jobs situation in the United States and I would think that would help to inform the debate and shape the rules of the agreement but so far it hasn't."

There's still some time left to debate the merits of the trade pact. If Congress gives the president negotiating authority and he reaches an agreement, Congress will have two additional months to debate whether to ratify it.