Senate Dems put Mitch McConnell in a corner after blocking debate on 'fast-track' trade bill

U.S. Senate Democrats delivered a major blow to President Barack Obama's trade agenda on Tuesday, blocking debate on a bill that would have smoothed the path for a Pacific trade pact.

The stunning outcome cast doubt on legislation that is key to the Obama administration's ability to complete the 12-nation Trans-Pacific Partnership, a central plank of its pivot to Asia.

"What we just saw here is pretty shocking," said Senate Majority Leader Mitch McConnell, a Republican, after the Senate voted 52-45 - short of the 60 votes needed - to pave the way for debate on "fast-track" trade authority for Obama.

The vote marked a victory for Senate Democratic leader Harry Reid, an outspoken opponent of fast-track, after weeks of speculation that the toughest fight would be in the House of Representatives and not the Senate.

Under fast track, Congress can either approve or reject trade deals negotiated by the administration but not amend deals like the TPP, a potential legacy-defining achievement for Obama.

The failure to garner the necessary votes came after pro-trade Democrats, including Senator Ron Wyden of Oregon, insisted that fast track be bundled together with three other trade bills, including one that would impose import duties on countries that manipulate their currencies for unfair trade advantage.

The White House strongly opposes the measure. A source familiar with negotiations in the Senate said one option would be to bundle the four bills together but take out the currency provision. That could be voted on separately, said the source, who asked not to be identified and stressed talks were continuing.

Democrats have also complained that the trade promotion authority (TPA) measure falls short on labor and environmental protections.

As Democratic support for the measure melted away, Senate Finance Committee Chairman Orrin Hatch, a Republican who was a major force for fast track, declared to reporters that the measure "may be dead."

But following the vote, Democrats predicted it would come back.

"I don’t think today’s vote is a death knell for TPA, but it is a very strong warning shot to the majority leader ... that without worker protections, without enforcement provisions, they will likely not move forward," Democratic Senator Chris Coons told reporters.

Negotiations on the TPP are nearly complete, but trading partners have said they want to see fast-track legislation enacted before finalizing the pact, which will stretch from Japan to Chile.

The TPP would create a free trade zone covering 40 percent of the world economy - making it the biggest trade deal since the North American Free Trade Agreement liberalized trade between the United States, Canada and Mexico.

More than two decades later, that pact is blamed by many on the left for factory closures and job losses and has soured sentiment toward the TPP.

Now, McConnell faces the tough choice of possibly bending to Democrats' demands and in so doing, losing Republican votes in the Senate and House.

Wyden said the four bills together were a package that would "throw out the 1990s NAFTA playbook on trade" and provided an opportunity to create jobs.

White House spokesman Josh Earnest played down the day's developments as a “procedural snafu” and said the White House would continue to work to push the legislation forward.

Only one Democrat, Senator Tom Carper of Delaware, backed the measure, despite a White House campaign blitz to win Democratic support.

Senate Republicans stuck together in voting to let the bill pass its first test. However, McConnell at the last minute switched his vote to "no" in a procedural move that lets him bring the bill to a vote again in the future.

Failure sends a worrying signal about the level of support for fast track, which is opposed by unions, environmental and consumer groups but backed by businesses, which reacted with disappointment.

“Today, a minority in the Senate failed American workers and the more than 14,000 manufacturers ... who need our nation to keep its mantle of economic leadership," National Association of Manufacturers President Jay Timmons said.

Although the administration points to research saying export-related jobs pay up to 18 percent more than other jobs, other studies show that increased competition from imports has cut wages and caused job losses in U.S. manufacturing.

(Reporting by Krista Hughes and Richard Cowan; Additional reporting by Susan Cornwell; Editing by Steve Orlofsky)