President Obama came back from his week of foreign policy meetings in Asia saying he was enthusiastic about promoting the Trans-Pacific Partnership (TPP) free trade agreement (FTA) now being negotiated. He also supports legislation in Congress giving him Trade Promotion Authority (TPA) to negotiate trade agreements with other countries and have them voted on by Congress without making amendments. Last week 200 business and agriculture groups asked congressional leadership for quick action on TPA this year indicating that it is a priority issue for them.
The House and Senate and the President usually work out the legislative language for TPA before any negotiations begin with other countries. Trade agreements were not a high priority item for President Obama in his first years in office. By the time he began aggressively pursuing the TPP agreement, the House was controlled by Republicans and no serious effort was made to find common ground. The differences have not narrowed over the past six months as the Obama Administration has acknowledged the value of having TPA.
Trade negotiations require the President and Congress to work together. TPA balances the powers under the U.S. Constitution for the Congress “to regulate commerce with foreign nations” and to “lay and collect taxes, duties, imposts and excises” (both in Section 8 of Article 1) and the President’s executive powers (Section 1 of Article 2) and authority to conduct foreign affairs (Section 2 of Article 2). Under TPA, Congress delegates to the President the authority to negotiate tariff and non-tariff provisions of trade agreements and requires the President to consult with Congress as the negotiations proceed. The consensus building by jointly setting negotiating objective and communicating between the Administration and Congress during negotiations make the up or down vote acceptable to both branches of government.
The consensus building by jointly setting negotiating objectives is clearly missing from the currently process and there is no way to establish that now. The Administration has been reporting to Congress on what has been done, but that is different from two-way communication about achieving shared goals.
The rest of the world does not understand or care about the President and Congress having shared goals or what they communicate. They see a President and a Congress who cannot agree to have an up or down on complex plurilateral trade agreements. The agreements could be subject to hundreds of amendments that would make them unworkable. They expect the U.S. to operate like the rest of the world and vote on an agreement without amendments. How the U.S. arrives at that conclusion is not their concern.
The TPP trade agreement is almost at the point of decision making for the U.S. government. Many negotiators for the other countries see a final agreement in the first half of 2015. Of course, that depends on the U.S. and Japan working out differences on autos and agricultural products. That is further complicated by slow economic growth in Japan and Prime Minister Abe’s decision to call snap elections. The TPP negotiations will undoubtedly be an issue, including whether President Obama is serious about the agreement without TPA to pass a final agreement.
Among supporters of TPA, opinions are divided on moving legislation in the current Congress or waiting for the new one in January that may be friendlier to TPA. While waiting until next year may be tempting, all legislation starts over in a new Congress. That will be even more so with a change of party control in the Senate. Months could be lost if the House and Senate become bog down on other controversial issues. The time to move on TPA is now if at all possible, rather than having several more months of uncertainty.
Action now on TPA in the U.S. could help the Prime Minister in Japan. The opposition has pointed to the lack of TPA as proof that the U.S. is not serious about the TPP trade agreement and that Mr. Abe is chasing a dream. The U.S. has never had a better chance to open the Japanese market than with TPP. With Mr. Abe reelected and with President Obama having TPA, the agreement would have renewed momentum as it moves toward completion. Improved trading terms with Japan alone would make worthwhile the effort to pass TPA in this Congress.
Passing TPA now would also have an impact on the Transatlantic Trade and Investment Partnership (TTIP) talks with the EU. These talks have been slow moving, but the new EU Commission has indicated they see 2015 as the year to move the talks forward. The U.S. could show similar interest by passing TPA.
Just how TPA legislation would move though the House and Senate is up the leaders of both political parties and the leaders of the Senate Finance and House Ways & Means Committees. Some have proposed adding it to the ‘tax extenders’ proposals while others have proposed combining it with other must have trade legislation. Senate Majority Leader Harry Reid (NV-D), who has not supported FTAs in the past, said recently he did not explicitly rule out the possibility that the Senate could vote on a bill to renew TPA in the current session.
President Obama has to show the enthusiasm he expressed when he returned from Asia. A President supporting or opposing a bill in Congress always has its risks, but this is an issue of national importance that requires the President’s involvement. As noted earlier, many of the details will get lost in the fine print, but leaders in other countries will remember where the President positioned himself.
While the U.S. has an internal debate about TPA, the rest of the world is not sitting idle on trade issues. At the Asia Pacific Economic Cooperation Leaders Meeting recently in Beijing, the leaders decided to move their own much delayed Free Trade Area of the Asia-Pacific (FTAAP) by endorsing the Beijing Roadmap for APEC’s Contribution to the Realization of the FTAAP. Also, according to a report by Inside US Trade Korean industries are already pushing the Korean government to join the TPP at the earliest opportunity. The benefits of more open trade are increasingly being realized around the world. The U.S. cannot afford to sit on the sidelines.