When the final text of a trade agreement is submitted to Congress it must include a plan for implementation and enforcement. Congress has 90 legislative days to act on the text and implementation legislation with no amendments permitted. The 90 day window for passage is critical. If the President introduced the text and implementation legislation before working out differences with Congress, the 90 days could have passed without Congressional action. The President is not required to send to Congress a FTA agreed to by the U.S. and another country.
In addition to expected TAA reauthorization in the Senate before voting on the three FTAs, action will be taken on renewal of two large trade preference programs for developing countries. The Generalized System of Preferences (GSP) and the Andean Trade Preference Act (ATPA) have expired and are included in the implementation language in the U.S.-Colombia FTA. The House will vote on the TAA “in tandem” with the three FTAs. All are expected to have bipartisan support.
The current action on the FTAs is occurring under Trade Promotion Authority (TPA) passed by Congress in 2002 and signed by President Bush. He included a request for TPA in his first State of the Union address in February 2001. The authority to negotiate was granted for three years to July 1, 2005, with a two year extension to July 1, 2007 if the President asked for the extension and neither the House nor Senate rejected the extension. President Bush asked for the extension and neither house denied it. The legislation expanded benefits for workers under the TAA program as part of the political consensus that moved TPA forward.
Once Congress acts on the three pending FTAs, it needs to again authorize the President to pursue trade agreement under similar legislation as passed repeatedly since 1974, but the President has not had since July 2007. 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” and the President’s executive powers and authority to handle foreign affairs. 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 U.S. is unique with Congress responsible for "foreign commerce" but the president having authority to negotiate with other governments which is not in parliamentary systems of other countries.
While a permanent TPA provision is desirable to handle ongoing trade negotiations, the constitutional split of responsibilities between the executive and legislative branches makes periodic review of the relationship necessary. Granting TPA for five years allows adequate time for the executive branch to carry out trade policy while allowing the legislative branch to have an effective voice in those policies. Disagreements should be over details concerning goals and objectives of trade policy and not over whether or not TPA should be provided.
The Obama Administration is already negotiating a Trans-Pacific Partnership (TPP) trade agreement with Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. Other countries like Japan, Philippines and South Korea may join the discussions. It is a comprehensive FTA covering goods, services, sanitary and phytosanitary measures, rules of origin and intellectual property rights. Substantial progress is expected to be reported when the U.S. hosts the Asia-Pacific Economic Cooperation forum in Honolulu in November of this year. TPA will likely be needed for the Administration to be taken seriously by its negotiating partners as the most difficult issues are discussed. While Congress has been consulted on the talks, it needs to help shape the U.S. position under its powers “to regulate commerce with foreign nations”.
With the concerns about economic growth and jobs creation being given more attention in recent months, increased trade has been recognized as helping to further increase specialization and economic efficiencies that result in higher wages for workers. Now is the time for the Obama Administration to submit the FTAs that have been negotiated and the developing country preference programs and to start creating the framework between the executive and legislative branches to negotiate and approve additional FTAs. President Obama should start the 90 days clock ticking for the Korea, Colombia and Panama FTAs after which he and Congress should move forward with TPA for additional FTAs.
The rest of the world has watched as Congress and the President have struggled to find common ground for the three FTAs and trade preferences for developing countries. Many have lost confidence in the U.S. government’s commitment to freer trade. The collapse of the Doha Round of WTO trade policy talks without a last minute effort by the U.S. to save the talks has added to the uncertainty. The U.S. alone could not have saved the WTO talks, but the lack of effort added to the apprehensiveness. A similar crisis in confidence occurred in the 1960s when Congress refused to vote on two provisions of the agreement from the Kennedy Round of WTO trade talks. Trade Promotion Authority, known as “Fast Track” back then, grew out of that misstep. Two steps forward in rapid succession would give the world hope that the U.S. is again ready to lead on trade issues.
The months of efforts in the House and Senate and with the Administration appears to have resulted in bipartisan support in the House and Senate for a vote in September. That should also reassure trading partners that a new U.S. consensus has been reached that trade is an important part of a pro-growth economic policy agenda and not a political football that will be kicked out of bounds in the midst of trade negotiations.
Ross Korves is the Economic Policy Analyst for Truth About Trade & Technology.