Discussions between the Obama Administration and leaders of the European Union (EU) concerning a potential trade agreement have again raised the need for Congress to provide President Obama with Trade Promotion Authority (TPA) to negotiate trade agreements with the backing of Congress. Passing a trade agreement without amendments on an up or down vote in the House and Senate is often seen as the key feature of TPA. In reality, the key is the consensus building by jointly setting negotiating objective and communicating between the Administration and Congress during negotiations that makes the up or down vote acceptable to both branches of government.
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 modern version of TPA (then called fast track authority) was included in the Trade Act of 1974 as the Nixon Administration prepared for the Tokyo Round (1974-79) of GATT multilateral trade negotiations. The act set out the parameters for the negotiations and Congress agreed to vote on the implementation legislation without amendments and with limited debate. That arrangement fit the constitutional responsibilities of both branches of government and continued with only minor interruptions through 1994.
President George W. Bush included a request for TPA in his first State of the Union address in February 2001. Labor provisions, environmental issues, negotiation objectives and enforcement of agreements were contentious issues. The final implementation legislation on TPA signed by President Bush in August of 2002 included expanded benefits for workers under the Trade Adjustment Assistance Program. The authority 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 house of Congress rejected it.
The law included 17 principal negotiating objectives, including trade barriers and distortions, trade in services, intellectual property, reciprocal trade in agriculture, labor, the environment and trade remedy laws. The U.S. Trade Representative (USTR) was required to consult regularly with the Congressional Oversight Group, the House Ways & Means Committee, the Senate Finance Committee and the House and Senate Agriculture Committees.
The President was required to give notice of intent to negotiate an agreement 90 days before beginning talks and consult with Congress before and during the negotiations. Agricultural and textiles issues required additional assessments and consultations by the President. TPA coverage could be denied for an agreement if both the House and Senate within 60 days of each other voted disapproval because of the President’s failure to notify or consult with Congress. When the final text of an agreement was submitted to Congress it had to include a plan for implementation and enforcement.
While permanent TPA 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 would allow 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 current situation is somewhat awkward with USTR Ron Kirk two years into negotiating the Trans-Pacific Partnership (TPP) Agreement with ten other countries and in serious discussions with the EU without the Administration seeking a consensus with Congress. USTR Kirk has made an effort to keep Congress and private stakeholders informed on developments and honored some of the timelines required in the 2002 legislation. Asking for TPA with an up or down vote for the TPP Agreement when the Administration is far along in the negotiating process could be seen as a one-sided bargain.
At least some of the leadership in the House and Senate are preparing to have a serious discussion about TPA. Senate Finance Committee Chair Baucus (MT-D) and House Ways and Means Committee Chairman Camp (MI-R), who will handle the legislation in their respective houses, say they want to get a bill done. Representative Nunes (CA-R), Chairman of the Ways and Means Subcommittee on Trade, said TPA is a top priority for him. Four Senators have already written to Senator Baucus requesting a hearing about agricultural trade issues with the EU since there is no TPA to guide the negotiations.
Business groups are ready to get on board. The Chamber of Commerce is in support of TPA, but reluctant to talk about details because it is the Administration and Congress who have to come to a consensus on the issues. Negotiations on an International Services Agreement with 20 other countries and expansion of the Information Technology Agreement will also occur this year and need input from business leaders.
President Obama needs to make the next move by indicating immediate interest in working with Congress on TPA. Over ten years have passed since the Congress has had a consensus exercise with the executive branch on trade issues. Many members are new since the last TPA discussion and have not had to deal with trade issues which continue to get more complex. The time to begin is now.
Ross Korves is an Economic Policy Analyst with Truth About Trade & Technology (www.truthabouttrade.org). Follow us: @TruthAboutTrade on Twitter | Truth About Trade & Technology on Facebook.
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Below is brief bit of additional information on Trade Promotion Authority from Ross Korves:
Additional Background on Trade Promotion Authority
International trade policy issues between the U.S. and other countries often require negotiations and formal agreements. Those agreements can be bilateral as in the U.S.-Korea FTA, regional like NAFTA and CAFTA-DR or multilateral in the WTO. Trade policy works best when there is a consensus between the executive and legislative branches of the U.S. government. Trade Promotion Authority (TPA) is one method of achieving that consensus for trade policy.
Countries that operate under a parliamentary system have a built in system of shared responsibilities on trade policy because failure of members of the ruling party to support a trade agreement could force the government to resign. There is not the degree of separation of powers between the executive and legislative branches as in the U.S.
This balance of powers was not an issue until about 80 years ago. Before then Congress generally responded to special interests in Congressional districts and states by keeping tariffs high to protect local industries. The economic depression of the early 1930s led to efforts to balance the narrow political concerns of Representatives and Senators with the broader national interests represented by the President. The Reciprocal Trade Agreements Act of 1934 allowed the President to negotiate reciprocal reductions of tariffs within a limited range and for a limited time period. The tariff reductions were implemented by Presidential proclamation without a vote by Congress. This authority was extended and used in the 1940 and 1950s to implement five rounds of multilateral tariff reductions under the General Agreement on Tariffs and Trade (GATT), the predecessor to the World Trade Organization (WTO).
This balance of powers held until the Kennedy Round of GATT negotiations in 1964-67 when two non-tariff trade barriers were negotiated. Congress believed that the President had overstepped his authority and did not enact legislation to implement the two provisions. U.S. trade officials quickly realized they would have little credibility in international negotiations without some prior commitment from Congress to accept agreements as negotiated.
The balance of powers issue between the legislative and executive branches on trade needs some type of formal authority that meets the requirements of the constitution. Negotiating trade agreements without it is not a serious option. The question is how to balance those powers.
The heart of the debate over TPA remains the same as in the early 1930s when the Reciprocal Trade Agreements Act of 1934 was created. Should trade policy be controlled by regional special interest groups that seek to extract income from other industries and consumers by restricting imports of competing products or should trade policy serve the interest of industries that need to purchase inputs and consumers who benefit from having access to supplies of goods and services from beyond the borders of the U.S.?