Bipartisan fast-track bill offers best chance to cinch trade pacts

The Senate Finance Committee is currently considering a trade bill that would extend “fast-track” negotiating authority to the president while also demanding a larger role for Congress than it has taken in the past.

The bill, the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, represents President Barack Obama’s best chance at winning the trade promotion authority he needs to conclude ongoing negotiations with Asia (the Transpacific Partnership or TPP) and Europe (the Transatlantic Trade and Investment Partnership or TTIP).

These negotiations, when combined with the Trade in Services Agreement (TISA), could revolutionize US trade by linking our economy to blocs that together comprise a large majority of global GDP. The deals would remove tariffs and streamline and synchronize disparate rules and regulations.

Fast track is essential to cinching all three because otherwise these agreements could be amended and revised at the whim of any member of Congress – akin to trying to negotiate with 535 lawmakers.

The bipartisan bill represents a healthy compromise that gives the president room to negotiate the best deal possible while ensuring he adhere to certain environmental and labor standards.

It would also boost transparency and remove the shroud of secrecy that has thus far surrounded the talks.

President Obama hopes fast track will help him finish negotiating trade deals with Europe and others.Reuters

Kept out of the loop

The president’s trade projects have attracted their share of criticism, something I discussed in detail in a previous article.

One consistent and understandable complaint is that the negotiations for these agreements have been done in secret, and that citizens, interest groups, and indeed members of Congress have been kept out of the loop.

This lack of transparency has attracted particular criticism because all of the pacts address sensitive issues that go well beyond traditional talk of tariffs and quotas. These include provisions that touch on intellectual property, labor and the environment, and food and product safety, among other things.

It seems undemocratic and even scandalous that the executive branch is negotiating agreements that will affect the lives of millions of Americans in such secrecy.

History of fast track

So why is the White House taking the lead? The Constitution gives Congress nearly all of the power in the trade arena. For most of US history, Congress used this power to set tariffs unilaterally through votes on the full range of commodities. But since the 1930s, lawmakers have chosen to delegate much of this power to the president. The primary reason is that during that decade trade policy came to be based on bilateral and then multilateral negotiations characterized by tit-for-tat concessions, and only the executive branch was in a position to make these deals.

The fast-track approach was first introduced in the Trade Act of 1974. It allows the president to negotiate trade agreements during a fixed period of time and binds Congress to take an up-or-down vote on them with no amendments. Fast track has the benefit of recognizing the negotiated nature of modern trade policy while also avoiding Congressional logrolling over district-specific protectionist measures. But ever since the introduction of fast track – and especially since the negotiating authority lapsed in 2007 – there have been concerns that Congress was giving up its prerogatives too easily.

Giving the president fast-track trading authority has many critics, many in his own party.Reuters

Compromises and a tighter leash

This is the context in which Congress is considering the new bill. Essentially, the bill represents an attempt at a compromise between making it easier for the president to negotiate and get approval for the TPP, TTIP and TISA and keeping the executive on a tighter leash than it has in the past.

First, the bill provides the president with negotiating guidance on a number of controversial issues. For example, the bill requires that trade agreements include labor and environmental standards (something desired by Democrats), and it also calls for tough enforcement and intellectual property protection (emphasized by Republicans). The bill also addresses such hot topics as e-commerce, agriculture, and currency manipulation.

Second, through a new “consultation and compliance” provision, the bill puts the White House on notice that if Congress is not satisfied that this guidance has been followed, fast track can be revoked at any time.

Finally, the bill introduces stricter transparency guidelines for the negotiating process and affirms that any changes to US law must be approved by Congress. This addition might be a response to the controversial inclusion of investor state dispute settlement in trade negotiations, a provision that allows investors to seek international arbitration if they believe that signatory states have mistreated them in violation of the agreement. Senator Elizabeth Warren has expressed concern that this provision would weaken labor and environmental standards by allowing foreign companies to bypass US courts.

Overall, while the bill covers a lot of ground, there remains a fair bit of room for interpretation in its guidance. That would give the president leeway in deciding how to abide by Congressional directives in his negotiations.

On the flip side, however, the bill would easily allow Congress to make the case that the president has ignored its wishes and proceed to suspend fast track. In that sense, the bill kicks some of the more controversial issues down the road. How much authority Congress actually takes will depend on how willing it is to sanction the president and to interpret the guidance strictly.

More bargaining power

Since many of the negotiations for the TPP, TTIP and TISA have already been accomplished, this raises the question of whether the president will have to renegotiate certain provisions given the fast-track bill’s demands.

Much of what has been negotiated is fairly secret, and figuring out what might conflict would take some analysis. But it is at least conceivable that the bill could reopen some issues that had seemed closed.

On this point, researchhas indicated that a strong legislature with veto power over an international agreement can strengthen the bargaining hand of an executive.

For example, Princeton University scholar Sophie Meunier has shown that the European Union is better able to preserve its status quo interests in trade negotiations when the member states give the European Commission less negotiating freedom. The same is likely true about the relationship between Congress and the US president.

So while more Congressional involvement might lessen the chances of a deal on some issues, it might also improve the odds of getting one that’s more favorable to the US. That’s because the president can credibly draw a line with his negotiating partners and argue that the US can’t concede on some issues if it wants Congress to approve the deal.

A more transparent process

Finally, the transparency rules would promote a more open trade negotiating process.

Some secrecy in negotiation details is probably necessary so that the US can keep its actual positions (and what it might be willing to concede) under wraps to get the best bargain. But transparently drawing a line on some issues, and backing that up with public statements and Congressional demands, can make it harder for negotiating partners to push the US farther than it wants to go.

Also, of course, transparency in negotiating agreements that will affect the lives of millions of people is more compatible with our democratic ideals than doing this all in secret. The bill would ensure that Congress is kept informed, that a representative of Congress can attend the negotiations, and that the full text is published in advance of the Congressional vote.

All of that seems right, and indeed the least that we should be doing to keep Congress and the public informed.

Can it pass?

Will the bill have enough support to be passed into law? Today’s Washington politics can make divisions over trade policy seem particularly inflamed.

While President Obama (like most of his predecessors at the White House) is a big proponent of trade agreements, many of his fellow Democrats in Congress are highly skeptical. And though many Republicans are inclined to be more supportive of trade, the politics of the moment may make some of them reluctant to hand the president a legislative victory.

That said, if fast track is to be extended and the ongoing trade negotiations are to be concluded, a compromise bill like this one is the most likely avenue and stands the best chance of success.

Charles Hankla does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.