Challenging the Conventional Wisdom on Fast Track

The Wall Street Journal’s Mary O’Grady put out an excellent column yesterday expressing skepticism about the trade agenda in 2014.  I agree with almost everything in the piece, with one major exception.  Contrary to the prevailing conventional wisdom, the lack of “fast track” trade promotion authority has not been and will not be an obstacle to completing the Trans-Pacific Partnership negotiations. 

Her concern about the lack of fast track relates to the willingness of other countries to negotiate when the president has not secured trade promotion authority:

Mr. Obama’s trade team has been working on [the TPP] for years. But U.S. negotiators still don’t have “trade promotion authority” (TPA) from Congress. This means there really hasn’t been much negotiating at all because the U.S. team still doesn’t know how much flexibility it has from Congress to cut final deals on sensitive areas of trade. That will come with TPA, which sets “objectives” that the administration must meet. No U.S. trading partner is going to talk seriously unless the president has it.

I strongly disagree with this characterization. For the last three years, countries have been knocking down the door trying to get into the TPP negotiations. They have done this even while knowing that the TPP will inevitably be a vehicle for pushing U.S. economic and strategic priorities at their expense. These governments see the economic benefit of access to the U.S. market and have shown no reluctance to engage in negotiations despite the Obama administration’s apparent disinterest in securing fast track authority from Congress.

If you believe the administration’s claim that the TPP negotiations are in their closing stages, then the impact of fast track could be especially counterproductive. It is true that a bill from Congress laying out its sensitivities will better inform and ensure foreign negotiators, but it will also reduce the flexibility of U.S. negotiators to make the concessions needed to get the deal completed. 

The real danger that fast track helps alleviate is not completion of the negotiations, but passage of the agreement through Congress. In the past, it made sense to impose Congress’s negotiating objectives through a fast track bill because Congress was unlikely to ratify an agreement that didn’t meet their demands.

But today, trade agreements are passed through Congress on largely partisan lines regardless of what’s in them. As O’Grady notes, House Democrats are not even involved in crafting the fast track bill because nothing in the bill will convince them to support the TPP when it finally comes up for a vote.

We shouldn’t forget that those same House Democrats, when they were in charge in 2007, ignored the previous fast track arrangement, demanded major changes to already completed agreements, and refused ever to hold a vote on agreements with Colombia, Korea, and Panama. As O’Grady explains:

Mrs. Pelosi didn’t want the Colombia FTA to go to the floor for a vote because it had enough support to pass. So even though the law instructed her to send it, she refused and stuck it in a drawer. That amounted to double-crossing the best ally the U.S. has in Latin America.

So if trade promotion authority convinces U.S. trading partners that Congress won’t obstruct or meddle with the agreement, they haven’t been paying attention. Senate Democrats are much friendlier toward trade and Republicans hold a majority in the House. It’s hard to imagine this Congress refusing to hold a vote on the TPP even without trade promotion authority.

Unfortunately, while fast track is neither necessary nor sufficient to get agreements through Congress, it is certain to reduce the value of the TPP as a vehicle to liberalize trade.  Any fast track bill coming out of Congress this year is bound to contain demands to include harmful rules in the TPP related to labor and environmental protection. Republicans are so eager to see progress on trade that they appear ready to accept these restrictions without a fight. 

O’Grady also hits the nail on the head with this observation about the inevitable inclusion of currency rules in the fast track bill:

It also may contain a provision aimed at allowing the U.S. to accuse countries of “currency manipulation” and apply “safe-guards,” i.e. protection. Given the resistance to this concept among many U.S. trading partners, completion of the TPP would become more difficult.

All of the observations O’Grady makes about the sad state of the TPP negotiations and trade politics in Washington right now are the very reasons why fast track is not only useless but harmful to the advancement of free trade.