Tag: tpa

Hyperbole Aside, Elizabeth Warren Is Right About the Risk of Investor-State

Sen. Elizabeth Warren takes to the Washington Post op-ed pages today to warn about the dangers of the so-called Investor-State Dispute Mechanism, which is likely to be a part of the emerging Trans-Pacific Partnership deal.  In substance, if not style, Sen. Warren’s perspective on ISDS is one that libertarians and other free market advocates should share. At least, my colleague Simon Lester and I do

ISDS grants foreign investors the right to sue host governments in third-party arbitration tribunals for treatment that allegedly fails to meet certain standards, such as new laws, regulations, or policies that might have a discriminatory effect on foreign investors that reduces the value of their assets. Certainly, investors – and in this context we’re talking mostly about multinational corporations (MNCs) – should have recourse to justice when these situations arise. But under ISDS, U.S. investors abroad and foreign investors in the United States can collect damages from the treasuries of their host governments by virtue of the judgments of arbitration panels that are entirely outside of the legal structure of the respective countries. This all raises serious questions about democratic accountability, sovereignty, checks and balances, and the separation of power.

An important pillar of trade agreements is the concept of “national treatment,” which says that imports and foreign companies will be afforded treatment no different from that afforded domestic products and companies. The principle is a commitment to nondiscrimination. But ISDS turns national treatment on its head, giving privileges to foreign companies that are not available to domestic companies. If a U.S. natural gas company believes that the value of its assets has suffered on account of a new subsidy for solar panel producers, judicial recourse is available in the U.S. court system only. But for foreign companies, ISDS provides an additional adjudicatory option.

Congress Should Decide Whether Trade Agreements Abide the Terms of Trade Promotion Authority

Trade Promotion Authority (TPA or Fast-Track Negotiating Authority) is not an executive power grab.  It is a compact between the legislative and executive branches, which each have distinct authorities under the Constitution when it comes to conducting trade policy. The purpose of forging such a compact is that negotiations would be impracticable – and likely interminable – if each provision were subject to the whims of 535 legislators.

Opponents of trade liberalization have smeared TPA as a wholesale capitulation to the president, who allegedly is freed of any congressional oversight and given a blank check to negotiate unamendable trade deals in secret without any input from Congress – only the capacity to vote up or down on the final deal. In reality, though, TPA is the vehicle through which Congress conveys its trade policy objectives, conditions, and demands to the president, who negotiates with those parameters in mind. Provided the president concludes a negotiation that abides those congressional parameters, the deal is given fast track consideration, which means essentially that legislative procedures are streamlined and expedited.

The trade committees are reportedly close to introducing trade promotion authority legislation, although there remains some debate about what it should include. Enforceable provisions to discipline currency manipulation would be a bad idea, as would be including provisions to reauthorize the ineffective and misguided Trade Adjustment Assistance program (which is widely acknowledged to be a payoff to organized labor).

But one important provision (or set of provisions) that has created a bit of an impasse between Senate Finance Committee Chairman Orrin Hatch (R-UT) and its Ranking Member Sen. Ron Wyden (D-OR) concerns certification that an agreement abides the requisite congressional conditions to be afforded fast track treatment. Those of us who argue that TPA is not an executive power grab, but a practical, constitutional solution to a policymaking quandary must acknowledge the propriety of such a provision – or a provision that accomplishes as much. There must be a mechanism through which the president is held to account – that the deal reflects the broad wishes of Congress.

Selling Trade Liberalization Like the Measles Vaccine

President Obama is presiding over what may prove to be the most significant round of trade liberalization in American history, yet he has never once made an affirmative case for that outcome. Despite various reports of intensifying outreach to members of Congress, the president’s “advocacy” is couched in enough skepticism to create and reinforce fears about trade and globalization.

Politico reports:

On Tuesday, Obama sent a letter directly to Rep. Ruben Gallego (D-Ariz.), arguing that reaching new trade agreements is the only way to stop China from dominating the global markets and letting its lax standards run the world.

“If they succeed, our competitors would be free to ignore basic environmental and labor standards, giving them an unfair advantage against American workers,” Obama wrote Gallego in a letter obtained by POLITICO. “We can’t let that happen. We should write the rules, and level the playing field for the middle class.”

Certainly, playing the China card could help win support for Trade Promotion Authority and, eventually, the Trans-Pacific Partnership, but it needn’t be the first selling point.  Pitching trade agreements as though they were innoculations from an otherwise imminent disease betrays a profound lack of understanding of the benefits of trade. With TPP near completion and the Transatlantic Trade and Investment Partnership talks expected to accelerate, the president’s stubborn refusal to make an affirmative case for his trade initiatives to the public and the skeptics in his party is disconcerting. Bill Watson was troubled by the president’s feeble advocacy of trade liberalization in his SOTU address.

Trade Promotion Authority Is not an Executive Power Grab

With the Trans-Pacific Partnership (TPP) negotiations reported to be nearing completion and the Transatlantic Trade and Investment Partnership (TTIP) talks kicking into higher gear, Congress is expected to turn its attention to Trade Promotion Authority (TPA) legislation in the weeks ahead.

That’s where opponents of trade – mostly from the Left, but some from the Right – have decided to wage the next battle in their war against trade liberalization. Tactically, that makes some sense because, if they succeed, the TPP and the TTIP will be sidelined indefinitely. But, as observed by the Greek Tragedians and countless times in the millennia since, truth is the first casualty of war.

Trade opponents characterize TPA as an executive power-grab, a legislative capitulation, and a blank check from Congress that entitles the president to negotiate trade deals in secret without any congressional input except the right to vote “yea” or “nay” on an unalterable, unamendable, completed and signed agreement. But the truth is that TPA does not cede any authority from one branch to the other, but makes exercise of that authority more practicable for both branches.

Under the Constitution, Article I, Section 8, Congress is given the authority to “regulate commerce with foreign nations” and to “lay and collect taxes, duties, imposts, and excises.” While the president has no specific constitutional authority over trade, Article II grants the president power to make treaties with the advice and consent of the Senate. Accordingly, the formulation, negotiation, and implementation of trade agreements require the involvement and cooperation of both branches.

Could Vice President Biden Help Save the Administration’s Trade Agenda?

Francisco Sanchez, former undersecretary of Commerce for international trade in President Obama’s first term, commented on the administration’s trade efforts in a March 21 article in Politico.  His view is that the president will need to get directly involved in making the case for liberalization if he wants his trade agenda to succeed.  Presidential leadership no doubt will be essential.  Certainly few congressional Democrats would be eager to stick their necks out on behalf of freer trade, if they think the president might leave them high and dry by backing away from his commitment to Trade Promotion Authority (TPA or “fast track”), the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).

But as I noted in a recent paper, it seems unlikely that the president is sufficiently committed to his trade agenda.  It also is unclear whether developments elsewhere in the world would permit him to devote the time and energy to trade issues that Mr. Sanchez correctly argues is needed.  That raises the question of whether other senior officials in the administration might be able to augment the president’s efforts. 

Would it be feasible for Vice President Joe Biden to play a useful role in achieving the administration’s trade objectives?  Biden knows Congress well and cast many trade votes during his career in the Senate.  He consistently voted in favor of trade liberalization in his early years, starting with the Trade Act of 1974.  Perhaps the Senate was a happier place then, with both parties placing relatively greater emphasis on keeping the United States actively engaged in strengthening the global economy.  Biden’s pro-trade voting record continued throughout the 1990s on behalf of trade policy initiatives – including NAFTA and the Uruguay Round – supported by President Clinton.  However, his approach appears to have changed rather abruptly when George W. Bush became president.  Since then Biden’s only pro-trade votes on major issues were to support the FTAs with Australia and Morocco in 2004.  He wrapped up his Senate career by voting against DR-CAFTA, Oman and Peru.

This background may position Biden to provide helpful outreach to members of Congress who have doubts about the administration’s trade agenda.  Since he has found himself voting both for and against market-opening initiatives, perhaps he would have credibility in explaining why liberalization is the right choice now.

Congress Likes at Least One Type of Fast Track

Seasoned observers of U.S. trade policy have been chagrined with the reluctance of Congress to pass fast-track negotiating authority. However, a small glimmer of hope appeared on March 25. That day, a statue honoring Dr. Norman E. Borlaug, recipient of the 1970 Nobel Peace Prize, was installed in Statuary Hall of the U.S. Capitol. His work in developing high-yielding grains is credited with enabling billions of people to eat better and to achieve higher living standards, objectives strongly supported by Cato. (See this 2009 post by Cato Executive Vice President David Boaz honoring the life of Dr. Borlaug.)

Capitol visitors who were fortunate to be associated with the state in which he was born (Iowa), the school where he studied (University of Minnesota), or where he spent the final years of his career (Texas A&M), were able to receive special tickets to enter Statuary Hall. These tickets were designated “Fast-Track Viewing,” which enabled the holders to bypass the long lines normally associated with a visit to the Capitol’s interior. It is gratifying to learn that Congress is willing to utilize fast-track procedures in some circumstances. Let’s hope they soon decide to apply the concept more broadly.

 

Or, is the incurable optimist in me wanting to ignore another possible interpretation? After all, a “viewing” is sometimes associated with paying respects to the deceased. Is it possible that “fast-track viewing” means that Congress thinks the concept is dead and that those who wish to pursue trade reform should do so through other means? Might be best not to overanalyze this issue.

Fast Track Fallacies Knee-Capping the Trade Agenda

Media have been reporting lately about the public’s burgeoning opposition to the Congress granting President Obama fast track trade negotiating authority. Among the evidence of this alleged opposition is a frequently cited survey, which finds that 62 percent of Americans oppose granting fast track to President Obama.
 
Considering that the survey producing that figure was commissioned by a triumvirate of anti-trade activist groups – the Communication Workers of America, the Sierra Club, and the U.S. Business and Industry Council – I had my doubts about the accuracy of that claim. After all, would lobbyists who devote so much of their efforts to derailing the trade agenda risk funding a survey that might produce results contrary to their objectives?
 
My skepticism – it turns out – was warranted. The 62 percent who allegedly “oppose giving the president fast-track authority for TPP [the Trans-Pacific Partnership agreement]” actually oppose giving the president a definition of fast track that is woefully inaccurate. The graphic below shows the question and response tally, as presented in the report showing the survey’s results, which is here.  Read the question that begins with “As you may know…”