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January 15, 2014 12:50PM

What to Look for in the Upcoming Trade Policy Debate

By K. William Watson

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The most important piece of trade legislation Congress has dealt with in years was introduced in the House and Senate last week. The “Bipartisan Congressional Trade Priorities Act of 2014” sets out the parameters for renewing trade promotion authority (TPA), originally known as “fast track,” in order to ease eventual passage of the Trans-Pacific Partnership and other agreements through Congress. There will be a lot of debate in the coming months about what U.S. trade policy should look like, and this TPA bill will do a lot to establish the agenda.

The new bill largely mirrors the last TPA grant in 2002.  The basic idea of fast track is that Congress agrees to hold an up-or-down vote on any trade agreement submitted by the president, while the president agrees to adopt a series of negotiating objectives laid out by Congress. 

I’ve explained before why I think TPA is not necessary right now to get agreements through Congress and why it could even make the TPP negotiations more difficult. However, that argument is temporarily moot since this TPA bill is on the table and will apply not only to the TPP but to the U.S.-EU trade agreement and any World Trade Organzation negotiations for the next four years. 

Defeat of this bill could quite possibly kill any chance the president has to conclude trade agreements before the end of his term. Also, the negotiating objectives included in the new bill are not as bad as I had feared.

At this point, we should be talking about what’s in the new TPA bill and how it might change as the debate heats up.

For starters, the bill’s weak language on currency manipulation is particularly encouraging. American automakers and their allies among House Democrats have made “misaligned” foreign currency their number one trade issue and have insisted on very strong language in TPA. The administration, however, has stated that it does not want the issue addressed in the TPP agreement, as other countries in the negotiations are strongly opposed to the inclusion of currency rules. 

The current text of the TPA bill calls out currency manipulation as a problem but leaves the president a lot of discretion. The political cost of that discretion has been a complete lack of support from House Democrats. Dan Ikenson has explained the troubling politics of this situation and calls for the president to take a tougher stance against Detroit if he wants to make progress with his own trade agenda.

On labor and the environment, the new TPA bill maintains the status quo in U.S. trade policy. The language requiring our trade partners to abide by specific international labor and environmental agreements was not included in the 2002 TPA but reflects a compromise reached in 2007, when Democrats took control of the House. Despite the fact that Republicans have regained their majority, many were worried that the new TPA would impose even stronger objectives on labor and environmental requirements. 

If support from House Democrats is already lost because of the currency issue, Republicans may want to consider whether there’s any room to roll back the objectives on labor and environment. Free trade should not be contingent on the adoption of foreign labor and environmental standards. As Dan Griswold succinctly explained when Congress was debating another fast track bill fifteen years ago:

This debate is not about worker rights or a cleaner environment. It’s about the freedom of people in America and abroad to engage in mutually beneficial trade. In the real world, the international standards and trade sanctions that opponents of fast-track insist upon could in fact slow progress toward better living standards in poor countries.

Now fast track imposes those very same standards and sanctions, but opponents are still not satisfied. Perhaps this Congress in 2014 is incapable of imbuing the trade agenda with much-needed faith in the free market, but there’s little to lose from trying.

The new TPA bill also continues the past policy of promoting strong intellectual property rules through trade agreements. This is an area where the United States has to expend a considerable amount of negotiating capital to get marginal changes in foreign IP laws that benefit a handful of U.S. industries. 

IP has also become a focus of domestic opposition to the U.S. trade agenda, as copyright and patent reform advocates recognize the dangers of locking-in bad policy through international agreements. Like labor and environmental targets, the IP component of the trade agenda is an issue where congressional consensus exists despite a pressing need for serious debate.

Finally, some separate trade initiatives may get tied-in to the passage of TPA.

Democrats are certain to insist on an extension of the Trade Adjustment Assistance program before supporting TPA. Trade Adjustment Assistance provides greater welfare benefits to people who can tie their job loss to import competition. It is an entitlement program whose primary purpose is to demonize trade while assuaging anti-trade constituencies. In truth, these jobs are lost due to economic growth and trade is only one of many ways to ensure a dynamic and competitive economy.

Also, the Generalized System of Preferences program that grants tariff-free treatment to imports from poor countries could be extended in conjunction with passage of TPA. The program, though it has its faults, helps many consumers and producers in the United States and creates economic opportunity for people who desperately need it. Despite being generally popular in Congress, the program expired last year.

TPA offers Congress an opportunity both to support and to shape the U.S. trade agenda. Perhaps the current set of negotiating objectives is the best that can be done with this particular Congress this year.  But, this is a good time to have a debate about the goals of U.S. trade policy: to consider ways to make it better and, especially, to keep it from getting worse.

Related Tags
Trade Policy, Herbert A. Stiefel Center for Trade Policy Studies

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