In the first several years of his administration, President Barack Obama was often accused of doing too little on trade policy. In an area where bipartisan initiatives seemed possible — as most Republicans support trade negotiations — and had been achieved in the past, the president seemed content to sit on the sidelines.
In his second term, however, Obama has turned his attention to trade and is pursuing two major trade negotiations, one with 11 nations in the Asia Pacific region (the Trans-Pacific Partnership, or TPP), and another with the European Union (the Transatlantic Trade and Investment Partnership, or TTIP). However, there are questions whether the administration is pushing too late, whether it is pushing hard enough, and whether it is pushing in the right direction. And there are also questions about whether our current trade model works. People following these issues for the first time may find the U.S. trade negotiating process complicated, confusing and convoluted. Because it is.
Several decades ago, a procedure was developed under which Congress would pass legislation that formally delegates trade negotiating authority to the executive branch, and in doing so, sets out specific objectives it wants the executive to pursue. As part of this arrangement, Congress promises not to amend the resulting trade deal when it is time to implement it in U.S. law. Instead, unlike normal legislation, Congress guarantees a simple yes or no vote. This special rule arose because of previous experiences where U.S. trading partners saw negotiated outcomes they had achieved amended away by Congress. This procedure was originally called “fast track,” and is now referred to as “trade promotion authority” (TPA).
There are questions whether the administration’s belated trade push can beat the clock.
Trade critics have pounced on this unique procedure as something unfair and undemocratic. Congress should be more than a “rubber stamp,” they say. Of course, this ignores that Congress actually votes on the final deal, and can reject it if it so chooses. The special procedure makes sense in this context. Trade legislation works differently than regular domestic legislation, because it is different: It is negotiated with other governments, rather than a purely domestic exercise.
To its credit, the Obama administration has, in recent months, begun to push Congress to pass TPA legislation, and Congress is close to doing so. Many trade experts believe that the TPP and TTIP cannot be concluded until TPA is passed, as our trading partners will not make their best offers until they know the final deal can be implemented properly. (Whether this is actually true is hard to say, but trade officials are operating under this assumption.) But there are questions whether the administration’s belated trade push can beat the clock. This suggestion may seem odd, given how much time Obama has left in office.
When presidential politics are taken into consideration, however, there is less time than one might think. As the primary campaigns heat up, more and more focus will be placed on the views of the leading contenders, and the policies they would implement when they become president. It will become increasingly hard for the current Congress to get anything done, as people may decide not to compromise in the hopes that they can do it their way when their preferred candidate takes office. As a result, if the TPP and TTIP are to be completed on Obama’s watch, things need to move fast.
Another concern is the extent of the administration’s efforts to promote these trade negotiations. Until recently, Obama’s approach could be seen as somewhat half-hearted. He mentioned trade occasionally, but it was clearly not his emphasis, and he did not spend much time on it. In recent weeks, however, he has taken on his liberal colleagues bluntly and directly, saying that Sen. Elizabeth Warren, D-Mass., a prominent critic, was “wrong on the facts” on this issue. If the TPP and TTIP are to come to fruition, the president must keep pushing on these issues.
Finally, in terms of the approach to selling the public on trade, the administration is calling the TPP the “most progressive trade agreement in history.” Obviously, the goal here is to pick up votes on the left by including progressive causes, such as minimum wage laws, in the agreement. However, this could backfire by driving away free market conservatives who do not want progressivism inserted into trade policy. In addition, the administration has focused mainly on exports as the benefit of trade agreements.
However, if exports are praised and imports are demonized, people get a distorted sense of the value of trade agreements. The main benefit is the increased competition and lower prices for domestic consumers. To convince people to support free trade in the long term, this argument must put front and center.
But this is not just about the Obama administration. The trade establishment as a whole, both Republicans and Democrats, has adopted a particular model, which will be put to the test in the coming months. Over the last two decades, trade agreements have shifted from narrowly focused efforts to rein in tariffs, quotas, subsidies and protectionist regulations, to a much broader “global governance” framework. Trade agreements now include substantive regulations on labor, the environment and intellectual property, among other things.
These issues have been added in response to the demands of interest groups, from both the left and the right, to generate support for these agreements. In the early years, this approach seemed to be a success, as major agreements such as NAFTA and the WTO were passed, and several bilateral free trade agreements were signed in the 2000s. But recently, as the rules have pushed boundaries further, they have led to stronger opposition.
The TPP and TTIP will be a test of whether this approach is still feasible. Trade agreements negotiated in the 2000s were smaller in terms of the scope of the economies the covered. The TPP and TTIP are very large, and will lead to the biggest trade debate we have seen in a long time. If the current model succeeds, the establishment’s bet will have paid off, and this model will likely guide the near future of trade policy and trade governance. If they are wrong, however, and we experience one of the largest rejections of a negotiated trade deal in history, the search will be on for a new model that can produce trade liberalization in the future.