By: Daniel Guillermo Schneider
In November 2009 President Obama announced, as part of the administration’s “Pivot to Asia”, that the United States would be participating in the Trans-Pacific Partnership negotiations. The Administration believes the trade agreement to be an “ambitious, next-generation, Asia-Pacific trade agreement that reflects U.S. priorities and values.”
In his 2013 State of the Union address President Obama announced that the United States would be entering into negotiations with the European Union for a Transatlantic Trade and Investment Partnership. The Administration has since stated that it believes the agreement will be “an ambitious, comprehensive, and high-standard trade and investment agreement that offers significant benefits in terms of promoting U.S. international competitiveness, jobs, and growth.”
These large, regional, multilateral free trade agreements, as well as a number of small, bilateral free trade agreements are seen to many as a response to the lack of progress in the Doha Development Round negotiations of the World Trade Organization. The feeling is that the Doha talks are too ambitious and agreement is too difficult to achieve on such a large scale, and that smaller bilateral or regional multilateral trade agreements would be easier to reach.
However, while consensus is easier to achieve in smaller bilateral and regional multilateral free trade agreements, one major hurdle remains for the United States to effectively agree to any free trade agreement: the United States Congress.
Historically, the power to regulate trade with foreign nations solely resided with Congress. Article 1, Section 8 of the Constitution states that Congress has the power “to regulate commerce with foreign nations.” Negotiating a free trade agreement with several other countries is quite difficult when the United States’ trading partners agree to something we propose, but Congress then refuses to pass or chooses to amend. This reduces the bargaining power of the Executive Branch as negotiating partners tend to be weary and reluctant to agree to something when they are doubtful that the United States Congress will even agree to it.
Some would say that the Framers of the Constitution intended all trade agreements to go through Congress as a check on the power of the president. However, in 1974 Congress granted the president Trade Promotion Authority, or “fast track authority,” to negotiate trade deals as part of the Trade Act of 1974. This authority expired in 1994 and was renewed in 2002 as part of the Trade Act of 2002, which expired in 2007.
Essentially, Trade Promotion Authority gives the president an outline of the objectives and priorities of Congress in regards to trade agreements, and allows the president to present any trade agreements to Congress for a yes or no vote without the opportunity for filibusters or amendments.
Trade Promotion Authority has been used by both Republicans and Democrats and is generally endorsed by supporters of free trade. According to its opponents, Trade Promotion Authority is a nifty trick for skirting Congress. However, this power was given by Congress to the president and still requires Congress to vote on the final agreement before it becomes US law.
As the last Trade Promotion Authority expired in 2007, President Obama has recently been seeking a renewal in order to gain greater bargaining power in negotiations for the Trans-Pacific Partnership and the Trans-Atlantic Partnership. Surprisingly, Obama’s main opposition on this renewal is not coming from the GOP, but from his own party as well as the libertarian wing of the Republican Party. The major concerns from the Democratic Party appear to be less with Trade Promotion Authority specifically and more with free trade agreements generally.
Recently, negotiations for the Trans-Pacific Partnership have stalled. It is believed to be because negotiators want to wait until after the US midterm congressional elections to relieve uncertainty about the Obama administration’s bargaining power and the likelihood of Trade Promotion Authority being renewed.
If an agreement is reached, these two trade agreements combined would affect the majority of the world’s GDP. The Pacific partnership would comprise 40%, while the Atlantic partnership would comprise nearly 50%.
The benefit of these agreements, supporters claim, is growth of the American economy through job creation due to the increase in markets for the exportation of American goods and services. Some opponents, on the other hand, claim that these trade agreements will increase economic inequality in the United States by lowering wages, while increase the power of corporations around the world.
As negotiations for the Trans-Pacific Partnership have begun to stall and the Trans-Atlantic Trade and Investment Partnership negotiations are still in their early stages, it appears that any agreement may hinge on the results of the midterm elections and whether the Obama administration can convince the new Congress to renew Trade Promotion Authority once again.
