The Trade Debate: What It All Means

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Mon, Jun 15 - 2:06 pm EDT | 2 years ago by
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    Trade is dominating the current political discussion. Unfortunately, because the debate is a bit esoteric and features several different issues, much of the discourse is muddied by ignorance and confusion. This primer provides the most important facts on the trade issues under discussion, presented so that at least your opinion – whatever it may be – will be among the informed few.

    Here are the key issues at stake:

    Trade Promotion Authority (TPA) is currently center stage, and is also known as ‘fast-track’ because its main purpose is to ensure a timely vote on negotiated trade agreements. TPA endures a vote on any submitted deals within 60 days, while preventing filibusters and amendments.

    The latter is a practical concession, as negotiating between governments would be all but impossible if, upon reaching mutual agreement between chief negotiators (typically representatives of the executive), the legislative body of each party could then mold it to their liking outside the give and take of the negotiating process. Even if ultimately approved, the number of different versions returned would almost always equal the number of participating nations, thereby rendering multilateral deals impractical even where all parties are generally in broad agreement.

    Some argue TPA represents an expansion of Presidential power, perhaps even unconstitutionally so, but fast-track authority is not new – having been enacted off and on since 1974 whenever agreements were in the works – and none are pointing to any past examples of abuse. If anything, its other provisions strengthen the role of Congress in the process.

    The Constitution’s Treaty Clause is simple: “The President… shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur…” While TPA does guarantee a vote where the Constitution is not otherwise as explicit in answering whether the Senate must do so to fulfill its role, in every other case it empowers Congress and constrains the White House. The bill includes, among other things, a laundry list of objectives to which the executive is expected to adhere in its negotiations, requirements for regular consultation with Congress during the negotiating process, and of course, the ultimate right of Congress to vote down any agreement.

    Addressing the question of its Constitutionality, former Attorney General Ed Meese explained:

    The TPA legislation… is clearly constitutional because Congress retains its authority to approve or reject all future trade agreements. It might be unconstitutional if Congress tried to delegate its authority to approve the final deal–but that is not at issue. Congress may always kill any future international agreement by withholding its final approval. The only difference under TPA is that Congress consents not to kill the agreement by amendment (i.e., the ‘death by a thousand cuts’). The Constitution grants each house of Congress the authority to establish its own rules of procedure, and it makes perfect sense for Congress to limit itself to straight up-or-down votes on certain resolutions, such as base closures and its own adjournment motions.

    Some, likely confusing the issue with actual trade agreements, have further argued that the TPA bill is somehow secret. That’s not the case, as like all legislation it has been publicly available as part of the Congressional record since it was filed (and is available in its prior enacted forms as well). The full text can be read by anyone here.

    Trade Adjustment Assistance (TAA) is for political reasons currently packaged with TPA (in the same legislation linked above). It is a program, typically supported by unions and Democrats, that was pared with trade in the past in an effort to offset perceived economic harms from increased trade. Among other things, it provides for retraining of displaced workers and financial assistance to firms affected by import competition.

    TAA has a proven track record of failure. It provides very expensive “benefits” for what in practice is an extremely tiny fraction of laid-off workers (import competition and overseas relocation account for only 1% of jobs lost in mass layoffs). Even according to a study commissioned by the Department of Labor the program is a net negative. It found that those participating in TAA programs were no more likely to find employment, and actually earned less than comparison groups. The “net benefit to society” was estimated to be negative $53,802 per participant!

    Senate Democrats demanded that TAA be packaged with TPA and passed them together in the same bill, which is why the votes on the two issues last week were intertwined in the House. Though unlike the Senate, the House voted on the bills separately. TPA passed 219-211 on largely partisan lines, but TAA was overwhelmingly defeated 126-302 after Democrats refused to support it. Why did they do that when they are the ones that have always supported the program? Because voting it down theoretically scuttles the entire package in the Senate, where decent Democrat support was necessary to reach a majority.

    But the issue is far from settled. There was a move to reconsider the TAA vote, which means a revote can occur after two legislative days. Expect that to happen soon, and perhaps for Republicans to now vote for TAA which they generally oppose ideologically. Seeing the lopsided nature of the vote, however, might also spark the Senate to pass a clean TPA bill without TAA.

    All of this raises the obvious question about why the fight over TPA, a largely procedural and previously uncontroversial piece of legislation, has not only brought about such Machiavellian maneuvering on Capitol Hill, but also struck a cord with the public.

    The reason is that TPA is really being used as a proxy fight over upcoming trade agreements. Although there are some strange bedfellows on free trade, with populist opposition spanning the ideological spectrum, it’s still true that Republicans mostly support free trade and Democrats mostly do not. Hence why Republicans could conceivably vote to pass TAA, a union-backed handout that epitomizes fiscal irresponsibility, if they see it as necessary to pass TPA, which they in turn perceive as making advances in freeing international trade more likely.

    Finally, we come to the Trans-Pacific Partnership (TPP), Transatlantic Trade Investment Partnership (TTIP), and the Trade in Services Agreement (TiSA). These are specific potential agreements currently being crafted between various governments that, when finished, will be subject to the fast-track process should TPA actually be passed. They are the true focus of the current fight as free trade opponents look to relitigate past defeats, like NAFTA.

    TPP, TTIP, and TiSA are not currently available to the public for the simple reason that they don’t yet exist in final form, but would necessarily be accessible well before a vote for both the people and their elected representatives to evaluate. Still, the current unavailability of the (potential) language of these agreements has proven fodder not just for ideological opponents of free trade, but for skeptics of internationalism and even conspiracy mongers.

    Leaks of drafts have kindled the opposition by indicating inclusion of a number of issues not apparently concerned with trade, including immigration and the environment. And it’s worth noting that even proponents of free trade in theory can find fault with specific agreements in practice. Merely bearing the name “free trade agreement” does not make a treaty any such thing in practice. Any of these may prove worthy concerns depending on the stance one takes on these issues.

    The Takeaway: It’s hard to argue that any trade agreements can be made without TPA or a similar process to ensure legislative consideration of treaties as they are agreed to. The impossible alternative is bringing all of Congress to the negotiating table.

    There’s also little serious reason to believe the trade agreements would sail through Congress if they end up even half as bad as some are now claiming. Republicans generally support free trade, but would be motivated to oppose anything infringing upon U.S. sovereignty, especially given the likelihood of intense public scrutiny leading up to a Presidential election. Nor would TPA even really bind them to the fast-track window if they need additional time to inspect the agreements. Because fast-track is based on Congressional rules, it can be changed at any time through a vote. Nancy Pelosi exercised this option in 2008 over a Colombia free trade agreement submitted by President Bush, delaying consideration of the agreement indefinitely.

    Nevertheless, for opponents of the trade agreements (whatever their potential motivations), rejecting TPA is strategically sound, albeit for some a bit muddled on the principles. Simply put, without TPA there can be no trade bills, though neither does TPA provide guarantee they will pass.

    Brian Garst is an advocate for economic and individual liberty. He works as Director of Policy and Communications at the Center for Freedom & Prosperity, a free market think-tank dedicated to preserving tax competition. His writings have been published in major domestic and international papers, and he is a regular contributor for Cayman Financial Review. He also blogs at BrianGarst.com and you can find him on Twitter @BrianGarst.

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