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American Politics & Foreign Policy

Trade & Foreign Economic Policy

Hoa NguyenI36037

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Question

Some scholars advocate giving the US president broad authority to conclude trade

agreements with other countries, subject only to “fast-track” review by Congress.

Others argue that to ensure workers’ rights and environmental safety, Congress

needs to avoid limiting its review and possible amendment of trade agreements.

What are the bases of each argument? Should the US president have fast-track trade

negotiation authority to protect national interests of the US? Or should the Congress

have more sweeping review of trade agreements to protect domestic interests?

Discuss in the context of current tug-of-war going on between President Obama and

the US Congress over the Trade Promotion Authority.

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What is fast track• Formally known as Trade Promotion Authority (TPA), or ‘fast-track’

• Congress delegation to the executive branch to negotiate international commerce

• Allows US president and trade representative to finalise trade deals without full Congressional oversight

• President must notify 90 days of entry to force

• Congress must vote to ratify within 60 days, no amendment, only up-or down vote

• A streamlining of the process by Congress in exchange for giving president ‘long detailed list of negotiating objectives’

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Executive branchesAuthority to negotiate and finalise trade deals

90 days notice to Congress before agreement taking effect

Congress

Right to regulate international commerce Within 60 days: No amendments on terms, up-or down vote only

Constitution

Trade deal ratified/revoked

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Where fast-track came from

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•World negotiation shifted from tariff to non-tariff issues

•Nixon 1973: proposed NTB negotiation rights

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•Congress cannot forfeit power to make law

•US negotiators needed some insurance of negotiated deals to partners

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romise: the fast-track

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Reasoning for fast-track

Fast-track facilitates trade promotion

• Stream lining the process• Provide some weight to US negotiators

Trade promotion is for overall benefits

• David Ricardo: comparative advantage theory• US lead in a trade order that benefits the US

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Unfavorable public view on fast-track and trade promotion

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•Trade agreements: trade deficits, millions job loss (low-skilled and high-skilled sectors), unchanged/depressed real wages

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•Who are the beneficiaries of trade agreements? Corporations? – a race to the bottom

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•Fast-track blocks Congress’ attempts to improve trade terms for the people

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Trade negotiations secrecyTrade negotiations are carried out in secrets• TPP• TTIP• TISA

Leaked TPP documents show problems• no enforcement mechanism for environmental terms• companies can sue states • What else?

Fast track facilitates such secret deals that.. • favour big corporations• and often harm other groups’ interests! (workers,

environment..)

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Checks & balances

• Fast-track: exclusive rights of USTR and president to choose

partners & terms

• When president reveal full text, it is a done deal

• Congress can not change terms

• Revocation possible, but costly. US credibility in negotiations

-> eliminate checks & balances?

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Fast track & The TPP

• Fast- track authorisation in current debate: controversial TPP

• Trans-Pacific Partnership

• 12 countries: US, JP, Mexico, Canada, AU, Malaysia, Chile, Singapore, Peru, Vietnam, NZ, Brunei

• Excludes China

• Covers IPR, financial regulations

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TPP – Economic Benefits

• Member countries = 40% world GDP, 25% exports

• Expected to boost growth by $300 bn in next decade

• Big corporations : tariff reductions for products made overseas • Consumers benefit too from cheaper products

• Job loss minimal as US factories are already in partner countries

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TPP – Political Move

• Counter China influence in the region

• China: Asia-only economic bloc, RCEP (ASEAN +6), One Belt One Road Policy, AIIB

• Strategically important for US influence & inclusion in global trade game

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Fast-track approval

• Clinton administration did not need fast-track to get trade deals signed

• But TPP is on another level with highly complex and controversial issues

• Without fast-track, it is possible that TPP may never be finalised

• US cannot afford to miss the TPP?

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Fast-track approval

• Ability to conclude TPP, TTIP, TISA

• Personal motive: Legacy for Obama?

• Senate approved - possibly helped by donations from corporations!

• 65-33 in favour (14 May)

• Over $1m donated by corporations Jan- Mar 2015

• Average $17,676.48 donated to each of 65 “yea” votes.

• Average Republican member received $19,673.28

• Average Democrat received $9,689.23

• And more contributions to member facing re-elections

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Fast-track approval

• House vote? June – more difficult as many Democrats and TEA Republicans oppose

• House members represent their constituents

• Final result?

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Fast-track

• Double bladed sword: facilitates trade but favours corporations at expenses of others

• US government may need to review the whole approach and process to trade

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Thank you