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Will Politics Derail Obama’s Trade Agenda?

Capitol Building

On Friday, 35 of the 36 freshmen House Republicans signed a letter to new USTR Michael Froman indicating their strong support for President Obama’s free and fair trade agenda. Stating, “We write to you as new members of the House of Representatives who strongly believe that expanding trade will increase economic growth and expand jobs across the United States,” the letter went on to describe their readiness to work on negotiations for the Transatlantic Trade and Investment Partnership (T-TIP), the Transpacific Partnership (TPP) and the Trade in Services Agreement (TISA).

The Republican letter comes at a crucial time during trade negotiations for the United States. With the first round of T-TIP negotiations set to begin next week, and the 18th round of the TPP negotiations the week after, Congressional support is key to moving forward. However, the 2007 expiration of Trade Promotion Authority (TPA) threatens to erode much of the potential for forward movement. TPA, which allows the President to “fast-track” trade agreements for approval or disapproval by Congress by removing the option for filibuster, is currently being considered for renewal. Essentially, the TPA forces the House and Senate to accept or reject a trade agreement, without amendment, within 90 days of its submission to Congress by the President.  The process  enables the United States to negotiate more beneficial trade policies with other countries, because of the reduction in approval time compared to other legislation and because counterparties know that Congress will have to vote “up or down” on the package.

Yet while House Republicans have signaled their support for a renewal of the TPA, some House Democrats are doing the opposite. Only one week earlier, 36 of 48 freshmen House Democrats signed a letter indicating their strong opposition to a renewal of fast-track negotiating authority as an inappropriate delegation of congressional authority over trade, particularly in light of (what they allege as) “the secrecy” surrounding  TPP negotiations.  “We do not believe that a broad delegation of Congress’s constitutional trade authority is generally appropriate,” the letter said. “Negotiations on the [TPP] delve deeply into many non-trade matters under the authority of Congress and state legislatures.”

House Democrats are not totally incorrect in this area; many trade agreements include provisions on the environment, labor and even drug patents. While being somewhat “non-trade,” unfortunately, they are also quite “trade.” And the impetus behind the TPA, e.g., promoting US trade interests with other nations, forces a prioritization of the “trade” side over the “non-trade” side. If the renewal of TPA does not succeed, it will remove U.S. negotiating leverage not only for the TPP and the T-TIP, but also for any future bilateral and multilateral trade agreements. Transparency regarding the progress of these agreements can be achieved without handicapping the negotiating and approval process. Renewed communication between the executive and legislative branches would be a good start, something that Finance Committee Ranking Member Orrin Hatch (R-UT) also acknowledged, “…[its] imperative that the President show some real leadership on trade and begin working with Congress in earnest to renew TPA. Without TPA, it is very hard to see how we can negotiate a strong trade agreement with Europe, and with the Pacific Rim nations through the Trans-Pacific Partnership.”

Congressional staff working on developing legislation that would renew TPA are making it clear that their efforts are slowing down, raising the prospect that the bill may not be renewed before the August recess. If this occurs, TPA may never even get a chance because September brings the extension of the debt ceiling and the reduction of the budget deficit.

Meanwhile, none of the freshmen Democrat signatories to the Froman letter even serve on the House Ways and Means Committee, which covers a large majority of trade issues in the House. Let’s hope the rest of the Democratic House Members join the Republican freshmen and heed the words of Senate Finance Chairman Max Baucus (D-MT) instead, who argues that “[TPA] will lay the groundwork for a successful trade agenda.” Failure to do so might compromise the future of the TPP, and the T-TIP before it even begins.

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About the author

Michelle Wein is a Trade Policy Analyst at ITIF, specializing in the connections between international trade, innovation, intellectual property and economic productivity.