Give Obama a Stronger Hand to Play
U.S. Trade Representative Michael Froman is reaching the end of negotiations over the Trans-Pacific Partnership, a free-trade agreement almost five years in the making. The accord would wrap the U.S., Japan, and 10 other Pacific Rim countries into a humongous free-trade zone with almost 800 million consumers and 40 percent of global output. It could increase U.S. exports by $78 billion a year and create hundreds of thousands of U.S. jobs over the next decade. Yet a deal won’t happen unless Congress soon gives President Obama fast-track authority, also called trade-promotion authority, which lets the president submit a treaty for a straight up-or-down vote.
Without fast-track authority, the U.S. won’t be able to negotiate the deal on favorable terms, and then Congress won’t approve it. That could sideline free-trade talks between the U.S. and the European Union, as well as efforts to write a much-needed global rulebook for trade in services.
If those initiatives fall apart, countries will most likely resort to narrow, two-way deals that put U.S. exporters at a disadvantage. Asians will have another reason to scoff at the notion of a U.S. pivot toward them. U.S. credit card companies and insurers will continue to be barred from some countries. Malaysia will maintain steep tariffs to keep out American-made cars, and Canada will keep protecting its dairy industry with tariffs of 250 percent on U.S. imports.
Congress’s thinking on fast-track authority is puzzling even by that body’s standards. Democrats resist the idea because they blame trade for job losses; Republicans resist it because they say Obama is a bad negotiator. In both cases, denying the president this authority—no major trade pact has been approved without it—only makes their apprehensions come true.
The Trans-Pacific accord would improve on Nafta, generally considered a success in most economic analyses, by exposing countries to lawsuits and penalties if they fail to enforce domestic environmental laws or deny workers the right to form unions and bargain collectively. (Labor and environmental rules would be part of the main treaty, not relegated to a side deal that countries can ignore, as happened under Nafta.)
The toughest trade disputes almost always get resolved in the final weeks of talks. That’s when countries that want something (say, U.S. access to Japan’s agriculture market) must give something in return (say, access to America’s sugar market). Other countries, though, are reluctant to strike these bargains if Congress might rewrite them.
This doesn’t mean Congress should step aside altogether. It has the power under the Constitution to shape trade treaties. It should state its goals in broad terms and insist on real consultation—in exchange for passing a fast-track measure. That would give the president’s negotiators maximum leverage in the final weeks of talks.