PPI | Policy Report | April 17, 2001
Fast-Track and Trade Policy in 2001
A New Look at an Old Debate
By Edward Gresser
The Bush administration's call for renewed fast-track negotiating authority sets the stage for the central trade debate of 2001. While fast-track was a familiar topic in Washington throughout the 1990s, this year's debate may be very different from those of the past.
The practical case for fast-track -- the procedure in which Congress sets negotiating objectives for major trade agreements and agrees to vote on the result without amendment -- is well-known. Now renamed "trade promotion authority," it eases negotiation and passage of agreements to open world markets. In so doing, it forms part of a broad policy response to the development of a global economy, one that combines America's historic commitment to open world markets with initiatives to expand the winner's circle at home through improved education and training and which pursues multilateral ways to strengthen environmental protection and worker rights.
But as important as this practical case is, the experience of the past four years -- during which, for the first time in a generation, an administration conducted trade policy without fast-track -- shows it to be in some ways a secondary concern. The more fundamental reason to renew fast-track is one of principle. That is, the absence of fast-track since 1997 has undone an important constitutional balance -- sharply weakening congressional influence over trade policy and giving administrations an unprecedented and in some ways unhealthy degree of power over the trade agenda.
No participant in earlier fast-track debates predicted such a result. In the 1990s, both supporters and opponents of fast-track correctly believed that the loss of fast-track would limit President Clinton's negotiating options. But neither realized that without fast-track the President could for the first time open and negotiate agreements without the prior consent of Congress and at times in defiance of the congressional majority party. Thus, paradoxically, the failure to renew fast-track in 1997 gave President Clinton more control over the substance of trade policy than any President had had in decades. The Bush administration has now inherited this new power.
The practical consequences of this new situation will change over time. President Clinton used the absence of fast-track to negotiate agreements attentive to labor and environmental issues despite Republican congressional objections; President Bush may be able to use this freedom to bypass Democratic objections to his goals. But in either case (and whatever one's views on the place of labor and environmental issues in trade policy) as an institutional matter the loss of fast-track sharply eroded Congress' power over trade policy.
Fast-track's renewal this year, while still important for the traditional pragmatic negotiating reasons, therefore has a greater importance. It is, first of all, the principal opportunity for progressives to influence and contribute to U.S. trade policy under the Bush administration. More fundamentally, renewal is essential to restore a check on executive branch power, a constitutional balance of control over trade policy, and a consensus-based policy development process that has served the United States well for decades.
To explain this conclusion, we must begin with a look at the standard case for fast-track. Typically, this has rested on a pragmatic view of the limitations of Congress, with the case argued along the following lines:
Comprehensive modern trade agreements are highly complex balances of concessions with foreign trading partners, and some of these concessions require protected industries to give up long-held special privileges.
Government leaders in parliamentary democracies can impose party discipline sufficient to pass such agreements, but the U.S. Congress, lacking such discipline, is unlikely to resist adding narrow amendments that help special interests maintain trade protection.
Adoption of such amendments will in turn lead our negotiating partners to withdraw their own concessions, thus unraveling agreements that a majority agree serve the greater good.
Without fast-track, therefore, foreign governments will refuse to negotiate seriously with the United States, and we will suffer economically as foreign countries maintain higher barriers and negotiate agreements among themselves that put American businesses, workers, and farmers at a disadvantage.
This reasoning has been accepted, by both supporters and critics of fast-track, for many years. It has an obvious flaw -- countries with presidential systems like ours (Brazil, Mexico, South Africa, South Korea, France, and others) seem able to pass trade agreements without any such procedure. But it cannot easily be discounted, as it emerges from experience. In a celebrated debate of 1967-68, Congress refused to implement a major element of the Kennedy Round of the General Agreement on Tariffs and Trade (GATT) negotiations. (This was a U.S. commitment to abolish an egregious program known as the "American Selling Price," which linked chemical tariffs to the price of chemicals on the U.S. market -- i.e., the more domestic chemical companies jacked up their prices, the more protection they got.) The failure limited the results of the Kennedy Round, embarrassed the United States internationally, and prompted the creation of fast-track as a new round approached in 1974.
Ever since, fast-track has been accepted as fundamental to U.S. negotiating credibility. The long-standing acceptance of the standard case for fast-track in turn explains why a debate over a procedural issue is so emotional -- it is a proxy for a debate over the basic aims of American trade policy. Just as supporters of Franklin Roosevelt's trade liberalization principles believed their goals would be impossible to reach without fast-track, so opponents believed that by blocking it, they could force a strategic change in the direction of American trade policy.
But four years of experience in trade policy without fast-track shows that such an absolutist view is wrong. The U.S. trade agenda neither stalemated nor reversed course when the last fast-track resolution expired in 1996; in fact, it accelerated.
Between 1997 and 2000, the administration negotiated three major multilateral trade agreements: the World Trade Organization's (WTO) multitrillion-dollar agreements on basic telecommunications, financial services, and duty-free cyberspace. It launched an imaginative and highly successful e-commerce program. It worked with Congress to pass three high-profile trade bills (the African Growth and Opportunity Act, the Caribbean Basin Initiative (CBI), and permanent normal trade relations (PNTR) for China). And it began negotiations on three new free trade agreements (with Jordan, Singapore, and Chile), concluding the Jordan agreement in the fall of 2000.
This record compares quite well to the records of earlier periods in which fast-track was in place. Though the legislation and agreements are obviously not entirely comparable, the following table may be helpful in placing the era in perspective:
|
Multilateral Agreements Concluded
|
Three (Tokyo Round, Uruguay Round, Information Technology Agreement) |
Three (basic telecommunications agreement, financial services agreement, duty-free cyberspace) |
|
Free Trade Agreements (FTA) Negotiated
|
Three (Canada, Mexico, Israel) |
One (Jordan; FTAs with Chile, Singapore also begun) |
|
Major Trade Bills Passed
|
Seven (Tokyo Round, U.S.-Israel FTA, CBI creation, Trade Act of 1988, U.S.-Canada FTA, North American Free Trade Agreement (NAFTA), Uruguay Round) |
Three (African Growth and Opportunity Act, CBI/NAFTA Parity, PNTR for China) |
This experience discredits the view that rejection of fast-track will wholly block, or even reverse, U.S. trade policy. It does not, however, invalidate a pragmatic argument for fast-track. As U.S. Trade Representative Robert Zoellick and others have noted, the success of the trade agenda since 1997 should not be taken as proving that any trade agenda can succeed without fast-track.
While the Clinton administration reached most of its trade goals in 1997-2000 without fast track, its absence did delay a lower-profile initiative (the U.S.-Chile Free Trade Agreement) for years. And its overall success may simply be the result of serendipity -- by lucky chance, none of the administration's top trade priorities in these years involved a detailed balance of concessions requiring congressional legislation. To be specific, the administration implemented the basic telecommunications and financial services agreements through regulatory measures and unilaterally committed the United States to refrain from imposing tariffs on electronic transmissions over the Internet; the Africa and CBI bills were unilateral U.S. trade liberalizations; and the bilateral agreements with China and Vietnam each asked only one commitment from the United States, in grants of PNTR and annually renewable normal trade relations, respectively.
By contrast, the two central U.S. trade policy goals of the next five years -- negotiation of a Free Trade Area of the Americas (FTAA) joining all 34 hemispheric democracies and a WTO Round, centered on agriculture and services trade reform -- are classic examples of agreements well-suited to fast-track. Both will include negotiations on U.S. tariffs, agricultural quotas, perhaps trade remedy laws, and other topics. Impossible to implement through regulatory means, they would ask Congress to accept many separate concessions and might pose a more difficult legislative challenge than the China, Vietnam, or Africa/Caribbean Basin Initiative bills. So a Congress capable of passing PNTR and unilateral trade liberalization without fast-track may find, in a 34-nation Free Trade Area of the Americas or a 140-country WTO Round, a challenge it is unable to meet.
Thus, fast-track renewal remains important on strictly practical grounds. It will enable American negotiators to proceed with more credibility and will ease the final passage of agreements with broad public support; in seeking renewal, the Bush administration is not simply engaged in a perverse attempt to limit its own authority.
But the record of the past four years offers Congress an equally strong reason to support fast-track: without renewal, it will lose its best opportunity to contribute to the trade agenda of the coming years. This is clear in a look at the institutional effects, as opposed to the practical policy consequences, of fast-track's defeat in 1997.
The absence of fast-track in the intervening four years had no effect on the strategic direction of U.S. trade policy and relatively minor effects on its specific achievements. But it did have a profound, unexpected, and troubling effect on the control of trade policy.
Previous debates missed, and experience has revealed, the fact that fast-track limits the freedom of administrations to negotiate with foreign governments at least as effectively as it limits the freedom of Congress to amend the resulting agreements. The principal change wrought by fast-track's absence was therefore less a crippling of the practical trade agenda than a greater freedom for administrations to set negotiating priorities and negotiate agreements without regard to congressional views.
The reason for this is clear in an examination of previous fast-track resolutions, including the 1997 bill. These resolutions, while changing in detail to fit specific circumstances, typically had four provisions:
(1) A set of formal negotiating objectives elaborating specific goals administrations must reach (e.g., eliminating tariffs, creating rules for services trade, raising intellectual property standards, etc.) in multilateral trade agreements within the GATT and WTO or in bilateral free trade agreements with particular countries;
(2) A requirement that before beginning negotiations for any such agreement, administrations must ask for and receive permission through a majority vote of both the Senate Finance and House Ways and Means committees, the committees with jurisdiction over trade policy;
(3) A limited time, typically 90 days, for Congress as a whole to consider, debate, and vote upon a completed agreement after an administration submits it; and
(4) A special procedural rule requiring Congress to vote only on the agreement as a whole and thus barring amendments to change or strike any particular part of the agreement. (This feature, though the subject of most heated debate, is actually the least meaningful concession in fast-track -- like any congressional rule, a no-amendment agreement can always be overridden on the floor of either the House or Senate.)
In summary, fast-track embodied not a one-way delegation of powers by Congress, but a symmetric balance of concessions. As Congress agreed in advance not to bury agreements without a vote and to limit its power to amend agreements, administrations also agreed to two limitations on their powers: They accepted congressional direction on negotiating goals in advance and gave up their power to open negotiations with foreign countries without congressional approval.
Thus, failure of the 1997 fast-track bill deprived trade agreements of special legislative protections and complicated the Clinton administration's negotiating task. But it also freed the Clinton administration from detailed negotiating objectives and mandatory committee approval for major negotiations. As a result, President Clinton enjoyed a far freer hand in setting a policy agenda and negotiating agreements than any president had had in decades.
This fact is amusingly clear in the recent comment of one of the principal lobbying groups against fast-track in 1997 -- the Naderite group Public Citizen -- on the opening of negotiations for the free trade agreement with Singapore. The paper implicitly recognizes that fast-track's opponents, in blocking its renewal, did not block trade policy per se, but rather helped to liberate administrations from congressional control:
The Clinton administration's procedure for launching this negotiation is outrageous ... without consultation with Congress or the public -- much less a delegation of exclusive Congressional authority to set terms for international trade -- the administration announced a major international trade agreement. (Public Citizen, Comment on U.S.-Singapore free trade agreement, December 26, 2000)
During the Clinton administration, freedom from congressional control worked to the benefit of those who support labor and environmental clauses in trade agreements. With no formal negotiating objectives or approval from Congress -- and in outright defiance of Republican objections to the labor and environmental agenda -- the Clinton administration concluded a free trade agreement with Jordan including labor and environmental chapters in the core of its text. It then went on to begin talks on free trade agreements with Singapore and Chile based on a similar model. But this is simply an accident of history -- without fast-track, future administrations will have the same freedom to open and conclude negotiations, and one can just as easily imagine current, or future, Republican administrations proceeding in a similar fashion to marginalize the concerns of Democratic Congresses.
Whatever one's view of the Jordan agreement or of the more general question of the relationship of labor and environmental standards to trade, one must conclude that the absence of fast-track has weakened, rather than strengthened, congressional control over trade.
This should cause some concern. In principle, Congress has an explicit constitutional role in setting trade policy and should be able to exercise it. In more practical terms, one can easily imagine future administrations abusing their new freedom by negotiating comprehensive bilateral or regional agreements without the consent of Congress and forcing their adoption by warning of diplomatic catastrophe (repudiation of a key ally in the Middle East or Asia; long-term alienation of America's neighbors in the Western hemisphere) in the event of rejection.
And more generally, over the long run good policy is more likely to result from the consensus-based approach embodied in fast-track than from unfettered executive branch control of the agenda. Any fast-track bill requires an early and prolonged discussion of negotiating goals. Thus it presents Congress and citizen groups with an opportunity to provide ideas on negotiating objectives and requires administrations to show that the trade agreements they hope to negotiate will meet those objectives. Thus, the agreements emerging from a fast-track process have a greater chance to reflect a broad public consensus on trade.
As Congress begins debate on another renewal of fast-track, the experience of the last four years thus offers a more subtle, balanced, and convincing case for its approval than the traditional pragmatic argument. This is that fast-track institutionalizes a cooperative, consensus-based approach to negotiations, which balances concessions from Congress and administrations to ensure that both can participate and use their unique strengths to reach the best result. By renewing fast-track, we ensure that Congress can contribute to negotiating goals in advance; we preserve a partnership in opening negotiations; and we create the best opportunity for trade policy to reflect a broad consensus of the American public.
Finally, we can return from conceptual issues to the real world and consider the consequences we might expect if fast-track fails once again. Here, two courses seem possible.
Case 1: Fast-Track Fails; Trade Agenda Stagnates
First, the conventional view may prove correct -- a rejection of fast-track could simply make it impossible for the United States to pursue ambitious new trade agreements.
Such a result would not destroy trade policy entirely, as the administration could still achieve such objectives as the integration of Russia into the WTO, the development of trade rules for cyberspace, unilateral trade liberalization and perhaps also services trade liberalization. But failure would come with a high economic and diplomatic price. A failed trade agenda would:
Perpetuate an unappealing international status quo. Foreign governments would continue to maintain generally higher trade barriers than the United States, and trade competitors, notably the European Union, would continue negotiating strings of preferential trade agreements that put American manufacturing at a disadvantage.
Cost the United States opportunities to liberalize its own trade regime, forcing American families, in particular the poor, to continue paying inflated prices for food and clothing and weakening overall U.S. competitiveness.
And damage our ability to promote our interests and values, in particular in the Western hemisphere. Without fast-track the FTAA -- one of the most important American diplomatic initiatives of the postwar era, intended to realize Franklin Roosevelt's dream of a hemispheric union of democracy and open trade -- might fail, leading to decades of north-south polarization in the Western hemisphere, renewed political turbulence and anti-Americanism, and fading hopes for democracy.
Case 2: Fast-Track Fails, Trade Policy Succeeds
A second possibility -- perhaps less likely than stalemate, but by no means inconceivable -- is that the administration might succeed in its trade agenda without fast-track.
In the case of the FTAA, for example, a successful 2001 agenda alone will bring the United States close to compliance with our ultimate obligations. We have already granted full free-trade privileges for Canada and Mexico through NAFTA, and last year's Caribbean Basin Initiative enhancement bill provided a similar degree of market access (less in the case of textiles and services; more in the case of footwear and apparel) for the 21 beneficiaries of that initiative. As a result, we have already granted free-trade benefits or something approaching them to 23 of the 34 FTAA members. Adding a new Andean Trade Preference Act and a free trade agreement with Chile this year would bring the total to 28 and cover well over 90 percent of American imports from the Western hemisphere.
At this point, Congress' responsibility in completing the task would be two-fold: (1) approving creation of a dispute settlement mechanism and (2) eliminating U.S. barriers to trade on five countries (Argentina, Brazil, Paraguay, Uruguay, and Venezuela) that provide about 8 percent of U.S. imports from the Western hemisphere. This task may be complicated without fast-track, as some of these countries have made opening requests for U.S. trade liberalization (e.g., with respect to anti-dumping procedures) well beyond our commitments in previous free trade agreemnts. And, of course, the administration would still have the challenge of negotiating the removal of foreign barriers to U.S. goods on all FTAA participants except Mexico and Canada. But while the task is complicated, success is by no means inconceivable.
In such an event, the traditional liberals now most firmly opposed to fast-track would see their worst fears realized. Given the Bush administration's dismal opening foray into international environmental policy, with the repudiation of a campaign pledge to regulate carbon dioxide emissions, and the uncertain future of any international labor agenda, trade policy would move ahead not in the context of a broader policy to address the full range of globalization concerns, but simply on its own, as part of a laissez-faire international economic agenda.
This would also be a disappointing result for progressives. The administration's market-opening agenda, building as it does on the Clinton record, might remain valuable in its own right. But it would, at best, be a partial and second-best response to the range of social, environmental, and other issues raised by globalization; one which abdicates basic ethical and humanitarian responsibilities and leaves problems of extraordinary significance to future generations.
As the central trade debate of 2001 approaches, a new look at an old controversy thus leads progressives to the same answer, though by a different route.
Rejection of fast-track may block a progressive trade agenda entirely, damaging America's ability to lead in the search for a more open, prosperous, and stable world. Alternatively, it could widen a growing imbalance between administration and congressional control of trade policy. In the current circumstances, this not only would be troubling as a matter of principle but would cost progressives an opportunity to broaden a basically sound trade agenda into a much broader and more comprehensive response to the globalization debate, one that both gives Americans the tools they need to succeed as the economy develops and grows and strengthens protection of the world environment and respect for the core labor standards.
Fast-track renewal this year, by contrast, will provide the United States not only with a practical measure with a proven record of facilitating trade negotiations but give us a way to restore the balance between Congress and administrations in the development of policy and, ultimately, provide a means for ensuring that American trade agreements reflect the broadest possible consensus on a policy critical to our living standards at home and to peace abroad.
The right choice seems clear.
Blueprint Keywords: Extra Fast Track
Edward Gresser is director of the Trade and Global Markets Project at the Progressive Policy Institute.
|
