Trade Promotion Authority: A winning bargain for Congress and the president

Controversies over the basic constitutionality of the Trade Promotion Authority process, as well as the balance of power between the executive and the legislative branches of government, are looming again in the current struggle over passage of new TPA legislation.

As Congress takes on new legislation to speed up trade agreements, the debate will seek to find a balance between the authority of Congress over trade policy and the necessity that the president craft agreements that further US economic interests. This commentary will attempt to sort fact from fiction and to provide a deeper historical context for the current struggle.

Trade Promotion Authority (or Fast Track Authority, under an earlier name) establishes a co-equal partnership between the president and Congress to expedite passage of legislation implementing trade agreements. The essential bargain goes as follows: the president agrees to negotiate trade agreements pursuant to objectives and priorities established by the Congress; in return, Congress agrees to an expedited up-or-down vote on the agreement and implementing legislation, without amendment. First established by Congress in 1974, the joint procedure has been renewed some six times under both Republican and Democratic presidents, and by Congresses controlled by both Republicans and Democrats, or divided between the parties. While the specific congressionally mandated objectives and priorities have evolved over time, the basic procedural framework and bargain have remained in place.

A brief history of TPA. Unlike many other governments in which the executive exercises strong or complete control over international economic relations, in the United States it is Congress that is granted full and final authority over trade policy. Article I Section 8 states simply and decisively that Congress shall have the power: “To regulate Commerce with foreign nations.” For 150 years, Congress exercised control of US trade policy through passage of tariff legislation, that is, taxes on foreign goods at the border. In 1934, however, Congress — wanting to rid itself of the endless petty demands on individual tariffs — granted the president authority to reduce tariffs on a reciprocal basis with other nations within pre-approved levels.

All of this worked well during the first rounds of multilateral trade negotiations under the General Agreement on Trade and Tariffs in the 1940s and 1950s.  During the Kennedy Round in the 1960s, however, trade negotiators moved beyond tariffs to tackle nontariff barriers to trade such as antidumping and regulatory regimes. This would ultimately force changes in domestic laws, and, at first, Congress balked and refused to act on these US commitments. At that point, US trading partners in turn demanded that the United States establish a system that produced an up-or-down vote on the final terms of future trade agreements (including implementing legislation) negotiated by the president and his team.

Fast Track Authority. In the Trade Act of 1974, Congress established so-called Fast Track (Trade Promotion) Authority. As noted above, the TPA authority has been repeatedly renewed since 1974, and the basic procedural framework has remained largely the same.  Over the next few weeks, the Republican congressional leadership has promised to produce the latest version of TPA, hopefully with some support from Democrats. Republican leaders have stated that the new authorization will follow closely the details of last year’s Bipartisan Trade Promotion Act of 2014.

The 2014 BTPA reflected increased congressional demands for greater participation in the FTA negotiating process, without impinging on the president’s broad executive power over foreign economic policy. With regard to consultation and notification, the act provided for:

• 90-day congressional notification before entering into negotiations for a new FTA.
• 90-day congressional notification before concluding negotiations for an FTA.
• Establishment of Congressional Advisory Groups in both houses that would preside over timely briefing during the course of the negotiations and be given access to all relevant documents. Membership would include select members of the Ways and Means and Finance Committees, as well as the chairmen of committees with jurisdiction over laws affected by the FTA.
• Creation of a broader Designated Congressional Advisors group, consisting of members who have petitioned for such a designation and received permission from relevant committee chairmen.
• A mandate to the Ways and Means and Finance Committee to establish a detailed system and timetable for consultation with the US trade representative (USTR).
• Enhanced transparency for the public by directing the USTR to develop specific plans for public outreach and consultation. (It should be noted that the USTR already has conducted some 1,600 briefings and meetings with NGOs, individual companies, and trade associations, and congressional staff.)
• The USTR, upon request of any member of Congress, must provide all pertinent documents in a timely fashion, including when available the final terms of a proposed FTA.

Further, in a January 30 speech at the American Enterprise Institute, Senate Finance Committee Chairman, Orrin Hatch (R-Utah) outlined several additional safeguards that will be included in the 2015 TPA process: implementing bills would include only provisions that are “strictly necessary and proper,” with “strictly” tightening the scope of such legislation; secret side deals would be outlawed in future trade agreements; and any changes to the agreement made after TPA had expired but before Congress has voted on the agreement would be placed outside the TPA process. He also promised that Congress would continue to insist on transparency throughout the process: there would be no “surprises” to the Congress or the public.

Expedited procedures. As noted above, the administration must give 90 days’ notice to the Congress before concluding an agreement. At that point, the USTR and the Ways and Means and Finance Committees (along with other committee of jurisdiction) begin joint work on crafting implementing legislation, including any changes to US law required by the agreement. The two committees hold so-called “mock markups” of the implementing legislation to work out any differences with the administration; and, should it be necessary, they hold “mock conferences” to iron out any differences between the two houses. There is no statutory time limit on this segment of the process.

With final implementing legislation agreed, the clock starts ticking again when the president formally submits a bill. The two committees have 45 session days to discharge the bill to the floor and the full Congress. Once it reaches the floor of each house, debate is limited to 20 hours, with no amendments allowed.

Careful attention will be paid to new negotiating objectives that reflect the vastly changed economic and technological landscape that has emerged since passage of the 2002 TPA.

Mandated negotiating objectives and priorities. Beyond the ultimate ability to reject proposed FTAs, Congress’s most potent power to dictate the substance of future agreements comes through the negotiating mandates it gives to the president when it passes the TPA. At this point in time — with more than a decade having passed since Congress last weighed in — careful attention will be paid to new negotiating objectives that reflect the vastly changed economic and technological landscape that has emerged since passage of the 2002 TPA. The usual format of the TPA is to divide it into categories of general objectives, more specific objectives, and finally other priorities. Some objectives have been included since the advent of the TPA: these include details regarding market access for goods, services, and agricultural products. Within these general categories, Congress often adds specific market access demands: viz., food safety and animal and plant health laws and regulation. Issues related to investment (and investment adjudication) and intellectual property will be updated to reflect current concerns. The TPA will also add a significant number of new issues, including rules for state-owned enterprises, regulatory reform and coherence, rules for an open Internet and freedom of data flows, restrictions on localization, and IP rules for new biologic drugs. The mandates concerning new issues are of paramount importance, as in these areas Congress has previously given no indication of its priorities.

There is a close and direct link between the objectives Congress mandates in the TPA and the consultation/reporting sections of the bill. In the pending Trans-Pacific Partnership negotiations, the legislators have carefully monitored the progression of the negotiating sessions; and they fully expect that the administration will attempt to bring to fruition the major goals set forth in the TPA — though there is also the (unspoken) knowledge that a final FTA package will contain areas where the United States has had to compromise in order to get a result that all 12 nations can agree to.

Partisan conflicts and the TPA. Since the mid-1990s, partisan conflicts over trade policy have spilled over into the TPA legislative process. It should be noted, however, that these conflicts are not centered on the TPA procedural executive-legislative compromise, but rather on disagreements over what issues and substantive mandates should be included in the TPA and subsequently in future FTAs. The most difficult issues coming forward from the 1990s have concerned the extent to which FTAs will include mandates in the areas of labor rights and environmental protection. Other contentious areas include IP for pharmaceuticals, investor-state dispute settlement, health and safety measures, and currency manipulation. In the current process, the administration is working to find some accommodation that will (minimally) satisfy various interest groups and constituencies.

For labor and environment, however, a 2007 compromise between the Bush administration and the Democratic Congress will dictate the language. In the so-called May 10th agreement, it was decided that both labor and environmental issues would be included in future agreements and subject to the regular dispute settlement provisions. Further, with regard to labor rights, nations will be expected to live up to the 1998 ILO Declaration on Fundamental Principles of Rights at Work.  Unlike actual ILO Conventions on labor rights, the Declaration is not legally enforceable, but merely a hortatory document. Republicans had adamantly opposed obligations related to the ILO Conventions, as those would have forced wholesale revision of US labor laws.

The TPA will add a significant number of new issues, including rules for state-owned enterprises, regulatory reform and coherence, rules for an open Internet and freedom of data flows, restrictions on localization, and IP rules for new biologic drugs.

On the environment, the May 10th agreement stipulates that FTA signatories must sign up to a group of UN environmental treaties, including those dealing with ozone depletion, endangered species, marine pollution, wetlands, tropical tuna, and Antarctic marine resources.

Constitutional questions and the executive balance of power. Controversies over the basic constitutionality of the TPA process, as well as the balance of power between the executive and the legislative branches of government, have been raised from the outset, and are looming again in the current struggle over passage of new TPA legislation. Both representatives from the Democratic left and the Tea Party Republican right have publicly expressed reservations about the legislation and the process. Opposition from the Democratic left wing is actually a cover for larger opposition to trade deals, particularly from labor and environmental interest groups. For conservative Republicans, however, there are real — if rebuttable — constitutional concerns. These Republicans have also been in the forefront of challenging what they consider the overreach of the executive branch under President Obama.

When the 2002 TPA was being considered, the same questions were raised by some Republicans. At that time, two legal scholars with impeccable conservative credentials, former Attorney General Edwin Meese and Judge Robert Bork, gave opinions supporting TPA constitutionality and the pragmatic balance between the executive and the legislature.

Meese wrote:

[The TPA legislation] is clearly constitutional because Congress retains the right 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 … The Constitution grants to 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.

US sovereignty. Meese also dealt with questions raised regarding US sovereignty and ruling by international bodies. He noted:

Future trade deals would not be unconstitutional, nor would they undermine US sovereignty, if they contained an agreement to submit some disputes to an international tribunal for initial determination. The United States will always have the ultimate say over what its domestic laws provide …. A ruling by an international tribunal that calls a U.S. law into question could have no domestic effect unless Congress changes the law to comply with the ruling.

In that regard, every TPA has included clauses that reinforce this sovereignty principle, such as:

No provision of any trade agreement entered into under the TPA that is inconsistent with any law of the United States, or any State, or any locality of the United States, shall have any effect.

Nor shall any provision of a TPA prevent the United States, or any State, or any locality from amending its laws.

Final Thoughts 

The congressional fingerprint is on every step in the TPA process, from the framing of mandated trade objectives and priorities, to continuous consultation and feedback, to the crafting of implementing legislation, and finally, to the up-or-down final decision on an FTA.

US sovereignty is closely guarded and reinforced through specific clauses that nullify any section of an agreement that is inconsistent with US law. Further, a congressional vote on TPA is not a vote in favor of FTAs pursuant to its mandates. Congress can and will exercise an independent judgment as to whether these agreements reflect its mandates to the president and are in the interest of the American people.

Without TPA, the United States would not be able to achieve its own negotiating goals, as our trading partners would hold back their own bottom-line compromises out of fear that the president and the USTR could not guarantee the steadfastness and good faith of the US political process.

Claude Barfield is a resident scholar at the American Enterprise Institute.

For a brief analysis of key sections of the bipartisan bill introduced April 16, 2015, see Barfield’s blog post, “Reactions to the new TPA bill.” 

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• Trade Promotion Authority