A front row seat in Republicans’ foreign policy debate, including their criticism of the Biden administration.
April 27, 2021 at 1:05 p.m.
In 2018 then-US President Donald Trump was infamous tweeted that “trade wars are good and easy to win”. This is not the case, of course, as we have seen over the past four years. Yet, unlike decades of evidence that trade liberalization improves U.S. economic prosperity and national security, the protectionist fever continues to plague both sides – and perhaps the Biden administration.
Trade protectionism in Congress is nothing new; Trade issues are often confusing and industry-specific, which has historically resulted in a congressional rout over tariff rates and unlikely bipartisan alliances against free trade policies. What is the hostility of the executive branch to the lowering of international barriers to trade after World War II is new.
In a radical departure from conservative free-market orthodoxy, the Trump administration has inflicted numerous trade wounds on Americans, including increasing tariffs on Chinese products to a average of 19.3 percent, slap the so-called “national security” tariffs on steel and aluminum of virtually all of the United States’ trading partners, withdraw the United States as a signatory to the Trans-Pacific Partnership (TPP), renegotiate the Free Agreement -North American trade (NAFTA) with provisions that restrict trade, hinder the main executive body of the The world trade organization (WTO), and enact a host of other anti-trade policies. The result? Rising costs to American consumers, loss of jobs, multibillion-dollar bailouts for ‘aid for trade’, and measurable American disengagement of the world economy.
Whether US President Joe Biden will stop the protectionist tides or attempt to overcome them remains to be seen, but a key test is coming soon. Protectionist interests hostile to trade deals strongly oppose a renewal of the “fast-track” procedures for Congress approval of trade deals, which are due to expire on July 1.
Traditionally, Democratic presidential candidates have often campaigned on protectionism, but pivoted to a more pragmatic international economic agenda once in office. For example, former US President Bill Clinton ushered in both NAFTA and US membership of the WTO through Congress, and former US President Barack Obama gained approval for the agreements trade with South Korea, Colombia and Panama in addition to signing the TPP. Although Biden’s presidency is still in its early stages, the administration has kept Trump’s tariffs in place pending the review – stating that his trade policy will be worker first (a way of saying that some industries need to be protected from competition) —and has adopted protectionist policies, such as tightening “Buy american“ rules for federal procurement and reimpose tariffs on aluminum on the United Arab Emirates.
On the bright side, Biden has made it clear that he intends to mend relations with American allies which have made the United States worse in part because of Trump’s trade provocations and nationalist rhetoric. But if the new president is serious about turning Trump’s course disastrous trade policies, a significant action he should take is to ask Congress to renew a fast track. Since the 1979 Tokyo Round of the General Agreement on Tariffs and Trade, expedited legislative procedures – also known as Trade Promotion Authority (TPA) – have succeeded ease the negotiation and approval of 15 free trade agreements as well as the entry of the United States into the World Trade Organization in 1995. One US trade agreement – the politically uncontroversial free trade agreement between United States and Jordan – has never been approved by Congress without a fast-track procedure, which means that these legislative procedures are generally accepted nationally and internationally as a prerequisite for the approval of trade agreements.
So far, Biden and his sales rep, Katherine Tai, have been evasive on whether the Biden administration will seek renewal of TPA; however, US Secretary of Agriculture Tom Vilsack recently expressed support for such an effort. As Vilsack astutely observed, the renewal of the APT will be essential if the United States hopes to successfully conclude open trade negotiations with the United Kingdom and Kenya or join the successor to the Trans-Pacific Partnership from which Trump has withdrawn. : the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The United States has also opened trade negotiations with the European Union as well as WTO negotiations on fisheries subsidies and digital trade. The Biden administration will have to decide quickly how it wants to move forward with these deals, especially as the rest of the world continues to make trade deals excluding the United States at a breakneck pace. The lack of valid expedited authorities will only hamper Biden’s efforts to re-engage American allies and make it more difficult for the United States to strike trade deals that are favorable to American consumers, workers and businesses. In the long run, an inward-looking United States with a blocked international trade and investment agenda will weaken its competitiveness and erode a powerful tool of soft power, leaving Americans poorer and less secure.
The TPA legislation, which has been renewed five times since 1974, grants Congress and the executive conditional constitutional power to negotiate trade deals – as long as the executive keeps Congress informed of negotiations, strives to achieve certain negotiating targets set by Congress and adheres to various deadlines and reporting requirements. In return, it guarantees the president a simple, filibuster-proof majority vote in both houses of Congress, without authorized amendment, within 90 legislative days.
The Obama administration was the last to renew the TPA in 2015 when it called for the swift passage of the Trans-Pacific Partnership – a monumental deal that would have applied liberalizing trade rules and tariff cuts to 40% of global GDP with the participation of the United States. Sadly, the TPP was never submitted to Congress, Trump withdrew the United States from the deal in early 2017, and it became the first US-brokered trade deal that Congress did not approve. The TPP was later renamed PTPGP and went ahead without the United States. Today, American producers – manufacturers, farmers and ranchers – face higher tariffs than their competitors in the vital and growing Asia-Pacific region, while consumers pay more than they would. otherwise for imports from CPTPP countries.
Importantly, the TPA helps resolve two lingering problems in US trade policy. First, it temporarily resolves constitutional tensions over who can negotiate and conclude an international trade agreement on behalf of the United States. Second, it provides reassurance to US negotiating partners that a deal signed by the president will subsequently receive a timely and unmodifiable up or down vote in Congress.
The U.S. Constitution expressly grants Congress the power to regulate trade with foreign nations, resulting in a constitutional division of labor between the business responsibilities of the legislature and executive primacy in foreign relations and treaty negotiations. Prior to 1934, Congress closely retained its trade responsibilities and directly set all trade policies, including individual duty rate legislation. This created ripe conditions for excessive logging as members of Congress bargained for months over tariff levels to protect the interests of advantaged voters. This process culminated with the passage of the infamous Smoot-Hawley Tariff Act of 1930, which dramatically increased tariffs as the United States fell into the Great Depression, triggered retaliation from trading partners, and a helped to stir up nationalist passions around the world.
The Smoot-Hawley disaster effectively ended the era of direct congressional tariff legislation. In 1934, then-US President Franklin D. Roosevelt signed the Reciprocal Trade Agreements Act (RTAA), a pivotal US trade policy bill that was a precursor to modern TPA legislation and that then Secretary of State Cordell Hull defended. For the first time, the RTAA has delegated to the President the conditional authority to negotiate tariff reduction agreements with foreign countries, including prior authorization to proclaim tariff reductions, for a period of three years. In 1936, the tariff reductions implemented under the RTAA agreements had lowered the average United States tariff on dutiable goods at pre-Smoot-Hawley levels. The successive renewals of the RTAA paved the way for the United States to enter the General Agreement on Tariffs and Trade (GATT), the precursor of the WTO.
Are Congress – and the Biden administration – ready to take the country back to the bad old Smoot-Hawley days? Tai was the leading trade lawyer for House Democrats and understands the historic importance of the TPA and its role in facilitating congressional-executive cooperation on trade deals. In years when the United States did not have a TPA or similar legislation – like the RTAA – in effect, the United States was unable to successfully approve new trade agreements, and the power the president’s bargaining has been reduced.
Tai also appreciates that the TPA is a power-sharing agreement, not a blanket delegation of business powers under Article I to the executive. When Congress passes a renewal of the TPA, it decides the rules by which the executive can negotiate trade deals in exchange for procedural privilege. The current version of the Fast Track – expiring in just a few months – contains negotiating goals, consultation, notification and reporting requirements, in addition to the disapproval mechanisms under which either house of Congress can “deactivate” expedited procedures if the executive branch has failed to meet its end of the TPA contract.
But if the Biden administration fails to correct the Trade Promotion Authority’s course, the United States risks being left in the commercial cold – just as the protectionist Trump administration may have intended.