The Obama administration has embarked on an aggressive trade agenda that could lower barriers and increase U.S. exports to many of the economic giants of Asia and Europe. To make that a reality, though, it may first have to negotiate future trade policy a little closer to home—with Congress.
The administration hopes to complete talks by October on the Trans-Pacific Partnership, which would reduce duties on a wide range of goods and services in the world’s most vibrant trading area. Eleven countries, including Australia, Peru, Malaysia, Vietnam, Mexico and Canada, are participating, and Japan has expressed interest in joining.
In his State of the Union address, President Barack Obama announced plans for a second deal, the Transatlantic Trade and Investment Partnership, which would link the United States and the European Union, the world’s two largest economies.
Departing U.S. Trade Representative Ron Kirk added to the agenda in January when he notified Congress of plans to start negotiations for a new agreement on international trade in services. The talks will include a group of 20 trading partners representing nearly two-thirds of global trade in services.
Obama has set a goal of doubling exports by the end of next year, after drawing criticism from free-trade advocates during his first term for moving too slowly on trade issues.
“The Obama administration suddenly has this highly ambitious trade agenda that they’ve laid out,” said John Murphy, vice president for international affairs at the U.S. Chamber of Commerce, a leading pro-business lobbying group. “Now the challenge is going to be executing.”
First, Obama must nominate a successor to Kirk, who in January announced plans to step down. Then, he has to work with lawmakers to restore a procedure called trade promotion authority that is regarded as key to getting trade treaties finalized and approved by Congress.
TPA, also known as “fast track,” has a history going back to the 1930s and was formalized in a 1974 trade law. Under TPA, Congress and the White House agree on the objectives of trade negotiations, and Congress affirms that it will vote on any trade treaty without offering amendments that would force the administration to go back to the negotiating table.
The last TPA law expired in 2007, and up to now, the Obama White House hasn’t pushed for its renewal. Without TPA on the books, trade partners are reluctant to sign off on deals that could later be amended.
That could be fatal to some complex trade deals, such as the future talks with the EU where success hinges on reaching delicate compromises on such issues as European agriculture subsidies and Europe’s restrictions on genetically engineered crops.
A strong trade agenda, said Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee, requires close cooperation and consultation with Congress, and “trade promotion authority is the linchpin that brings these elements together.”
Members of Obama’s Democratic Party tend to oppose TPA, arguing that trade pacts negotiated by past administrations have resulted in job losses in America and given short shrift to environmental, labor and human rights issues. The last TPA law was passed in 2002 by the slimmest of margins, with House votes of 215-214 and 215-212.
More than 300 labor and environmental groups, in a letter last week opposing the Trans-Pacific talks, said no TPA legislation should be considered without a thorough assessment of how a trade deal will affect job creation, environmental and labor rights, food sovereignty, access to medicine and other issues.
The administration is coming off a good two years on trade. In 2011, it succeeded in getting Congress to approve three bilateral free trade agreements with South Korea, Colombia and Panama and extend a law that helps workers hurt by foreign competition. Last December, Congress sent the president legislation that removed Cold War restrictions standing in the way of permanent normal trade relations with Russia.
The three free trade bills, negotiated by the George W. Bush administration and reworked after Obama took office, were all covered by the TPA law in effect before 2007.
The administration, in its trade policy agenda report released last week, pledged to work with Congress on TPA “to facilitate the conclusion, approval and implementation of market-opening negotiating efforts.”
Republican Rep. Dave Camp, who oversees trade policy as chairman of the House Ways and Means Committee, said he was disappointed the administration has not engaged with Congress on TPA and urged Obama to both nominate a qualified trade representative and immediately begin discussions on renewing the fast track law.
Senate Finance Committee Chairman Max Baucus joined Hatch in a letter to Kirk that welcomed the US-EU talks and said they “intend to intensify efforts to ensure prompt consideration and renewal of trade promotion authority.”
“It is our hope and expectation that the administration will join us in these efforts,” they wrote.