Conclusion: Towards A New Consensus, 2008-?
Our study shows how the U.S. trade-agreement negotiation and approval process has developed over time and been altered by Congress to accommodate changing circumstances. Such changes are both natural and inevitable.
Because the Constitution gives Congress exclusive authority to set tariff rates and decide the terms of commerce with foreign nations, while the executive branch is granted authority to conduct international negotiations, some form of coordination is required. Over the course of the United States' existence, this constitutional separation of powers has resulted in the legislative and executive branch playing widely varying roles in the formation of both trade agreements and trade policy more generally. One constant has been the executive branch's attempts to acquire increased control over these matters.
In the Republic's first 100 years, trade agreements were generally adopted by the Senate as treaties, with bicameral legislation used to implement the changes to U.S. tariff rates. From 1890 to 1934, Congress experimented with delegating defined authority to negotiate tariff terms to the executive branch. The first several delegations allowed the executive to negotiate tariff agreements without subsequent congressional approval, but these were limited to specific countries and goods. The 1922 act introduced the notion of allowing the executive to proclaim tariff adjustments to equalize the costs of production across countries. Several acts during the period authorized the president to negotiate trade agreements that would have to be brought back to Congress for approval.
With the 1934 Reciprocal Trade Agreements Act (RTAA), Congress permitted the executive to negotiate trade agreements (which modified tariffs within certain bands) without a congressional implementing vote. The act was controversial in Congress, and was initially established only as an emergency measure for three years, with any agreements negotiated without Congress' approval sunsetting with the authority itself.
However, once established, the RTAA's tariff proclamation authority was repeatedly extended by Congress for one- to three-year periods. Scores of trade agreements were completed under this form of tariff-proclamation authority, including the original 1947 GATT and four rounds of further GATT negotiations. The GATT set certain principles regarding trade in goods and established tariff rates. Congress did not vote on the GATT rounds, and a proposal to establish an International Trade Organization (which would house the GATT) failed to obtain Senate treaty approval. By 1958, as the importance of trade to the U.S. economy increased, Congress reasserted its role by establishing a form of legislative veto.
When the Johnson administration overstepped its delegated tariff authority in the 1967 Kennedy Round, Congress ended its willingness to allow adoption of trade agreements without an affirmative congressional vote. That GATT pact included non-tariff measures related to anti-dumping policy. Congress had warned that such matters related to domestic law, not tariffs, and were outside of the executive's trade authority. Johnson signed the agreement anyway. Congress demonstrated its constitutional prerogatives by refusing to implement that aspect of the GATT deal, while Johnson used existing tariff-proclamation authority to implement the Kennedy Round tariff cuts. Congress did not provide any new delegation of presidential trade authority from 1967 to 1975.
Fast Track was the next U.S. trade-agreement negotiation and approval mechanism. During President Nixon's narrowly won first term, he worked to consolidate his political base by courting various constituencies with import-restraining measures. After winning his second term, Nixon changed his economic team, but continued prioritizing political power over policy substance. His initial proposal for new presidential trade authority would have allowed him to negotiate trade agreements on tariff and certain non-tariff issues such as procurement and dumping; he would also be able to proclaim not only the new tariff rates, but the changes to federal law needed to implement the pacts.
The Nixon administration initially argued that this was necessary to bring other countries to the negotiating table after the Kennedy Round meltdown. However, when countries agreed to launch the next GATT Tokyo Round prior to any delegation of congressional trade authority, the administration conceded that the real issue was ensuring a final vote on trade agreements. The Senate put a stop to Nixon's outlandish proposal that would have grabbed Congress' basic legislative authority. However, the Senate did agree to a Fast Track system that would allow the president to negotiate on tariff and certain non-tariff issues and sign and enter into agreements before a congressional vote, with a later vote guaranteed on the already signed pacts within a set amount of time under controlled floor-voting rules.
The GATT Tokyo Round was completed under this form of Fast Track. For the first time, it included "codes" on issues traditionally under sole congressional purview, such as procurement, non-tariff barriers (i.e. regulatory standards) and dumping. The Fast Track authority was extended for an additional eight years in 1979.
The Reagan administration transformed Nixon's consolidation of presidential trade- agreement power into a new instrument expanding presidential power over an array of new non-trade policy matters that were central to implementing Reagan's laissez-faire ideology. The 1984 and 1988 Fast Tracks authorized the president to negotiate and enter into agreements that set rules for service-sector, intellectual property, financial and investment policy. This remarkable new expansion of presidential authority which allowed the branch to diplomatically legislate on a wide swath of domestic non-trade issues was used to launch the Uruguay Round GATT talks in 1986.
The first President Bush's notice to Congress of his intent to launch NAFTA negotiations triggered a congressional backlash against Fast Track. In 1991, fair traders invoked a midterm Fast Track extension disapproval procedure to allow a vote to terminate the authority early. Unlike the near-unanimous bipartisan passage of the 1979, 1984 and 1988 Fast Tracks, 192 House members voted against Fast Track under the disapproval resolution. But without a majority to stop its extension, the procedure remained in effect for use to finalize NAFTA. In 1993, a WTO-specific Fast Track extension was obtained by the Clinton administration.
NAFTA and the WTO exploded the boundaries of "trade" agreements. These pacts established numerous constraints and obligations on a wide range of policies from food safety and immigration, to drug patents and truck safety unrelated to trade. Unlike the widely supported GATT Tokyo Round, the WTO and NAFTA engendered fierce congressional opposition, and required a great deal of the Clinton administration's political capital. Even NAFTA and WTO's critics did not understand the full impacts of the agreements' expansive non-tariff terms until the pacts began to undermine an array of domestic non-trade laws. And despite promises by the pacts' supporters that the deals would reverse the growing U.S. trade deficit, U.S. trade with Mexico shifted from balance to a growing deficit, and the global trade deficit continued to grow. Congress' support for Fast Track and the expansive international commercial agreements it had wrought steadily diminished.
The Omnibus Trade and Competitiveness Act of 1988 used for NAFTA and WTO replicated similar requirements in past Fast Tracks that labor standards be included in trade agreements. However, because Fast Track's structure allows executive-branch negotiators enormous discretion regarding Congress' negotiating objectives, meaningful labor provisions were not included in NAFTA or the WTO.
The Clinton administration, known for its trade-expansion agenda, did not have Fast Track authority for six of its eight years. Indeed, a Fast Track bill for the Clinton administration was voted down on the House floor in 1998 a historic first. From 1995 through 2002, there was no congressional delegation of trade authority.
President George W. Bush came to office with establishment of Fast Track and expansion of NAFTA as top priorities. After a lengthy battle, he obtained a Fast Track delegation in 2002. Many Democrats who had ardently supported past Fast Tracks led the fight against this one, focusing on the implications of providing the executive branch with enormous authority to implement non-trade policies. Bush used Fast Track to extend the NAFTA model through eight pacts, including CAFTA, which passed by a two-vote margin in 2005.
Ironically, it was Bush's use of Fast Track's full powers that destroyed what was left of congressional support for the extraordinary procedure. The Bush administration dispensed with many of the traditional, albeit not required, executive-legislative coordination practices. Instead of negotiating with the trade gatekeeper committees on a bipartisan basis, the Bush administration even ignored a unanimously supported Finance Committee amendment passed in the Oman FTA's mock mark up in 2006. On the Peru FTA, the executive stretched even further, first cutting a deal with Democratic congressional trade leaders to add improved labor and other provisions to the already signed agreement, and then renegotiating these terms of the signed agreements with Peru, Panama, Colombia and Korea without providing Congress with the required notice of intent to enter into an agreement. This left some Republicans fuming and voting no on the deal's mock mark up. (In the last days of his term, Bush then angered Rangel and Levin by implementing the deal before Peru had made the changes to its domestic laws required to meet the labor and environmental improvements the Democrats had obtained in the FTA's text.) The final straw came when Bush used the Fast Track process to try to force a vote on the Colombia FTA in April 2008, after congressional leaders had explicitly asked for further discussion of the proposal. Congress reasserted its constitutional prerogatives and passed a new rule that removed the pact from the 60-day House vote timetable. For Fast Track's critics, this string of executive abuses only confirmed their long-time warnings.
The Obama administration now faces the challenge of negotiating with Congress to replace Fast Track. As our review shows, the Fast Track mechanism was but one of various procedures employed by Congress to coordinate trade-agreement negotiations and approval. As President Kennedy noted in 1961, an old delegation method that does not meet the needs of its era "must not simply be renewed, it must be replaced."
This review has also shown that the Fast Track mechanism was not necessary to ensure U.S. trade agreements or trade expansion. Under other delegations or in the absence of delegations trade has expanded and agreements have been signed, negotiated and put into effect. For instance, while the Clinton administration was without Fast Track, trade expanded over 30 percent from 1995 to 2000. And by its own reckoning, the Clinton administration negotiated and passed 130 trade and investment agreements without Fast Track, including the Jordan FTA, which passed unanimously under normal congressional floor procedures. Additionally, the China WTO accession agreement (which was the basis for Congress' approval of permanent most favored nation treatment for China) passed under regular congressional procedures.
We have also described the mismatch between the Fast Track mechanism and the challenges of today's complex international commercial agreements. Fast Track was premised on 1970s realities, when trade agreements were still largely about traditional trade matters such as tariffs, quotas and anti-dumping policy. Unless Congress forbids the inclusion of non-trade regulatory issues in "trade"-agreement negotiations altogether, it will need a greatly enhanced role in formulating and reviewing trade-pact terms. Specifically, this means the legislature must determine what non-trade matters can and cannot be included in international commercial pacts. In addition to considerations of policy space for instance excluding certain matters to preserve flexibility to modify non-trade policies as circumstances require without having to amend trade pacts Congress must also have the capacity to ensure that non-trade regulatory provisions are consistent with domestic policy goals. Ensuring Congress can hold executive-branch negotiators accountable to legislative directives will require changes to the delegation mechanism at the core of Fast Track, not just the addition of new negotiating objectives that have been systematically ignored under past delegations.
Even defenders of current trade policies agree that Fast Track's time has passed, and a new delegation mechanism is needed. Hal Shapiro, the author of a recent book on the topic, wrote that Fast Track "is surely not what the drafters of the Constitution intended. Indeed, in key respects, Fast Track appears to contravene what they intended. Moreover, it is not necessary, and it does not promote the right debate Fast Track has become a distraction for fashioning policy to a national globalization strategy."255 And arch-free market advocate and former Sen. Phil Gramm (R-Texas) has said that he opposes any delegation of Fast Track that included labor and environmental standards, precisely because he views these as domestic in nature. "If we had a President who wanted to change environmental or labor law, and do it in a way to limit congressional power and authority, he could do it unilaterally through Fast Track." (Interestingly, he views the inclusion of non-trade patent terms in Fast Tracked trade deals as acceptable, because "America is in the patent and copyright business I would argue that element in free trade agreements was pretty much like Britain being for freedom of the seas when they controlled the seas because they had the world's greatest navy.") Even if one doesn't agree with his conclusions on substance, Gramm's logic on procedure is sound.
Some will always think that any congressional or public input on trade is too much. For instance, one Clinton administration official, Harold Hongju Koh, called Fast Track "the most congressionally influenced trade regime since Smoot-Hawley." Indeed, he wrote that even the 1962 act offered Congress "too much input."256 Invariably, when any new congressional trade delegation mechanism is brought up, those who benefited from Fast Track's allocation of decision-making power will attack it probably as protectionist. However, history has shown trade expansion to flourish under a variety of institutional arrangements. At issue is not a battle between protectionism and free trade. Rather, at issue is Congress' appropriate role in devising international commercial agreements that directly affect wide swaths of non-trade domestic policy. This is a fundamental question of the practice of democratic participation in this era of globalization.
And the demos is responding. A growing majority in Washington and in U.S. state capitals agrees with Shapiro's comment above that Fast Track has outlived its usefulness. Substantive concerns have been accompanied by a high level of political traction. Criticism of status-quo trade policy also proved to be electorally potent in the 2006 and 2008 national elections.257 It figured prominently in the 2007-08 presidential primaries, with all eight Democratic candidates and even some Republicans pledging changes to trade policy. President Barack Obama promised to "replace Fast Track with a process that includes criteria determining appropriate negotiating partners that includes an analysis of labor and environmental standards as well as the state of civil society in those countries I will ensure that Congress plays a strong and informed role in our international economic policy and in any future agreements we pursue and in our efforts to amend existing agreements."258
Finally, Obama's USTR pick, former Dallas Mayor Ron Kirk, is a Fast Track critic. According to the Dallas Morning News (3/8/02), Kirk blasted his Democratic primary opponent Ken Bentsen in the 2002 U.S. Senate race for casting "the decisive vote to give this trade bill a one-vote victory in the House of Representatives without any real guarantee of help for workers who lose their jobs because of trade." (Moreover, Obama's reported first pick for USTR Rep. Xavier Becerra (D-Calif.) voted against Fast Track on three out of three occasions. In the 2001 floor debate on Fast Track, Becerra pointed out that the procedure was completely unnecessary, as "Over the past 250 years of our Nation's existence, for only 20 of those years, from 1974 to 1994, has this body granted the President authority for fast tracking any trade agreement. In those 20 years, five agreements were signed. In contrast, during the 8 years of the Clinton administration, 300 agreements were signed with countries from Belarus to Japan to Uzbekistan. We can do this without Fast Track."
The quest for the next system of trade-authority system has already begun. In 2007 and 2008, prominent civil society organizations passed formal policy resolutions and issued papers laying out their views of the core requirements for any new trade authority. (Many of these efforts included aspects of proposals offered in the past by members of Congress, such as a 1995 Fast Track replacement proposal promoted by then-Rep. Bill Richardson (D-N.M.) and then-Minority Leader Richard Gephardt,259 and the 2001-02 Rangel-Levin Fast Track reform proposal.) The AFL-CIO and Change to Win labor federations and the National Farmers Union passed formal policy resolutions calling on Congress to replace Fast Track with a mechanism that enhances Congress' role. These resolutions contemplate the inclusion of readiness criteria, binding negotiating objectives, and pre-signing votes on trade-agreement contents areas described in more detail below. The Citizens Trade Campaign, Public Citizen and other organizations have called for a new trade negotiation system based on similar elements.260
Perhaps the clearest evidence that the Fast Track delegation system has altogether lost its legitimacy has been the "reform" proposals of business interests who have long defended the status quo. A recent example was a draft Fast Track bill put out by the National Foreign Trade Council (NFTC), which represents the interests of large corporations who had a privileged role in shaping U.S. trade agreements under previous delegations. The NFTC's July 2008 proposal maintains the old Fast Track structure, but even so includes certain enhancements in Congress' role, such as establishment of a congressional super-committee that would be required to approve executive-branch proposals to launch FTA talks with specific countries. This Joint Committee on Trade would be comprised of chairs and ranking members of an array of committees whose jurisdiction is affected by today's wide-ranging "trade" agreements.261
Interestingly, establishment of such a trade super-committee is one element of a comprehensive U.S. trade reform proposal introduced into Congress in June 2008. Sen. Sherrod Brown (D-Ohio), Rep. Mike Michaud (D-Maine) and Rep. Linda Sαnchez (D-Cal.) unveiled new legislation in June 2008 called the Trade Reform, Accountability, Development and Employment (TRADE) Act. The bill sets forth the principles for a Fast Track replacement and also details mandatory economic and regulatory objectives with which new and existing U.S. trade deals must comply.262 As of the end of the 110th Congress, the bill had 80 cosponsors, including nine House Committee Chairs, and members of diverse geographic and political provenance.263 A labor official's statement at a news conference on the TRADE Act seemed to represent Congress' intent with the new proposal: "We're tired of playing defense. We're here to play offense."264
This bill builds on past congressional reform efforts and the proposals of various academics and civil society groups. Its Fast Track replacement proposal includes:
- specific "readiness criteria" set by Congress for selecting future U.S. trade negotiating partners. In order for the president to initiate negotiations, the gatekeeper committees must confirm that countries with whom the executive proposes to negotiate meet Congress' statutory readiness criteria;
- mandatory congressional negotiating objectives that list what must be and must not be included in future trade agreements;
- enhanced consultations with (and briefings of) Congress by executive-branch trade officials throughout the negotiating process;
- creation of a Congressional Trade Agreement Review Committee that includes the chair and ranking member of House and Senate committee whose jurisdiction is directly covered by today's international commercial agreements. This committee is designed to supplement the role of the gatekeeper committees, by providing a mechanism for legislators with expertise in the non-trade issues covered by the pacts to access trade briefings and provide input to executive-branch officials;
- certification by the Congressional Trade Agreement Review Committee that mandatory negotiating objectives have been met before a trade agreement can be brought to a vote. This would ensure that executive-branch negotiators and their counterparts from other countries have an incentive to meet Congress' negotiating objectives;
- a congressional vote to approve an agreement's text and explicitly authorize the president to sign and enter into it. This critical measure would ensure Congress can review and decide on the merits of an agreement before it is signed. This would also create a strong incentive for executive-branch negotiators not to try to use trade pacts to push non-trade measures otherwise opposed by Congress (as occurred using Fast Track's procedural back door).Because Congress would have the opportunity up front to ensure pacts and negotiating partners meet their criteria, voting on final implementing legislation would no longer become a high-stakes proxy for non-implementation-related disagreements;
- a process to provide subfederal officials a role in deciding whether their states will agree to be bound to trade pacts non-trade regulatory constraints regarding land-use, service-sector, procurement, and investment policies. However, unlike the Bricker Amendment in the 1950s (or the Articles of Confederation in the 1780s), this mechanism would not block the federal government from adopting international agreements or trade policies within its jurisdiction.
The legislation will be reintroduced in 2009. Importantly, these principles are useful regardless of which party or person controls the presidency.
Such arguments for increased democratic participation in the trade policymaking process are compelling. While perfect democratic debate about globalization policy is impossible, a bias towards more voices is likely to better represent the public interest.265 Further, the expansive non-trade scope of today's international commercial agreements argues for Congress to have a more prominent role in their negotiation and approval than ever before in the nation's history.
One Fast Track advocate hit the nail on the head when he wrote, "the president is well-situated to accumulate foreign affairs power [while Congress is not]. Congress thus could benefit by utilizing tools that would redress the balance-of-powers weakness vis-ΰ-vis the executive."266
Elements of such redress would include a trade-authority mechanism broken up into stages of executive-legislative cooperation, over which the Congress retains leverage and indeed control regarding whether the next stage of delegation is provided. In addition, a process that recognizes the broad scope of today's international commercial negotiations through greater and more diverse congressional involvement could redress the current power imbalance.
As this review has shown, delegation of Congress' trade authority has taken different forms over the course of the nation's history, with a new system of delegation being established every few decades since 1890 in response to changing circumstances. The next few years will show whether the U.S. political system is sufficiently dynamic to embrace a change towards a new delegation mechanism, one that reduces political tension about trade policy and secures prosperity for the greatest number of Americans, while preserving the vital tenets of American democracy in the era of globalization.