Regime V. Executive Hegemony over Non-Tariff Rules: Fast Track's Rise and Fall Through 2008
- On the Fast Track in Nixonland, 1973-1975
- Fast Track's First Uses Expand GATT from Tariffs to Other Issues, 1975-1980
- Fast Tracking the "Reagan-Thatcher" Agenda, 1980-1988
- Failure of Attempts to Reform Fast Track, 1988-1994
- Fast Track is Dead, Part I, 1995-2001
- George W. Bush administration kills Fast Track's remaining legitimacy, 2001-2008
On the Fast Track in Nixonland, 1973-1975
While Nixon's first term included "more new regulation... than in any other presidency since the New Deal," in historian Allen Matusow's words, he "entered the second term determined to reverse this trend."96 George Shultz had replaced Connally as Treasury secretary in June 1972, and convinced Nixon that trade was going to be the predominant tool for exercising U.S. influence in the world. He maintained that other countries' non-tariff barriers were a primary constraint on U.S. exports, and thus an obstacle to sustained U.S. trade balance.97
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Labor politics were also in flux. While the AFL-CIO supported the Kennedy Round and TEA, trade-related job losses among its members were leading the federation to formulate specific proposals aimed at ensuring that trade expansion continued to benefit American workers. In 1971, the AFL-CIO drafted legislation co-sponsored by Rep. James Burke (D-Mass.) and Sen. Vance Hartke (D-Ind.). The bill would have frozen imports at 1960s' levels using quotas, limited the export of U.S.-developed technology, and increased the taxes that U.S. multinationals paid on their overseas operations.98
As author John Judis put it, the Burke-Hartke bill "opened debate over an entirely new area of public and democratic control of corporate behavior. It was based on the premise that the public had a right to regulate what an American corporation did internationally when American jobs were at stake... more than any single debate, it expressed the basic conflict that the post-Bretton Woods world economy was creating between business on the one hand and labor and movements" on the other. And big business fought ferociously to make sure it never became law.99
Nixon, who benefited from the AFL-CIO's unusual failure to endorse the Democratic candidate in the recent presidential campaign, began his second term still courting labor. In February 1973, he attended the annual AFL-CIO convention in Key Biscayne, Florida. Nixon expressed his sympathy for workers displaced by imports, but did not endorse Burke-Hartke, letting slip that he had another proposal in mind that would allow more flexibility but achieve many of the same results. Labor staffers suggested that they had won the president over to their approach.100 Echoing Shultz, the AFL-CIO's Nathaniel Goldfinger wrote in the New York Times that non-tariff barriers abroad were creating barriers to U.S. trade balance. Among the causes of American decline were:
"The spread of managed national economies. Governments now have direct and indirect barriers to imports, as well as various types of subsidies for exports. The result is that imports surge into the huge American market, the most open market to imports of all major industrial countries, while the expansion of United States exports is retarded or blocked by the practices of foreign governments."101
In April 1973, Nixon unveiled his legislative proposal, which he pitched as a comprehensive package to restore America's trade balance.102 The Washington Post editorial board summarized the situation the president found himself in: "Mr. Nixon has usually been able to arrange his affairs in a fashion that leaves Congress pretty well out of our international relations. Now, before he can negotiate with the rest of the world on the crucial issues of trade, he must have a kind of authority that only Congress can give him."103
The Trade Reform Act of 1973, H.R. 6767, introduced by Wilbur Mills on April 10, 1973, would create a new delegation of tariff-proclamation authority. Section 401 of the act featured authority for the president to apply new import surcharges, and set their rate. The surcharges could be applied on a country-by-country or across-the-board basis. It allowed for certain exclusions, such as for oil. In the committee's report on the bill, it advocated that import surcharges should be the preferred means for countries to deal with balance-of-payments problems.104
Yet the most dramatic feature of the legislation was its new expansion of executive authority over non-tariff issues. Nixon's team saw foreign governments' procurement practices as a growing obstacle to U.S. exports and thus an impediment to closing the trade deficit. Thus, they wanted authority to enter into trade agreements that would include disciplines on government procurement and other related matters. They strongly implied that the trade deficit could be resolved by reducing foreign "non-tariff barriers." Said one administration official:
"With the success of the Kennedy Round in 1967 in reducing tariffs among the world's major trading nations, non-tariff practices have become the major impediment to fair competition and the free flow of goods in international trade. Major attention will be given in the Multilateral Trade Negotiations to eliminating and reducing these trade-distorting measures. The job will not be easy as many of these practices are imbedded in national laws and policies."105
In making his case for non-tariff powers, Nixon invoked Congress' rejection of Kennedy Round non-tariff implementing legislation. He argued that the branch had embarrassed the nation, and that countries would refuse to negotiate with the United States in the future. In reality, the new GATT Tokyo Round was launched in September 1973, a year before Congress had agreed to new presidential trade authority. Shultz claimed: "the fact that our trade bill is still under congressional review does not impede our ability to participate actively and fully [in GATT talks] at this stage."106
The 1973 act represented a wholesale re-envisioning of Congress' fundamental constitutional responsibilities. While the tariff-proclamation authority was a continuation of past practice, Fast Track delegated to the president for the first time the authority to enter into an agreement that included non-tariff matters. Nixon's original Fast Track proposal would have allowed the president to negotiate and sign trade agreements covering tariff and non-tariff matters, and to unilaterally proclaim tariff levels and changes to U.S. non-tariff laws for a period of five years.
Congress would be given 90-days notice before the president entered into any trade agreement that made changes to non-tariff legislation. However, the president would not have to explain in any detail what U.S. laws he contemplated changing. After proclaiming any tariff or law changes, the president was to transmit copies of any such proclamations to Congress. No congressional vote was required, and the proclamations automatically took effect if neither chamber "vetoed" the proposal via a disapproval resolution within 90 days. In a letter to Mills on June 13, 1973, Nixon's Justice Department argued that the authorities to enter into non-tariff trade agreements and to impose import surcharges were constitutional, and cited Supreme Court rulings from Hampton to Field.107
Shotgunning the Balance of PowersJohn Connally summed up the Nixon administration's approach to executive-legislative relations thusly: "If the legislature wants to give you a new power you take it. Put it in the corner like an old shotgun. You never know when you might need it."108 One congressperson returned to this frame decades later, noting that "Fast Track operates like a gun to our head no amendments, no reservations."109 |
In addition to the tariff and non-tariff provisions, the package included more trade adjustment assistance. And to counter concerns that limiting Congress' role would hinder private-sector input into U.S. trade-agreement formulation, the proposal established a system of formal trade-advisory committees that would be comprised of private-sector representatives.
Nixon had kicked off 1973 trying to get labor's backing for his delegation proposal. After the initial collaborative noises, however, both he and Mills sidelined labor. As early as April, labor leaders recognized the Nixon-Mills bill did not meet their minimum standards, and President Meany promised to push mandatory Burke-Hartke style quotas as an amendment. But Ways & Means voted down the Meany amendment in July.110 The Washington Post again summed up the situation when its reporter wrote that, "the landmark legislative proposal gives organized labor none of its maximum demands."111 Meany declared that the Nixon-Mills bill was "worse than no legislation at all."112
The bid for greater presidential authority and an expanded scope for "trade" agreements did not go unnoticed in Congress. In the month-long Ways & Means hearings, the very first comment fired at administration officials came from Rep. Al Ullman (D-Ore.), who said: "My problem with your proposal, and I think this perhaps will be your major obstacle in getting this legislation through, is the degree to which we are delegating broad new powers to the executive."113
At another point in the hearings, Mills raised the specter of non-trade laws being challenged as barriers to trade in new trade agreements, echoing the concerns Eugene Millikin raised decades before in the GATT hearings. Nixon administration official John Jackson batted this criticism away: "There are some other possibilities in the area of how a government will allow another government or another society's firms to set up offices in the country, in our country, for instance, or to provide certain kinds of facilities. Now, sometimes these are termed, I grant you they are out on the fringe, but sometimes they are termed nontariff barriers." Mills retorted: "Do any of our health laws enter into this, sanitation laws?" Jackson replied: "Yes. I am sure that there are such, there are aspects of those laws that could be termed nontariff barriers."114 While the administration downplayed Fast Track's implications for non-trade policy, a review of the extensive hearings reveals testimony from a Japanese business advocate that listed "Buy Local" and "Buy America" provisions in almost every state as something to be eliminated in the GATT negotiations.115
Mills was prescient. The record would show Fast Track to be a powerful mechanism for skirting Congress' control of domestic non-trade policy, and forcing changes to the very policy areas the chairman had identified. (For instance, implementation of the Fast Tracked GATT Uruguay Round in 1995 included changes to U.S. meat-safety and inspection regulations. This weakened the previously standing policy that allowed only imports of meat and poultry meeting U.S. standards.116) At the time, however, Mills and his committee were reassured that their concerns were misplaced. For instance, Ways & Means documents reveal that the committee assumed that the kinds of non-tariff negotiations being contemplated would lend themselves to simple conversions to tariff equivalents. This would involve, to make a purely hypothetical example, converting a 500-shipment-a-year cheese quota to a 25 percent cheese tariff. But what is the tariff equivalent of a public health-care system, or a recycled-content requirement (both targeted for curtailment in subsequent Fast Tracked trade negotiations)?
The Ways & Means report on the bill revealed further insights into the committee's expectations on process. "The committee has been assured, however, that due to the complexities involved and, in particular, to the unique legislative character [of non-tariff barriers], ... that the adoption of [changes to non-tariff laws] will be the subject of a request for affirmative congressional approval through the normal legislative process."117 In other words, Mills trusted the president responsible for Watergate to refrain voluntarily from using the vast new authorities just greenlighted by the committee.
It is intriguing to consider the role of Ways & Means in agreeing to such a major delegation of congressional authority. The revenue committee had jurisdiction over trade because tariffs had been a primary source of government revenue in the republic's early years. But by 1973, tariffs constituted only 1 percent of government revenue.118 And in any case, since 1890, Congress had regularly delegated authority over tariffs to the executive branch, which had built up agencies like the Tariff Commission (now USITC) to make recommendations on the issue. However, the scope of non-tariff pacts contemplated under Fast Track would deeply delve into numerous other congressional committees' jurisdiction, including many delicate domestic-policy issues not appropriate for executive-branch control. The historical record hints at some congressional awareness of the implications of this expansion of jurisdiction. Nonetheless, to this day, many in Congress are surprised to learn that the WTO or NAFTA include binding rules regarding non-trade issues covered by committees outside Ways & Means and Finance. This was true of the 1970s GATT talks as well. Regardless, decades of jurisdictional inertia meant that at this critical juncture these committees were empowered to facilitate Nixon's stunning grab of the legislature's trade and non-trade authority. It is perhaps not surprising that most of the House committee chairs voted against the 1973 Fast Track.119
The Ways & Means leaders from both parties Acting Chair Ullman120 and Ranking Member Herman Schneebeli (R-Pa.) rounded up support for Fast Track, and controlled a combined six hours of debate when it came to the House floor on December 10, 1973. Even though a majority of Democrats opposed the measure, the bill's opponents only got one hour of floor-time to present their views. James Burke (of the Burke-Hartke bill) made the most of the scarce time, giving a blistering speech:
"There is no question that this bill would make the President of the United States the foreign trade czar of this Nation. While it is conceivable that there would be times when I might agree with his actions, it is also certain that there would be many times when I would disagree. But, agree or disagree, there would be little Congress could do, having voted in this bill to give the President a free hand to conduct this nation's foreign trade as he determines best over the next 5 years... taken all together, this massive delegation of authority to the President constitutes a virtual abdication of congressional authority and interest in the foreign trade area.
"In my opinion, the Founding Fathers clearly and carefully assessed the importance of the power to levy duties and in other ways to regulate foreign commerce... If regulation of foreign trade was of crucial importance to our Founding Fathers... of how much more greater concern should the conduct of foreign trade be to a Congress today? Not only is foreign trade inextricably wound up with the conduct of this nation's foreign policy but it is crucial to the Nation's whole domestic economic policy, both monetary and fiscal, as well as its full employment policy...
"To mention the Gulf of Tonkin is to mention the most flagrant example of congressional abdication of authority, in this instance, Congress' exclusive power to declare war. Anyone who has been in this body the last 10 years knows firsthand the tremendous effort it took to gradually regain some semblance of congressional authority in this area, culminating as it did only with the decision to end the bombing of Cambodia on August 15 of this year.
"How this same Congress a few weeks later can even contemplate abdicating authority in the foreign trade area is beyond my comprehension. To allow the President and in effect faceless bureaucrats downtown, answerable to no one authority to make the vital decisions over the next 5 years in foreign trade is for Congress to bow out of one of the most important areas of decision-making in the government today. History and not ancient, but very recent history if it has taught this Congress anything, it is that power lost today in the name of greater ease of decision-making and flexibility for negotiators, is power hard to regain tomorrow in the name of constitutional prerogatives...
"Now we all know that life today is more complicated than it was in the days of our Founding Fathers. Certainly relations with foreign governments are no exception. Doubtlessly matters requiring, as trade policies do today, detailed negotiations with foreign governments necessitate the day-to-day participation of executive department personnel. Furthermore, it has never been anything but difficult since the beginning of time for governments to resolve conflicting demands between the dual needs of determining national foreign policy objectives and providing negotiators with sufficient flexibility to negotiate the best possible arrangements with foreign governments. Granted these conflicting demands make it extremely difficult to legislate in the foreign trade area. However, I do not think we acquit ourselves with any great distinction when we avoid drafting necessarily difficult and complicated legislation and simply give the executive department authority to make the tough decisions in this area. In my opinion, these decisions are important enough to be either made directly or clearly charted by the legislative branch of the government. But instead of wrestling with the problem of providing sufficiently clear guidelines for our negotiators in the very important international conferences scheduled for the near future, we have left it for the President to do... Instead of being called the Trade Reform Act of 1973, it should be labeled the Trade Power Transfer Act."121
On December 11, 1973, the bill passed the House on a 272-140 vote, offering Nixon in the middle of the Watergate scandal unprecedented powers.122
Surely the Senate then, that traditional bastion of legislative-branch prerogative, would block the overreaching Fast Track proposal. In fact, it did, amending the legislation to require Congress to have a vote to approve or disprove trade deals negotiated by the executive branch under the delegated authority. In negotiations in the summer of 1974, Sen. Herman Talmadge (D-Ga.) got the executive branch to admit that there were only a few non-negotiable aspects of the bill. Namely, that congressional consideration of trade agreements should be time limited, and that they should be given an up or down vote once they were negotiated (so as to avoid the Kennedy Round situation where Congress simply refused to vote on non-tariff implementing legislation). The administration claimed that a guaranteed vote would reassure negotiating partners that once negotiations were complete, Congress would be forced to accept or reject the outcome.123
The final bill ordered the president to quickly take action to have the GATT adopt "international fair labor standards" including public petition and dispute settlement.124 And, when one final concession was made this time related to a provision for the trade treatment of Soviet bloc countries that limited Jewish emigration125 an amended Fast Track was approved by the Senate on a 72-4 vote on Dec. 20, 1974, months after Nixon had resigned.126 The bill was signed into law by President Gerald Ford in January of the following year.
Core Aspects of Fast Track Trade-Authority Delegation
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Transporting oneself back to the 93rd Congress (1973-74), it is possible to see how such a revolutionary delegation of congressional authority might have passed. The United States was running its first trade deficit in a century, and the executive branch was promising Fast Tracked deployment of trade measures like import surcharges to restore balance. Some trade advocates bemoaned that, "the Administration trade bill, which would have been regarded as drastically protectionist a decade ago, now represents the liberal wing of the congressional debate."133 Also, Nixon officials premised their campaign on a view of the global economy that seems quaint in retrospect, telling Ways & Means that: "China is largely an agricultural country... we don't know for sure how much trade they are prepared to have."134
Perhaps most critically, U.S. trade agreements to date had concerned only traditional trade matters cutting tariffs and lifting quotas. Thus, the final Senate deal may have seemed like a tolerable protection of congressional authority, given Congress' notion of what would be included in trade agreements. After all, Congress had delegated tariff-proclamation authority before. Legislators did not foresee expansive pacts like the WTO and NAFTA, which would rewrite swaths of non-trade policy. Additionally, Congress was reassured that the scope of future non-tariff provisions would still be limited mostly to issues like quotas or customs valuation methods.
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The debate on the initial establishment of Fast Track also revealed the split between the so-called "gatekeeper" committees Ways & Means and Finance and the rest of Congress. The dealmaking Mills encapsulated the approach that both Democratic and Republican gatekeeper chairs would take over the years. He said of Nixon: "He is asking for more of a grant of authority than we have given any other President. This is a touchy subject in Congress right now. But ... I'm for it."135 In 1973-74, reformers led by Rep. Richard Bolling (D-Mo.) tried to address the concentration of power in these committees by attempting to remove trade from Ways & Means' jurisdiction. The effort, led from Bolling's Select Committee on Committees, would have given trade jurisdiction to the Foreign Affairs Committee. Mills organized vigorously against the effort, making common cause with labor groups that opposed Bolling's accompanying proposal to separate out education from the House Education & Labor Committee's jurisdiction. In September 1974, the House Rules Committee reported out Bolling's plan, with a Democratic Caucus-backed substitute that did not include the jurisdictional changes. The House passed that watered-down reform bill by a wide margin.136
In sum, Fast Track was passed because of a unique set of historical circumstances. The Nixon White House's disregard for separation of powers likely played a major role in the conception of the idea. Only in the midst of a global economic breakdown whose roots were poorly understood would Fast Track's highly unorthodox provisions on non-tariff issues have been considered a possible economic remedy. Opposition from the Republican Party for 30 years the voice of constitutional criticism of the Reciprocal Trade Agreements Act was absent: their president was in charge this time. Democratic criticism was split. On one side was a labor camp that bet everything on a strategy of mandatory quotas, thought it had an ally in Nixon, and lost big. On the other, a foreign-policy camp led by Sen. Henry "Scoop" Jackson (D-Wash.) and Rep. Charles Vanik (D-Ohio), who didn't debate the bill's constitutional or trade implications but focused on the bill as a vehicle to pressure for Jewish emigration from the Soviet Union. Other Democratic leaders just wanted to make a deal, and had perhaps not thought critically about the proposal. Mills' once sharp mind in particular had been weakened by addiction to alcohol since 1969 and painkillers since 1972, according to biographer Julian Zelizer.137 So when legal scholars like Hal Shapiro say that Fast Track "is not necessary,"138 it must be added that it was also not inevitable. Yet for a generation, it was the presumptive trade-agreement negotiation and approval mechanism.
Fast Track's First Uses Expand GATT from Tariffs to Other Issues, 1975-1980
The Tokyo Round of GATT negotiations started in 1973, and by 1979, the Jimmy Carter administration brought the completed deal back to Congress for an expedited up-or-down, Fast Tracked vote. The first use of Fast Track revealed a problem that time only exacerbated. Fast Track did not provide Congress any mechanism to review agreement texts to ensure they met Congress' negotiating objectives (which, in the 1974 act were listed in the form of "steps to be taken toward GATT revision" in Section 121). There was also no process by which the executive branch if it ignored congressional negotiating objectives and instructions would lose Fast Track's rights to sign an agreement before a congressional vote. Thus, Fast Track gave the executive extraordinary power to determine unilaterally trade agreements' contents.
Despite Congress' negotiating objectives to the contrary, the final Tokyo Round agreement did not contain meaningful labor standards. Indeed, labor standards still remain outside the WTO system, despite repeated negotiating instructions in Fast Track delegations.139 Included instead were a series of unprecedented agreements on various non-tariff matters that extended far beyond the quotas and customs valuation issues discussed with the trade committees during the 1973-74 Fast Track debate let alone the original mid-century hearings on the GATT. Yet the notion of expanding into non-tariff issues was so controversial with the other 102 GATT signatory countries that the only way to even broach these subjects was for the resulting outcomes not to become full GATT agreements. Rather, the new expanded non-tariff rules were only signed by some participants. These plurilateral agreements became known as the Tokyo Round "codes," and were signed by only a relatively small number of (mainly industrialized) GATT members, including the United States.140
The texts of these non-tariff agreements delved deeply into matters previously in the exclusive jurisdiction of domestic legislatures, including the most domestic of all matters: how domestic tax dollars should be spent in procuring goods and services. The Tokyo Round procurement agreement not only required that foreign and domestic goods and producers be treated equally a direct conflict with expansive Buy American laws then in effect but set forth limits on what technical specifications and supplier qualifications Congress could establish.
The incursion into Congress' turf was significant, but the GATT's dispute resolution and enforcement systems did not make these new rules truly binding on signatory countries. At that time, the GATT utilized a dispute-settlement procedure fleshed out over decades of practice that mediated inter-member conflicts. Panels convened under this dispute practice were comprised of trade experts, who analyzed challenged laws. The "Technical Barriers to Trade" and "Procurement" Codes both included similar panel systems. But national governments had more power under these systems than they do under the WTO today. For instance, the pre-1994 GATT procedures included the standard diplomatic safeguard of requiring all members' consensus before taking punitive measures or other transformative actions. So if a member country strongly objected to a panel's conclusion that its laws violated GATT rules or to orders that it change a domestic law, that country could block adoption of such a ruling. Thus, it could determine when the downsides of not complying with a ruling outweighed other national interests, and could avoid trade sanctions for maintaining GATT-inconsistent policies.141
While the Fast Track aspect of the 1974 trade package was used to enormously extend the scope of "trade"-agreement jurisdiction and ignore Congress' instructions regarding what should and should not be in the next GATT round, the other aspects of the 1974 trade package came largely to naught. For instance, the Ford and Carter administrations did not utilize the broad import-surcharge authority provided in the package, and instead focused on a "jawboning" strategy of talking down the dollar and talking up foreign demand for U.S. exports. This approach failed to close the growing trade deficit.142
In the congressional mock markups on the Tokyo Round, labor-union representatives urged that procurement and other non-tariff issues be taken out of the agreement.143 Human rights and religious groups urged the Carter administration to make good on its commitment to include labor rights in the GATT and focus on poor-country development.144 But, once again, GATT's proponents carried the day with a highly misleading campaign. On the House floor, a number of congressmembers expressed concern about the new authority for the president to waive "Buy American" rules for federal procurement. Rep. Charles Vanik (D-Ohio) the chair of the Ways & Means trade subcommittee responded by talking about the export opportunities in foreign procurement markets, or about the exceptions to the broad waiver authority, such as for certain Defense Department (DOD) contracts. Witness this colloquy, which did little to clarify what was actually at stake:
Rep. John Ashbrook (R-Ohio): "Can the gentleman visualize any United States standard, anything that relates to health, safety, industrial, or agricultural, that in some way is not affected by this bill that could be altered, waiver or otherwise shaped by GATT or someone outside?"
Vanik: "I do not believe that there is anything in this bill that would decrease or diminish or detract from any U.S. standard."
Ashbrook: "Or any other U.S. statute?"
Vanik: "Nothing that I can see in this legislation."
Ashbrook: "Well, in the first place, we know, I would remind my friend that that is not so. Specifically... the president can waive what we know to be the 'Buy America' law."
Vanik: "That does not apply to DOD at all."
Ashbrook: "Well, I did not say DOD. Is the gentleman saying that the president cannot waive the Buy America Act?"
Vanik: "He cannot waive it. It does not apply at all to DOD. The president has no power by this bill to do that."...
Rep. Robert Bauman (R-Md.): "Earlier today I asked [Vanik] this very question, and the gentleman told me there was no authority in this act that would allow the president to waive the Buy America Act... this act provides him with new power that he never had before."...
Ashbrook: "I myself look upon it as dropping a lot of time bombs, a lot of trip wires, setting up a lot of minefields ... I intend to vote against this bill. I think we have gone far beyond anything necessary and have not protected our own interests adequately."
The chairman of the Government Operations Committee, which had jurisdiction over procurement, expressed concern that the president was given too much waiver authority and that he would not have to come back to Congress for approval of future gutting of "Buy American" rules. But he like other members concerned about the new constraints on areas clearly within Congress' remit were forbidden from amending the legislation due to Fast Track rules.
The resulting Trade Agreement Act of 1979 implemented the Tokyo Round and extended Fast Track authority until 1988.145 Interestingly, the 1979 Act was not a vote on congressional approval of the underlying GATT agreement, which was still only under provisional acceptance by the United States.146 Carter's Fast Track also specified that any U.S. law would prevail in the event of a conflict with trade-agreement requirements. Further, the bill explicitly required that, if the president determined that GATT or other trade pacts required further changes in U.S. statutes, he would have to request Congress to consider such changes through normal congressional procedures, and give the gatekeeper committees 30-days advance notice before sending up the suggested statutory changes to Congress.147 The 1979 Fast Track passed almost unanimously in both houses.148
Fast Tracking the "Reagan-Thatcher" Agenda, 1980-1988
President Ronald Reagan came to office inheriting the eight-year Fast Track delegation passed in the 1979 Act. At the time, the trade deficit was increasing and Congress was responding with various proposals to limit imports, especially from developing countries. Legislation authorizing the Generalized System of Preferences (GSP), a system providing special low tariffs to imports from developing countries, was expiring, and pressure was building to exempt richer-country beneficiaries (such as Hong Kong, Taiwan and South Korea) from continuing in the program.149 As an array of trade bills consumed much of Congress' attention, the Reagan administration focused on GATT.
Reagan faced considerable congressional opposition to many of his legislative initiatives, which included laissez-faire restrictions on government's role in markets. Ideological allies such as the UK's Margaret Thatcher faced backlash among their populations for similar initiatives.150 Nevertheless, Reagan's advisors also convinced him to take trade actions that intervened in the "free market," such as currency-market interventions and the negotiation of voluntary export restraints. Such actions, similar to those taken by Nixon, undermined his credibility as a de-regulator, which would have to be pursued by other means.
An agenda thwarted in the context of full debate found a perfect home in the context of obscure international negotiations. The Uruguay Round of GATT talks (launched in 1986 in Punta del Este, Uruguay) provided a suitable delivery mechanism for much of the Reagan-Thatcher agenda: service-sector privatization, limits on government regulation, enhanced private-property rights, and more.151 Reagan administration officials led by USTR official Geza Feketekuty played a leading role in channeling the corporate and think-tank deregulatory push through the GATT talks.152 One Feketekuty ally told the Chicago Tribune in 1980, just days after Reagan's election victory: "A lot of services that have traditionally been done by the government, such as education, and social services, may become something that we'll have to deal with in international commerce."153
There was ample domestic and international opposition to the notion that service-sector or investment regulations should be set internationally, much less by trade negotiators whose experience was largely limited to tariffs, quotas and the procurement issues from the 1970s Tokyo Round. It was thus of extreme importance to Reagan that he find a legislative vehicle that would duck potential criticisms and obtain maximum legislative support. As it turned out, a bill that had been kicking around Congress since 1983 authorizing negotiation of a "Free Trade Agreement" (FTA) with Israel which had 163 House cosponsors and was supported primarily on foreign-policy grounds proved to be the perfect option. Several of the trade bills then under consideration in Congress, including some trade balancing measures and the GSP reauthorization, were combined into a package that became the Trade and Tariff Act of 1984.154
In order to overcome House opposition to the GSP and non-trade measures, Senate Finance reported out a bill (H.R. 3398) that combined these elements with authorization for Israel FTA negotiations. On September 20, 1984, the bill passed the Senate by a 96-0 vote. Because the House had not passed any of the component legislation, Ways & Means reported out four separate bills, and passed each of them on October 3. This was orchestrated by Chair Dan Rostenkowski (D-Ill.), who had taken Wilbur Mills' place as trade dealmaker in chief. The House Fast Track bill (H.R. 5377) passed on a 416-6 vote. After a conference to resolve the differences, the final measure (H.R. 3398) passed the House on a 386-1 vote on Oct. 9, and the Senate on a voice vote the same day.
Largely flying under the radar, the 1984 act dramatically expanded the subject matter and the types of agreements that the president was authorized to negotiate. Title III of the act authorized the president to collect information on (and enter into agreements related to the elimination of) "barriers to international trade in services" and "the trade distortive effects of certain investment-related measures." Service and investment barriers were defined as denial of "national treatment and restrictions on the establishment" of service operations and investments; "foreign industrial policies;" "export performance requirements;" and "direct or indirect restrictions on the transfer of information into, or out of" a given country. The Commerce Department was also authorized to collect information on other governments' failures to enforce copyrights and patents identified as barriers to trade (even though protection of monopoly patents is one of the most trade-distorting measures).155
The 1984 Fast Track also included a new delegation of authority for the president to negotiate and enter into bilateral FTAs across a wide range of tariff and non-tariff matters. While negotiations with Israel were greenlighted by the statute, the gatekeeper committees were to be given an additional 60-day notice in addition to the required 90-day notice before trade agreements with other countries were signed. If the executive failed to provide such notice, the proposed pact would not receive Fast Track treatment. Moreover, under the 1984 act, the gatekeeper committees could take an agreement off the Fast Track for any reason at all during that 60-day period.156 During the debate over an FTA with Canada, Sen. Max Baucus (D-Mont.) catapulted to prominence on the trade issue by becoming the ringleader of an effort to force administration action on Asian trade issues. His tactic? Threatening to use the 1984 act's disapproval resolution to withhold use of Fast Track for the Canada pact. In the end, the administration cut side deals with a variety of senators and Fast Track was applied to the Canadian FTA.157
As one legal scholar noted in 1986, the 1984 disapproval provision "dramatically expanded the influence of the House Ways & Means Committee and the Senate Finance Committee vis-ΰ-vis the rest of Congress."158 (This broad gatekeeper committee Fast Track disapproval procedure was subsequently removed during the 1988 Fast Track, which instead included a narrow disapproval resolution limited to situations in which the executive failed to give notice or properly consult with Congress.159) While the addition of any Fast Track disapproval resolution sounded like an improvement in Congress' relative power compared to the original Fast Track process (and the broad mechanism in the 1984 act did provide leverage in its one (threatened) use), the post-1988 procedural disapproval resolution provisions meant little in practical terms: the gatekeepers' policy perspectives tended to align with the executive branch.
The Israel FTA, passed in 1985, was modest in reach by today's standards. The Canada FTA, however, included chapters and provisions related to investment, finance, and intellectual property a greatly expanded scope from the reciprocal tariff agreements of the past.160 The Reagan administration rushed negotiations on the Canada pact to completion in late 1987, so that Congress could be notified 90 days before a planned signing on January 2, 1988 the very last day of the 1979 Fast Track. According to trade analyst I.M. Destler: "To legislators' annoyance, and contrary to the law's intent, major substantive provisions of the agreement were defined in the period between the October notification and the January signing."161
Even though its scope expanded beyond any past trade agreement, the 1988 Canada FTA did not draw much attention in the United States beyond agricultural-state representatives. Few in Congress were even aware of its many non-tariff provisions. In Canada, the pact, which threatened to drag the better Canadian environmental and safety laws down to U.S. levels, generated passionate grassroots opposition and became a major national political issue.162
Failure of Attempts to Reform Fast Track, 1988-1994163
By the end of the Reagan years, there was a widespread sense in Congress that the United States needed to pull back from the laissez-faire policies Reagan was pushing in every forum. The trade deficit continued to grow, and Congress was demanding a return to import surcharges. Reagan partially stifled these demands by negotiating the 1985 Plaza Accords, an international agreement to allow the dollar to depreciate against other currencies,164 and by extending voluntary export restraint agreements on steel.
But deindustrialization continued, and the Democratic Congress saw a new opening to address the issue through the 1988 expiration of Fast Track. In particular, some in Congress sought to condition a new delegation of trade authority on the insertion of labor rights into trade pacts, and on an enhanced Section 301 process that could pressure trade partners such as Japan for more market access.165 The result: the Omnibus Trade and Competitiveness Act of 1988.
The 1988 act was unique in the history of Fast Track in that the president did not initiate a request for new authority. In fact, Reagan eventually demonstrated his displeasure by vetoing the bill passed by Congress. The version of the bill that Reagan vetoed passed twice in each chamber once in initial form, once in conferenced form. While the House voted to override the president's veto, the Senate was unable to do so. Ultimately, Rostenkowski brokered a compromise bill that removed provisions opposed by Reagan that would give workers advance notice if their plant were closing. (Cleverly, Congress passed the so-called "WARN Act" as stand-alone legislation that later became law.)166 The final vote on the watered-down bill flipped the tables on the traditional trade divisions in Congress, with those who had been critical of current trade policies, such as Reps. Byron Dorgan (D-N.D.) and Marcy Kaptur (D-Ohio) supporting the bill, and those who supported the existing policies, like Sen. John McCain (R-Ariz.) and Reps. Tom DeLay (R-Texas) and Phil Crane (R-Ill.), voting against it.167
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Despite the supposedly tougher language on labor rights, this grant of Fast Track produced NAFTA and facilitated much of the Uruguay Round negotiations neither of which contained labor standards, and both of which exploded past boundaries to include a wide array of non-trade policy constraints and obligations. Members of Congress and advocates grew increasingly frustrated as their "model" delegation authority had been twisted to produce "trade" agreements in which real trade policy occupied a minority position among hundreds of pages of non-trade provisions. A closer look would have revealed that Rostenkowski's bill had only expanded on Reagan's 1984 Fast Track in regards to authorizing the executive branch to set investment, services, intellectual property, and other regulatory policies through trade negotiations.169
Congress' interest was further piqued when President George H.W. Bush gave notice to Congress in February 1991 of his intent to use Fast Track to negotiate a North American Free Trade Agreement (NAFTA) that expanded on the Canadian pact's scope and added Mexico. Mexico's per-capita income at the time was 10 to 15 percent of U.S. levels, and environmental and health conditions in Mexico some caused by U.S. companies' border maquiladora plants were often terrible.170
Meanwhile, the first draft text of the Uruguay Round GATT talks leaked. The new text showed the stunning scope of the talks, which focused mainly on non-tariff issues and the setting of globally binding constraints on an array of policies previously under the sole jurisdiction of domestic legislatures. This new breadth included limits on the regulation of service-sector firms operating within a country, patent and copyright law, immigration policy, and more. The text also included a proposal to establish a new global commerce agency then called the "Multilateral Trade Organization," under which GATT and a dozen new agreements would be subsumed. Fighting against overwhelming congressional disbelief that a "trade" agreement could implicate such issues or enter the United States into a new international organization without a treaty vote, environmental and consumer advocates joined labor in trying to draw congressional attention to the proposal. But then a GATT tribunal issued a ruling against the U.S. Marine Mammal Protection Act, the law that forbid U.S. sale of tuna fish caught with purse seine nets, a method that had led to high rates of dolphin death. The case, dubbed GATTzilla v. Flipper by Fast Track opponents, became Exhibit #1 in the threats posed by over-reaching international commercial rules and tribunals undermining non-trade policy.171
The disenchantment was voluble. Congress was increasingly angry about having no means to control with which countries the executive chose to initiate trade negotiations. It was also becoming increasingly clear that executive-branch negotiators were ignoring those congressional negotiating objectives that did not comport with their ideology, while adding aspects to pacts such as MTO, later renamed the WTO never contemplated by Congress. As the NAFTA and GATT Uruguay Round talks continued, many in Congress saw themselves placed in the position of having to agree to numerous objectionable non-trade provisions in the pacts (plus various totally unrelated provisions tucked into the implementing legislation),172 or oppose entire agreements. This led to the end of wide bipartisan support for Fast Track.
One concrete expression of this ire was the introduction of the first resolution of disapproval for a Fast Track extension. The 1988 Fast Track was written so that it would run until 1991 and then continue on until 1993, unless Congress passed a resolution of disapproval to stop the extension past 1991. Such an extension disapproval resolution could be introduced by any member of Congress, and would enjoy a privileged guaranteed vote.173 In March 1991, Rep. Dorgan and Sen. Ernest Hollings (D-S.C.) invoked this provision to lead a majority of Democrats in voting to discontinue the grant of Fast Track.174 In I.M. Destler's words:
"At this time the issue could have been killed in committee the law provided that a fast-track disapproval resolution could reach the House or Senate floor only if the requisite committee(s) approved. But committee and chamber leaders quickly decided that burial in committee, while perfectly legal, would be viewed as politically egregious and thus discredit both the procedures and any agreements reached thereunder. Disapproval resolutions would have to go to both floors, and be voted up or down there."175
Ways & Means and Finance thus reported out the resolutions, although with the recommendation that they be rejected by the Congress as a whole. (The House committee's negative recommendation passed 27-9, and the Senate committee's was 15-3.) Nonetheless, the actual House floor vote on the extension disapproval resolution was somewhat close 192-231. The resolution failed to obtain a majority thanks in part to a partnership between Republican President Bush and the Democratic chairs of the gatekeeper committees. (Rostenkowski and his Senate counterpart Lloyd Bentsen got Bush to promise a non-binding "action plan" on NAFTA labor and environmental issues in return for committee opposition to the Dorgan-Hollings resolutions.176) As a face-saving measure, members were allowed to let off steam by voting the same day for a non-binding "sense of the Congress" resolution (H. Res. 146) on what should be and should not be in NAFTA and the WTO.177 (In 2005, Dorgan since elected to the Senate introduced an extension disapproval resolution under the 2002 Fast Track. This time, the Republican-controlled Finance Committee simply bottled it up and refused to let the measure go to the floor.)178
The Clinton administration arrived in 1993 with the NAFTA negotiated by the Bush administration signed and ready to go to Congress under Fast Track. But in Geneva, the GATT talks were bogged down over agricultural issues and opposition by many countries to the expansive service-sector, investment, procurement and intellectual-property aspects of the proposed deal.179 The negotiations were heading towards establishing a new global commerce agency, the WTO, which would provide much stronger enforcement of GATT's rules, and transform the pact's contracting parties into members of a new international organization with ongoing negotiating remit. This also drew considerable concern from many countries.180
Rather than altering these pacts, the Clinton administration made passing NAFTA a top priority,181 and launched an intense campaign against the majority of the Democratic base groups that had just worked to elect him. The NAFTA campaign squandered the new president's political capital for passing the health-care reform proposals that had been a highlight of his campaign.182 The Clinton administration then pushed for passage of a short Fast Track extension specifically to allow completion of the Uruguay Round.183
The sudden encroachment of "trade" agreements into an array of non-trade domestic regulatory issues drew the attentions of new constituencies in the environmental and consumer worlds. The 1993-1994 votes on NAFTA, Fast Track and the WTO respectively attracted a very determined and broad-based opposition. This included hundreds of advocacy groups never before involved in a trade fight.
However, many in Congress dismissed these groups' concerns after a joint corporate / Clinton administration campaign characterized the messengers and the message as uninformed, loopy and protectionist.184 Given no past trade agreement had, for instance, increased monopoly protections for pharmaceutical companies, allowed foreign corporations to skirt U.S. courts to sue the U.S. government for cash compensation, or required Congress to conform wide swaths of law unrelated to trade to its terms, many in Congress simply did not believe the critics who raised these issues.
And with Fast Track limiting normal committee procedures, relatively few hearings were held on these aspects of the agreement. Most in Congress understood NAFTA and WTO to be trade agreements, not broader sets of policy proposals directly affecting their jurisdiction and thus requiring their special concern or attention. Indeed, during the WTO debate, it came out that hardly any members of Congress had read the Uruguay Round agreements.185 The congresspeople outside the gatekeeper committees who did prioritize the NAFTA and WTO debates mainly focused on job-related or industry-specific concerns. Some members of Congress claimed that it would be inappropriate despite their concerns with the legislation to reject an agreement that had taken the president years to negotiate. Still other fence sitters in the NAFTA battle were amenable to what the Center for Public Integrity called an "orgy of dealmaking" on unrelated issues that characterized the Clinton administration's legislative approach.186
Even ardent defenders of Fast Track recognized that NAFTA and the WTO had revealed Fast Track's enormous discretion for "diplomatic legislating" by the executive branch. One such analyst conceded that: "Fast Track gives the President greater freedom to shape trade agreements to his programmatic agenda than would otherwise be possible under ordinary legislative process."187 In November 1993, Congress passed NAFTA by a 234-200 vote. This was the closest trade-agreement vote in modern history, and included 102 Democrats voting for NAFTA, in part to support their new president.188 A year later, Democrats lost control of Congress, after core supporters frustrated with their trade policy defected to the GOP, or just stayed home.189 In a lame-duck session, the Democratic Party's final act in leadership before a 12-year stint in the minority was passage of the Uruguay Round Agreements Implementation Act. They established the international commerce agency Truman had failed to get through Congress over 40 years before, at a moment of minimum political accountability.190 Ironically, in doing so, the Democratic Congress put in place an array of limits that would be brought up endlessly to attack food-safety, auto-safety, climate, energy, health-care, access-to-affordable-medicines, and other Democratic priority policies.
NAFTA and WTO Are Not Mainly About TariffsAgreements like NAFTA and WTO contain hundreds of pages of non-tariff rules to which all signatory countries must conform their laws at all levels.191 For instance, the WTO enforces 17 major agreements, only two of which are about trade in the traditional sense. NAFTA-style pacts contain various special investor privileges that reduce many of the risks and costs previously associated with relocating production from developed countries to low-wage developing nations.192 Among these are a minimum guaranteed standard of treatment for foreign investors, bans on performance requirements, and powerful enforcement systems that allow investors to avoid domestic courts. This investor-state enforcement system allows a foreign investor to directly sue governments before a World Bank or United Nations tribunal over domestic policies or government actions that it believes undermines its future expected profits or its expansive trade-pact rights, and to demand cash compensation for such losses.193 Also, special WTO protections for pharmaceutical companies require signatory governments to provide them longer monopoly patents for medicines. The University of Minnesota found that extending U.S. monopoly patent terms by three years (from the then 17-year term to the 20 years required by the WTO) increased the prices Americans pay for medicine by over $8.3 billion. That figure only covers medicines that were under patent in 1994 (when Congress approved WTO membership), so the total cost today is much higher.194 NAFTA and the FTAs extend these price-increasing protections even further. In addition, the Clinton administration committed certain U.S. immigration policies including a guaranteed minimum of 65,000 H1-B visas per year for foreign workers to enter the United States195 and over 100 service sectors to comply with the WTO's service-sector agreement. This means that an array of U.S. financial, health-care, land-use, and climate policies are bound to comply with WTO constraints, and could be challenged if these exceed pact-established limits.196 The WTO, NAFTA and the related FTAs also set limits on safety standards and inspection rates for imported food and products, even as these pacts include rules that increase the volume of imports.197 It is not merely a theoretical possibility that the constraints on domestic policy established in "trade" agreements can undermine non-trade policies and policy space. The ban on Internet gambling within U.S. territory was ruled to be a WTO violation by the organization's enforcement tribunals in 2004-05. U.S. Clean Air Act and Endangered Species Act regulations have been successfully attacked at the WTO and subsequently weakened. A NAFTA tribunal ordered the United States to allow Mexico-domiciled trucks to have access to all U.S. roads, despite the latter country's weaker safety and environmental standards. Canadian extra-long and extra-heavy trucks also have similar rights thanks to NAFTA.198 Beyond just the WTO rulings themselves in which tribunals ruled against challenged domestic laws 90 percent of the time199 mere threats of trade challenges often have sufficed to chill policy proposals at home and abroad.200 |
In the end, the Bush I and Clinton administrations utilized Fast Track in the way that Nixon probably intended but was unable to accomplish in his own time. Over the course of the fifth regime, presidents bundled together their controversial trade and domestic priorities into trade deals that were too long for members of Congress to read, and too complicated for all but the most determined to even opine upon.
Fast Track is Dead, Part I, 1995-2001
Anger was increasing inside and outside of Congress at Fast Tracked "trade" deals' undermining of the public interest. Fair traders raised two key concerns about how the Fast Track process was weakening the leverage of Congress and other groups not privileged to be appointed by the president to the formal advisory committees. First, Fast Track's structure had dramatically shifted the balance of power on a wide array of trade and non-trade policies to the executive branch. Instead of authorship by numerous members of Congress subject to some level of accountability by constituents (particularly in the House, with its two-year election cycle), policy was now made by appointed executive-branch staff who regularly revolved between industry and the administration. The president (who did face re-election pressures) could theoretically be held accountable. However, in practice, the concentration of trade policymaking power in one elected president whom voters would judge on a vast array of policy decisions over four years attenuated the accountability on specific trade decisions. Second, the Fast Tracked trade agreements were establishing and empowering supranational institutions from the WTO itself to an array of WTO and NAFTA-recognized private-sector standardization bodies which were shielded from democratic accountability altogether.201
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As one WTO staff person admitted in a moment of candor, the WTO "is the place where governments collude in private against their domestic pressure groups."202 |
In order to try to steer trade-agreement policymaking back towards trade and away from backdoor domestic deregulation, advocates created and strengthened cross-sectoral coalitions, such as the Citizens Trade Campaign. These partnerships involved labor groups that had long been active on trade, but now teamed up with consumer, farm, faith and environmental groups. These Fast Track critics utilized a comprehensive "inside-outside" strategy that combined lobbying with grassroots pressure. They also clarified that their goal was changing the "rules" or "model" of globalization, so that trade expansion could occur without sacrificing the principles and practice of democracy, and the domestic public-interest protections it had created.203
In sum, the executive NAFTA-WTO overreach created a lasting political backlash against Fast Track. The growing effectiveness of the new public-interest coalitions, growing Democratic congressional concern about the Clinton trade agenda (as the economic damage and political backlash from NAFTA and WTO grew), and the Republican-controlled Congress' partisan power-plays meant that the Clinton administration was unable to get Fast Track for the entire remainder of its tenure.
Fast Track Not Necessary For Trade ExpansionThe Clinton administration is known for its major trade-expansion agenda, but it only had Fast Track for the first two years of its eight-year reign. Thus, Fast Track had relatively little to do with trade expansion per se. As already shown, the GATT the single most important multilateral trade regime was negotiated without the extraordinary procedural and non-trade-policymaking powers of Fast Track. By its own reckoning, the Clinton administration negotiated and passed 130 trade and investment agreements without Fast Track,204 including the U.S.-Jordan Free Trade Agreement, which contained enhanced labor standards and was passed by almost universal acclaim under normal congressional floor procedures.205 After Clinton lost Fast Track, from 1995 to 2000, trade expanded over 30 percent. As former Clinton administration USTR Charlene Barshefsky said in 2000, "if you look at our record on trade since 1995, I don't think the lack of Fast Track impeded our ability to achieve our major trade goals."206 |
Yet lack of trying does not explain why the Clinton administration was without presidential trade authority for six of its eight years.207 After a failed effort to obtain Fast Track in 1995, Clinton worked in 1997 with GOP congressional leaders to develop a new Fast Track authorization bill. In contrast to the broad margins of passage for the 1979, 1984 and 1988 Fast Tracks, this bill faced fierce opposition. The administration, GOP congressional leaders and a broad corporate coalition lobbied fiercely for the bill. Although they were uncertain that they had a majority locked down, a vote was scheduled in the House. Speaker Newt Gingrich (R-Ga.) and the Clinton White House thought that actually starting the vote would create the maximum leverage for their efforts to obtain the last needed bloc of support. After a week's delay, the bill was brought to the House floor on November 9, 1997. Consideration of the measure started with the necessary precursor debate and vote on the rules for consideration of the underlying bill.
The climate on the House floor was volatile. Over twelve hours of debate, the vote on the bill was pushed back repeatedly as the White House, GOP leaders and flocks of corporate lobbyists working the Capitol's halls worked every angle to build a majority. Ultimately, the Clinton administration finally asked the Republican leadership to pull down the Fast Track bill in the wee hours of November 10 after over 80 percent of Democrats and many Republicans indicated they would oppose it.208 Undoubtedly the prospect of Clinton suffering a high profile political defeat was tantalizing. However, GOP leaders complied with the Clinton request to pull the bill, perhaps worried that the precedent of Congress voting down Fast Track was too costly to their larger priority of expanding the corporate globalization agenda.209 This was historic. Had the vote proceeded, Fast Track would have been defeated.
However, in 1998, the congressional Republicans revived Fast Track, and it was defeated on the House floor an unprecedented revolt, with 171 of 200 Democrats and 71 of 222 GOP opposed.210 The political problems Fast Track caused for members of Congress were fundamental: increasingly furious constituents were holding them accountable for problems caused by trade agreements over which they had no control. As Rep. Peter DeFazio (D-Ore.) noted:
"This is about a process that includes plausible deniability. That means there are a lot of people here who do not want to take responsibility for what is happening in America. They can say, you know, I had concerns about NAFTA. I knew there were problems with some parts of NAFTA. I knew there were problems with labor agreements, they were kind of weak, and we lost a lot of jobs there, and wages have gone down on both sides of the border. Yes, I had some real concerns about those environmental provisions. I really did not think they would clean up the border, which is one of the largest and fastest growing hazardous waste sites in the world. But I had to vote up or down, and I could not sacrifice 2 years of secret negotiations, and we will fix those things later. That is what we hear every time an agreement comes forward under Fast Track. Are Members going to blow up three years of careful secret negotiations, just because they have a minor concern about their farmers or about the environment or about American workers? No. The herd here most times said, gee, I would have liked to do something, but I could not. Why could they not? Because they gave away that authority at the beginning. Do not give away that authority ever again."211
The 1998 Fast Track debate touched both on the mechanism's overconcentration of unaccountable power in the executive branch, and its lack of a meaningful connection to trade expansion. Marcy Kaptur, who had been instrumental in attempting to beef up the 1988 Fast Track, summed up these concerns by noting on the House floor: "Fast Track is not required for good trade agreements. It is required to get bad trade deals through Congress."212
George W. Bush administration kills Fast Track's remaining legitimacy, 2001-2008
On August 27, 2000, then-candidate George W. Bush gave a speech in Miami setting Fast Track as one of his top legislative priorities. After the election, with Republicans controlling both chambers of Congress and the White House, President Bush set out to obtain a new delegation of authority to expand the WTO and extend NAFTA-style trade agreements to additional countries, most notably through the Free Trade Agreement of the Americas (FTAA). While the Republican congressional leadership shared Bush's zeal for this agenda, public antipathy to NAFTA was high and the prospect of its expansion unpopular in Congress, including with some members of his own party.213
What ensued is a long and tangled story, so here's the spoiler: passing this final delegation of Fast Track required almost two years of intense battle. Controversial procedural tactics included holding open the House roll call to twist arms, flip votes, and ultimately pass Fast Track by two votes in the middle of the night, just as Congress was going on recess in 2002. This victory was pyrrhic, as Bush's use of Fast Track to try to force a vote over congressional objections on the highly controversial Colombia FTA ultimately proved to be Fast Track's final undoing.
Indeed, Fast Track's structure provided Bush with a perfect tool to abuse what was an already shaky inter-branch relationship regarding trade-agreement negotiations and approval. Ironically, the straw that broke Fast Track's back came when Bush simply invoked the full powers that the extraordinary mechanism had on paper that, to date, presidents had only threatened to unleash. For members of Congress, the Bush administration's use of Fast Track to steamroll their suggestions about trade agreements' contents, implementing legislation, and vote timing revealed exactly how the process operated, and to what degree it cut them out of a meaningful role. So as we show in this section, not only was Congress unwilling to provide Bush with additional authority past 2007, but by 2008 even former proponents of the Fast Track process had begun discussing the need for a greatly altered system that enhanced congressional control.
But let us back up our story to share some of the key details that provide context for the current situation. Almost immediately after entering office in 2001, the Bush administration started demolishing what little remained of the so-called bipartisan "trade consensus." The Jordan FTA, which Clinton had negotiated and signed in 2000, contained somewhat improved labor provisions and importantly contained labor provisions in its core text. The agreement passed by a wide margin under normal, non-Fast Track congressional voting procedures in the first year of the Bush administration. When Democrats who had traditionally opposed FTAs announced their support for the Jordan pact even though it contained other provisions they opposed limiting access to generic medicines they stated that the improved labor standards were but the first step toward a more comprehensive overhaul of FTAs. But the Bush administration's response was to invalidate the FTA's labor provisions by writing the King of Jordan and declaring it would not enforce them.214
In the summer of 2001, the Bush administration launched a campaign for what it called a "clean Fast Track," i.e. one that did not address the reservoir of concerns about past delegations, the agreements they had produced, or their lack of enforceable labor, environmental and other public-interest standards.215 In this effort, Ways & Means Chair Bill Thomas (R-Calif.) played a key role. Thomas' abrasive personal style and open contempt for committee Democrats resulted in a bill that infuriated many members who in the past had supported Fast Track delegations.216 Thomas' bill contained substantially weaker language on labor standards than those in the 1988 Fast Track.217 His proposed legislation included language designed to deny Fast Track treatment to trade bills containing the Jordan-style labor provisions. This language stated that Fast Track procedures would only apply to labor and environmental provisions that are "directly related to trade," "consistent with the sovereignty of the U.S.," "trade expanding and not protectionist," and do "not affect a country's ability to make changes to its laws that are consistent with sound macroeconomic development."218
As early as June 2001, House Democrats from Minority Leader Richard Gephardt (D-Mo.) (who had supported the 1991 and 1993 Fast Track extensions) to the pro-"free trade" New Democrats were united against the Thomas bill and Bush's overall approach. But members' tactical unity was driven by a range of calculations. In one corner were Democrats concerned about Fast Track's undermining of the separation of powers, thus enabling more over-reaching NAFTA and WTO-style agreements that invaded Congress' domestic policymaking prerogatives. In another were members that assumed the Bush administration would eventually cede to their demands for political cover in the form of enhanced labor standards (enforceable or not), as had past administrations. In still another were members that used the labor-rights issue as proxy for wider critiques about Fast Track and the agreements it had enabled, and who had varying degrees of understanding about the precise limits that Fast Track put on their ability to see their pro-worker objectives effectively realized. Given the mood in Congress on trade, even one of the most pro-Fast Track, pro-NAFTA Democrats in Congress, Rep. Jim Moran (D-Va.), announced, "a clean bill is a dead bill."219
The administration tried several approaches to try to overcome this opposition. First, they invoked arguments about the alleged economic success of past Fast Tracked deals like NAFTA. Thanks to record NAFTA trade deficits, however, this line of argumentation did not gain traction in Congress. Later, after the 9-11 attacks, the administration shifted its messaging to a national-security frame. Bush's U.S. Trade Representative Robert Zoellick, for instance, wrote a Washington Post editorial entitled "Countering Terror with Trade," which argued that Congress needed to past Fast Track to show "Today's enemies... that the United States is committed to global leadership." This security-mongering argument has been a common ploy ever since.220 In this instance, a central argument aimed at corralling GOP support for Fast Track was that Republican members of Congress had to demonstrate to the world their support of the president. With this, GOP congressional leaders began to move the bill.221
By October 2001, Ways & Means ranking member Charles Rangel (D-N.Y.) and committee trade leaders Sander Levin (D-Mich.) and Robert Matsui (D-Calif.) developed an alternative Fast Track proposal that would have improved labor, environmental and other negotiating objectives. The proposal addressed some criticisms of NAFTA-style investment rules, by specifying that mere diminution in the value of an investment would not constitute a compensable expropriation. It established a "non-political screening process for investor-state claims."222 The proposal offered congressmembers more opportunities to initiate Fast Track disapproval resolutions, although it did not alter the basic structure of Fast Track. Their bill also sought to impose more accountability over executive-branch negotiators in regards to Congress' negotiating objectives, although it did do so in a manner that (bizarrely) increased the influence of corporations during the negotiation phase: Ninety days before signing a trade agreement, the president would be required to certify to Congress that the principal negotiating objectives had been met. At that point, not the Congress, but the private-sector advisory groups would have 30 days to vote to second this assessment. If a majority of the advisory committees disagreed, Fast Track procedures would not apply to the agreement.223
Rangel and his colleagues offered this proposal as a "motion to recommit" during the debate on the bill on December 6, 2001. (This legislative procedure allows members critical of a bill to call for a vote on whether to send it back to committee with specific amendment instructions.) But the motion failed, and the final passage vote on the Thomas bill was called. When time for the vote had elapsed and the large voteboard looming over the House floor showed a majority against Fast Track, frustrated Democrats yelled from the floor that time had expired and Fast Track had been defeated.224 But that was not to be. In the aisles of the House chamber, the House Republican leadership rounded up several Republicans from textile districts and promised them a deal to pass legislation amending several U.S. trade-preference programs in order to win their support. Three Republican Fast Track critics then changed their stance thanks to this last minute maneuver, including Rep. Robin Hayes (R-N.C.), who cast the deciding vote.225 Hastert slammed down the gavel the second the "yes" vote number bested the "no" vote tally. The House thus passed the Thomas bill by the narrowest of margins (215 to 214), after Speaker Dennis Hastert stretched House rules to keep voting open for twenty minutes after the official clock had tolled.
Many of the same issues that marked the House debate transferred over to the Senate fight. Thomas' 2001 Fast Track, in addition to rolling back labor-standards language (even the strongest version of which had proved ineffective in the past), gave enormous discretion for negotiators to extend extremely problematic FTA investor-rights provisions. This issue became a prominent focus of the Senate debate on the Finance Committee's Fast Track bill. Thanks to various shuffles in Senate leadership, the Senate bill was more moderate than Thomas'. Republicans and Democrats had twice exchanged the Finance Committee's chairmanship during 2001-02 (from William Roth (R-Del.) to Max Baucus (D-Mont.) to Charles Grassley (R-Iowa).) Unlike the House side, however, where the Democratic gatekeeper-committee leaders put forward ideas (squashed by Thomas) to modestly reform Fast Track's structure, Baucus supported a bill largely drafted by his Republican counterparts in exchange for White House commitments on trade adjustment assistance (TAA).
The 2002 Senate Fast Track debate featured an unprecedented month-long floor fight, from April 25 to May 23. While final Senate passage was expected given traditionally the Senate has passed trade bills by wide margins the extended debate and wide array of amendments to the Finance proposal was unusual. Sen. John Kerry (D-Mass.) offered an amendment on investment rules that was a stronger version of the Rangel-Levin-Matsui proposal. The Kerry amendment included general instructions for negotiators to insert a carve-out for non-discriminatory public interest and environmental policies in future agreements. The White House campaigned ferociously against the amendment, which was defeated with help from Baucus. The White House similarly attacked and defeated a modest amendment by Sen. Joseph Lieberman of Connecticut that would have rolled back some of the new anti-labor and anti-environmental standards language.226
Meanwhile, a bipartisan team of senators, Mark Dayton (D-Minn.) and Larry Craig (R-Idaho), offered an amendment forbidding U.S. negotiators from rolling back U.S. anti-dumping laws in future trade agreements. Unlike the Kerry amendment, this proposal was structured so that it would actually create an unprecedented and binding congressional mandate upon which Fast Track would be conditioned. Dayton-Craig called for the waiver of Fast Track rules if a trade agreement undermined existing U.S. anti-dumping laws. The amendment was supported in the Senate on May 14, 2002 by a strong bipartisan vote of 61-38.227 The Senate passed the overall Fast Track package as an amendment to a bill on Andean trade preferences on May 23 on a 66-30 vote.
The House and Senate had passed different Fast Track bills, with some Senate provisions (such as on TAA) having never received a House vote. The two chambers needed to convene a conference to prepare the bills for final passage. Thomas' procedural stunts, however, were far from over. On June 26, the Ways & Means chair and his allies on the House Rules Committee proposed a so-called "self-executing rule" that, in addition to the standard procedure of requesting a conference, took the unprecedented step of simultaneously approving vast portions of the Senate bill that the House had never voted on. The measure also stripped the Dayton-Craig amendment. Democrats questioned its constitutionality. In the words of Rep. Alcee Hastings (D-Fla.): "Last week, [Thomas] accused the other body of all sorts of underhanded legislative witchcraft. And how do we answer that in the House? With our own Harry Potter-like sorcery."228 Rep. Nancy Pelosi (D-Calif.) added, "This is a very dark day for the House of Representatives."229 The "rule" passed by a 216-215 vote, with over 94 percent of Democrats opposed.230
After a month in conference, the bill came to the House floor for final passage in the middle of the night on July 27. This latest version added a remarkable provision, dubbed the Gramm amendment. This was a massive loophole to the bill's (already weak) labor and environmental standards. It stated that a country could get out of the requirement to (not repeatedly fail to "strive" to) enforce its own labor and environmental law if its government decided to spend its labor enforcement dollars on other priorities!231 In the words of Rep. David Wu (D-Ore.): "To deem this a loophole is to call the hole in the side of the Titanic a small leak."232 The conferenced bill also gutted the Senate-passed Dayton-Craig amendment, including instead hortatory and unenforceable language on dumping. Additionally, the final version gutted much of Baucus' TAA proposal.233
Despite only 25 out of 210 House Democrats supporting the bill and 27 House Republicans opposing, the Orwellian-named Bipartisan Trade Promotion Authority Act of 2002 passed the House by a 215-212 at 3 a.m. the morning after Congress' summer recess was to have started.234 The approval again came after the vote clock was stopped. Levin summed up the view of many when he said, the mechanism "maintains a minimal, meaningless, and last-minute role for Congress, at a time when trade policy is increasingly intertwined with all areas of domestic policy."235 Perhaps the most poignant commentary came from Robert Matsui, one of the House's leading Democratic advocates of NAFTA and WTO. He urged his colleagues to vote down Fast Track, saying:
"I stand here before you today as a free trader... But this vote is about much more than that. It's about the fact that the very nature of international trade has changed radically. Trade is no longer primarily about tariffs and quotas. It's about changing domestic laws. The constitutional authority to make law is at the heart of our role as a Congress and of our sovereignty as a nation. When international trade negotiators sit down to hammer out agreements, they are talking about harmonizing 'non-tariff barriers to trade' that may include everything from antitrust laws to food safety.
"Now, I believe the President and the USTR should be able to negotiate trade deals as efficiently as possible. There's no question about that. But that does not mean that Congress must concede to the Executive Branch its constitutional authority over foreign commerce and domestic law without adequate assurances that Congress will be an active participant in the process. Congress should be a partner, not a mere spectator or occasional consultant to the process. The Thomas bill does not ensure that. Think about what may be bargained away at the negotiating table: our own domestic environmental protections ... food safety laws ... competition policies. That's the air we breathe, the food our children eat, and the way Americans do business...
"The nature of trade has changed, and Fast Track authority must change with it. I ardently believe in the principles of free trade. But I will not put my constitutional authority over domestic law and my responsibility to my own constituents on a fast track to the executive branch. I urge my colleagues to vote no on this legislation."236
Overall, the Bush administration used Fast Track much more aggressively than previous presidents, passing eight NAFTA-style trade deals, including CAFTA which passed the House by a two-vote margin in 2005 in the middle of the night largely along party lines. In that instance, the bill passed once again after the vote clock was stopped and Hayes had been persuaded to reverse his "no" vote.237 (Interestingly, Hayes lost re-election in 2008 to a social-studies teacher who had been moved to run for Congress because of Hayes' repeated trade vote flip-flops, and whose campaign focused primarily on the damage these votes had caused his district.) Notably, Bush was not successful in expanding the WTO or establishing the FTAA, which had been the original justifications for asking for Fast Track.
The Bush administration's strong-arming of the legislative branch via Fast Track was educational for many members of Congress who had not previously focused on the details and implications of the delegation authority. First, Bush dispensed with some of the friendly if largely meaningless courtesies presidents had provided to the trade gatekeeper committees, which had provided a patina of legislative-executive branch cooperation. In 2006, after a front page New York Times exposι detailed the prevalence of horrific sweatshop conditions in Jordanian factories producing for the U.S. market under the Jordan FTA, Sen. Kent Conrad (D-N.D.) offered an amendment to the Oman FTA in the Senate Finance Committee's "mock markup" session. Conrad's amendment would have prohibited goods made with slave labor from entering the United States. He noted that he offered the amendment, which was approved by the committee on a bipartisan unanimous 18-0 vote, because FTA partner countries had promised Congress in the past to make certain changes to their laws but then failed to do so after the vote.238 Not only did the Bush administration refuse to add this amendment to the Oman FTA's implementing legislation, but argued moreover that it was prohibited by Fast Track from amending the FTA. Conrad subsequently told the press that he had "really lost confidence in this process... I won't subject American workers to that kind of competition."239
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The arbitrary authority provided the executive branch under the delegation was then further highlighted in this case to the upset of some Republican congresspeople when the Bush administration proceeded to do the very thing it claimed it could not on previous trade deals: post-signing alterations of FTA text signed under Fast Track. In May 2007, Bush renegotiated FTAs with four countries to include certain labor, environmental and drug-patent provision improvement that Rangel and Levin now in the majority had sought. Two Republican Finance Committee members, Sens. Orrin Hatch (R-Utah) and Jon Kyl (R-Ariz.), voted against the Peru FTA during a September 21 mock-mark up of the bill, citing the post-facto changes to the FTA's terms.240
It was not a just an inter-party, but an intra-party problem. The deal to modify the agreements had been negotiated without input of most Democratic House members, much less their consent. Many members of the Democratic House Caucus were furious when the deal was announced as a New Trade Policy for America. This was followed by a surprise May 2007 news conference in the Capitol featuring administration representatives and Democratic and Republican congressional leaders who announced plans to move forward with at least two of Bush's free trade agreements even as some Democratic congressional opponents of that plan gathered in the rear of the room fuming.241 Statements that Rangel and Baucus had made, after being elevated to chairs of their committees in 2007, compounded this anger. The chairs suggested that they would be inclined to provide President Bush with new Fast Track authority.242 Much of the new House majority Democratic leadership and caucus members were focused on investigating and countering what they deemed abuse by President Bush of his existing authorities and disdain for Congress' constitutional role. Thus the notion of granting him any additional discretion or authority was not popular.
The uproar from many Democratic House members and base groups about the May 10 Bush trade deal colored the ongoing discussions among congressional Democrats regarding the next steps on trade policy. In June 2007, the Democratic House leadership issued a written statement stating that they would not support further Fast Track for President Bush.243 The document, signed by Speaker Pelosi, Majority Leader Steny Hoyer (D-Md.), Rangel and Levin, demonstrated unity against further Fast Track for Bush. It also signaled that Rangel and Baucus' early 2007 statements did not represent the position of the united House leadership.244 The Peru FTA passed in November 2007, but with a majority of Democrats including 12 of 19 House committee chairs voting against.245 (And, as if to top it all off, in January 2009 Bush implemented the FTA as one of his final acts in office, without Peru having complied with the labor and environmental improvements that Rangel and Levin had won in the FTA text.)
Yet the Fast Track structure might have survived President Bush were it not for his last Fast Track move. Most stunningly of all of Bush's maneuvers, the president broke traditional Fast Track etiquette by submitting the Colombia FTA for a vote, over the explicit opposition of the House leadership and without the courtesy of going through the mock mark-up process. The trade deal was highly controversial to begin with, since many in and out of Congress consider Colombia to have such severe labor and human rights problems (and its president so entangled with rightwing paramilitaries) that the country should never be considered for an FTA.246
The president's right to force a vote in this manner had of course always been a key aspect of Fast Track. But past presidents had avoided formally exercising it, perhaps to avoid highlighting to all in Congress that, under Fast Track, the president could seize control of the legislative branch's floor schedule. Corporate supporters of the Colombia FTA had urged the White House to not use what they dubbed the "nuclear option," for fear of what it would do to the future of the Fast Track process.247 Regardless, the administration dispensed altogether with the "mock mark ups," and submitted legislation it had written without congressional review, thus triggering the Fast Track House 60-day forced-vote clock.
Bush's last move was the death knell for Fast Track. Pelosi and the House Rules Committee responded to Bush's unprecedented move by reasserting Congress' constitutional prerogatives. The Rules Committee formulated a new rule for the Colombia FTA, which removed the mandatory 60-day vote timeline, and the House passed this new rule on April 10, 2008.248 In Pelosi's words, "We are the people's House. Their timetable should be our timetable."249
The damage that Bush's move had wrought was signaled by the comments of previously uncritical supporters of Fast Track. Rep. Ike Skelton (D-Mo.), who had systematically supported past Fast Tracks and trade agreements, noted: "Article 1, section 8 of the U.S. Constitution grants Congress the power to regulate commerce with foreign nations ... On April 8, 2008, the Administration took the unprecedented step of delivering the Colombia Trade Promotion Agreement to Congress without having fully consulted with the House and the Senate. In my view, the Administration's maneuver seriously jeopardizes prospects for the trade agreement's passage in the House."250 Sen. Richard Lugar (R-Ind.) issued a statement "in response to President Bush sending the U.S.-Colombia Trade Promotion Agreement to Congress to ensure a vote this year": "I support the U.S.-Colombia Trade Promotion Agreement ... However, I am concerned by the politically inhospitable circumstances in which the agreement is being sent to the U.S. Congress. The Colombian free-trade agreement faces stiff opposition because many in Congress believe the Colombian government has not taken sufficient measures to ensure the safety and security of its workers. This opposition could derail its passage this year."251 Rep. Greg Meeks (D-N.Y.), one of the few Democratic supporters of CAFTA and a fierce supporter of the Colombia FTA, commented: "I'm disappointed... You don't take these kinds of agreements up unless you have an agreement. I think this hurts it."252
One long-time Beltway trade pundit denounced the Colombia FTA Fast Track meltdown as "the gravest threat to the global trading system in decades."253 But less shrill establishment commentators noted that "Even before this week, Fast Track has had a rocky history and has sometimes been suspended, for example during the latter years of the Clinton administration following the passage of the North American Free Trade Agreement."254
America's fifth trade regime, Fast Track, had also coincided with a return to low Robber Baron rates of U.S. per capita income growth. From 1973 to 2008, the average annual real per capita growth rate was only 2 percent below that of America's first 100 years, and that of its post-war Golden Age.