How can the US secure trade deals?

With the resounding Republican victory in November’s midterm elections, most pundits are despairing that Congress and President Barack Obama will find any areas for cooperation in the coming two years. If there is a potential bright spot of mutual interest, though, many believe it must be in international trade.

Despite the reluctance of Democrats in Congress, the president is in the process of negotiating two sweeping trade deals, one with Europe and another with Asia. Perhaps, the thinking goes, Obama’s support for open trade will find a partner in a Congress controlled by free-market Republicans, allowing America’s trade agenda to move forward at a rapid clip.

However, while bipartisan agreement does appear more likely in trade than in more contested policy areas such as immigration, the road will not be easy. Significant impediments remain to a deal between the White House and Republicans, and it’s not clear these can be ironed out to open the way for progress.

A fast track on trade

The current trade impasse took form last January, when President Obama formally asked Congress to grant him Trade Promotion Authority (TPA), also known as “fast-track.” In essence, fast-track allows the White House to negotiate a trade deal and then get an up-or-down vote in Congress. This delegation of power has been a tool used by most presidents since its creation in 1974, and the White House considered it critical to moving forward with ongoing trade negotiations.

The first of these negotiations, to create the Transpacific Partnership (TPP), is set to eliminate key trade barriers between the United States and 11 Asian countries, including Japan. The second, called the Transatlantic Trade and Investment Partnership (TTIP), could be of even greater significance. It would merge the world’s two largest economies, the United States and the European Union, into a more deeply interdependent trading zone.

No sooner had the president asked Congress for TPA, however, than opposition began to build, putting both TTIP and TPP in jeopardy. Perhaps the most influential naysayer was President Obama loyalist Harry Reid, Democrat and outgoing majority leader of the Senate, who undoubtedly feared that fast-track approval would hamper his party’s chances at the polls. A bipartisan bill to extend fast track was introduced but quickly foundered on a lack of enthusiasm from all sides.

Reasons for optimism

Now that the midterms are over and Republicans have retaken control of the Senate, might the way be open for an agreement on trade? There is at least one reason to be optimistic: trade is among the few areas where one can still find some agreement across the aisle.

Republicans, who tend to represent corporate and financial interests, are already more amenable to free trade, while labor-backed Democrats are more likely to oppose it. But these party-based differences are not the whole story, and that’s where there could be common ground.

The relative weakness of America’s political parties means that members of Congress must cater to the interests of their constituents, and these can vary dramatically depending on their district. A Republican from the textile belt of North Carolina may be a trade skeptic, while a Democrat representing an export competitive high-tech region may back open markets.

Another reason to remain hopeful is that both major trade accords have significant security implications that may attract bipartisan support. The TTIP is meant to reaffirm transatlantic ties at a time when Europe is being severely tested, while the TPP is about building a pro-American economic zone in China’s backyard.

All of this suggests that a bipartisan trade bill, backed predominately by Republicans but also by many Democrats, is a distinct possibility. Perhaps trade is an area where, at long last, gridlock can be avoided and something can get done.

Let’s not get carried away

But we should pause before we get carried away. Many members of Congress on both sides of the aisle remain skeptical about the trade pacts and, even more fundamentally, about fast-track authority itself – without which it would be very difficult to negotiate a deal.

Many on the left view free-trade agreements as detrimental to the environment, labor standards, and the safety of imports, making Democrats afraid that support for trade will incur the anger of their base. Republicans, meanwhile, may back free trade philosophically but could be reluctant to hand President Obama any policy victory.

Perhaps the most serious challenge to movement on trade lies in the fast-track system itself. The Constitution gives authority over trade to Congress, and for well over 100 years that body would simply vote a tariff bill every few years. But since the 1930’s, the international trading system has been based on negotiations where countries exchange concessions over market access. The Trade Act of 1974, which created the fast-track system, recognized that under these circumstances the executive branch would need to be a key player in trade. It represented a voluntary but very real delegation of congressional power to the president.

The problem now is that trends in international trade are increasing the need for executive leadership even as they create new incentives for Congressional involvement. The introduction of issues such as intellectual property, environmental, health, and labor regulation, and domestic subsidies into trade negotiations makes it all the harder for Congress to set out clear guidelines to the president prior to negotiations.

So, what are the chances that a deal between the President and Congress can be struck, and what might that deal look like? An adjusted, narrower form of fast-track could work, specifying which countries and on which issues the authority applies. Or Congress could extend the traditional 90-day fast-track window to provide more room for debate. Or it could even demand more regular consultations during the negotiations.

One thing is certain: if the TPP and TTIP negotiations are to be success, some form of congressional delegation must occur. Without it, our negotiating partners will never trust in the president’s ability to make concessions and will fear Congress’s power to change unilaterally the terms of any bargain that is struck. The days of complete legislative dominance in trade policy are definitely at an end.

It’s notoriously hard to predict the future, and trade may still get moved to the back burner as another victim of Washington gridlock. But there is reason to hope that a modified system of fast track, more appropriate to the present century, could emerge to form the basis of a new era of trade cooperation.

This article is published in collaboration with The Conversation. Publication does not imply endorsement of views by the World Economic Forum.

To keep up with Forum:Agenda subscribe to our weekly newsletter.

Author: Charles R. Hankla is associate professor of political science at Georgia State University in Atlanta.

Image: A container ship departs Burrard Inlet in Vancouver, British Columbia March 6, 2009. REUTERS.