Washington Grapples With Fast-Track Legislation
(Article originally published in May/June 2015 edition.)
The President is fighting his own party on this one.
Having put aside for the time being the legacy issues left over from the previous Congress, the new Republican leadership has now moved on to what could be the defining legislation of the 115th Congress – whether to grant President Obama fast-track authority for a new trade deal with the Trans-Pacific Partnership (TPP).
The object of fast-track legislation is to provide the President the authority to negotiate a free-trade agreement that will only be subject to a straight up-or-down vote of approval or rejection by the Congress. It has long been believed that without such fast-track authority the U.S. cannot realistically achieve free-trade agreements. Subjecting any negotiated agreement to subsequent amendments by Congress, or for that matter by the parliaments of our trading partners, would render free-trade legislation a mirage.
Congress has repeatedly provided this authority to presidents from both parties for at least the past 40 years, and some trace the practice back 80 years.
The TPP Proposal
The current focus of fast-track authority would link the U.S. with eleven other countries on the Pacific Rim of Asia and South America that together account for about 40 percent of global economic activity: Australia, New Zealand, Canada, Mexico, Chile, Peru, Japan, Malaysia, Singapore, Vietnam and Brunei. It’s estimated that TPP would boost world output by approximately $200 billion annually, produce real income benefits to the U.S. of almost $80 billion annually, and increase U.S. exports by almost $125 billion annually by 2025. According to the U.S. Trade Representative, about four million Americans are employed in jobs supported by U.S. exports to TPP countries.
The fast-track legislation enjoys solid support from American business interests including the Chamber of Commerce and the Business Roundtable. Proponents point to the nation’s history of economic growth following free-trade agreements and its potential to boost exports.
But its most strident opposition is organized labor. Richard Trumpka, President of the AFL-CIO, representing 12 million American workers, has denounced TPP as “not worthy of the American people and American workers.” Trumpka argues that TPP will not protect American jobs or grow the economy. He complains that the deal will benefit Wall Street, not Main Street. According to Trumpka, TPP does not contain meaningful enforcement provisions needed to protect American workers from unfair competition. He points to the loss of 60,000 factories and millions of high-wage jobs from the U.S. since adoption of other free-trade agreements, notably the North American Free Trade Agreement (NAFTA) twenty years ago.
Trumpka views the TPP through the lens of a constituency that blames free-trade measures for the loss of their jobs and disruption of their way of life. For that constituency, more of the same will be stiffly resisted. A respected recent public survey by the Pew Research Center reported that only about 20 percent of Americans believe that more free trade will increase employment and wage prospects here. According to the analysis, Americans are the least likely among citizens of developed nations to exhibit faith in the benefits of free trade.
As the fast-track measure came to the Senate floor recently, the debate sharpened. Opponents argued that they were being asked to approve a secret deal and that the measure lacked the kind of financial, worker and environmental protections required to warrant approval. Senator Elizabeth Warren (D-MA) charged that TPP would weaken U.S. financial regulations enacted to protect economic stability. Senator Bob Casey (D-PA) charged that “It’s a job-destroyer for Americans. Seven of these countries have minimum wages of $3/hour or no minimum wage at all. Two have minimum wages below $1/hour. This is a prime example of how this deal could undermine U.S. jobs.”
Obama has taken the lead in responding to TPP critics. But his argument has largely been to ask his traditional Democratic supporters to “trust me.” While he has said Senator Warren is “absolutely wrong” about the deal, media reports have failed to report substantive explanations by the President showing why she is wrong. In coming weeks it will require more substance from the President and his allies if they hope to win over more supporters in the House.
While cabinet officials like the U.S. Trade Representative and the Secretary of Commerce may be able to address some specifics more concretely in classified briefings, the Administration suffers from the current secrecy surrounding the TPP text. It remains classified and has not been published. Because the TPP negotiations are ongoing, the text is a mystery to the public. And even though it is available for review by Members of Congress, the fact that details cannot be discussed publicly puts the Administration at a serious disadvantage and opens it to charges that something rotten is being hidden from the American people.
Senator Warren recently charged that “the President won’t actually let the people read the agreement for themselves. It’s classified.” And Representative Charles Rangel (D-NY) complained that it’s “absolutely ridiculous that you have to go into a secret room.”
The political importance of votes on fast-track is highlighted by Trumpka’s declaration on behalf of organized labor that “It means so much to working people” that, if one does not support labor’s position on this issue, “you are against us.” In the face of such determined opposition and despite the strong support of Obama and the Republican congressional leadership, it is not yet clear that they can muster the votes necessary to enact legislation that will allow the President to conclude an agreement.
The first attempt in the Senate to debate the measure failed when Democratic senators closed ranks to filibuster it. This prompted the President to call pro-free-trade Democratic senators to the White House to broker a compromise whereby debate could proceed. The deal required the Senate Majority Leader, Mitch McConnell (R-KY), to allow debate and votes on a separate currency manipulation measure designed to protect American workers and allow Democrats to show their support for workers. The measure passed with bipartisan support to strengthen enforcement against unfair trade practices and provide support for dislocated American workers.
But because the measure is separate from the fast-track legislation and subject to presidential veto, it will not prevent the grant of fast-track authority to the President. With this compromise it appears that Obama has threaded the needle in the U.S. Senate and that body will likely approve the measure.
Attention therefore shifts to the House of Representatives where Republicans hold an historically large majority but are themselves split over fast-track authority. House Republican leaders have called for Obama to produce 50 House Democrats to support the bill. Given the large Republican majority in the House, the need for 50 Democratic votes means that about 80 House Republicans may not support fast-track authority.
That is a serious problem. It’s been estimated that the number of House Democrats who currently support fast-track authority is far fewer than 50. And in a bad sign for the measure, House Minority Leader Nancy Pelosi (D-CA) decried the length of the authorization, which would grant a president fast-track authority for six years, at least four years beyond Obama’s tenure. The score of House Democrats who had previously expressed support for fast-track authority have recently declined to support it.
Opposition among House Republicans arises from not only economic concerns but also factors not present in previous free-trade debates, including Tea Party-affiliated members who are opposed to relinquishing congressional power to a chief executive they distrust.
The number of moderate House Democrats who supported President Clinton in the NAFTA ratification debate in 1993 has shrunk dramatically as gerrymandering eliminated many of their seats. Likewise, the 1993 NAFTA debate predated the Republican revolution led by House Speaker Newt Gingrich that marked the rightward shift of House Republicans, a shift that has lurched even farther to the right with the rise of the Tea Party. In these circumstances, the political struggle to secure enough House votes may prove nettlesome.
Another interesting aspect of the debate is the regional split within the country when it comes to free-trade legislation. A notable alliance between midwestern senators of different parties from Michigan and Ohio highlights the lingering distrust free trade sparks in this region of the country. On the other hand, support from coastal states that stand to benefit from greater foreign trade appears to be more common.
Notably, however, California senators Boxer and Feinstein remain undecided. And the positions taken by Republican presidential hopefuls Rand Paul (R-KY) and Lindsey Graham (R-SC) against the legislation appear to reflect their consideration of the potential significance the issue may play in the presidential primaries. – MarEx
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.