(What’s Left of) Our Economy: Big Business Still Favors A TPP Fast Track – for Everyone Else

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Business Roundtable, Congress, fast track, Michael Froman, National Foreign Trade Council, Obama, offshoring lobby, Orrin Hatch, Paul Ryan, Ted Cruz, TPA, TPP. Trans-Pacific Partnership, Trade, Trade Promotion Authority, {What's Left of) Our Economy

A funny thing has happened to the Offshoring Lobby groups that pushed so hard (and successfully) for Congress to give President Obama fast track trade negotiating authority. Now that they’ve seen the text of the Trans-Pacific Partnership (TPP) trade deal whose passage they’ve also urged, several have decided they don’t like the core provision of fast track trade negotiating authority.

Central to the case for fast track – now officially known as Trade Promotion Authority (TPA) – is that preventing Congress from monkeying around with the final text of trade agreements negotiated by presidents and their aides is vital to persuading America’s interlocutors to negotiate seriously. If American lawmakers could amend the deal at will, why would foreign leaders put forward their best offers, especially if they might anger powerful domestic constituencies?

That’s what U.S. Trade Representative Michael Froman has made unmistakably clear. In a late-2014 article in Foreign Affairs, Mr. Obama’s chief trade diplomat wrote, “By ensuring that Congress will consider trade agreements as they have been negotiated by the executive branch, TPA gives U.S. trading partners the necessary confidence to put their best and final offers on the table.”

The Republican leaders who have supported the president’s trade agenda agreed as well. According to Senate Finance Committee Chair Orrin Hatch of Utah, TPA “allows for trade deals to be submitted to Congress for an up-or-down vote, an incentive for negotiating nations to put their best offer forward for any deal.” And before he was elected Speaker and chaired the House Ways and Means Committee, Wisconsin’s Paul Ryan contended (in an article co-authored with Texas Republican Senator and current presidential candidate Ted Cruz, “By establishing TPA, Congress will send a signal to the world. America’s trading partners will know that the U.S. is trustworthy and then put their best offers on the table. America’s rivals will know that the U.S. is serious and won’t abandon the field.”

When Congress was considering fast track, moreover, leading business groups strongly echoed this line. As specified in a statement from the Trade Benefits America coalition that spearheaded the pro-fast track lobbying campaign, fast track historically ”has provided our trade negotiating partners with a degree of comfort that the United States is committed to the international trade negotiating process and the trade agreements we negotiate.”

One of the coalition’s major members, the National Foreign Trade Council (NFTC), was even more explicit: “Without U.S. trade negotiating authority, other countries will be unwilling to negotiate with the United States for fear that U.S. commitments and concessions would not hold weight.  In particular, they would be unwilling to put important politically sensitive concessions on the table.”

Last week, however, some of these organizations were changing their tune. In a statement calling for Congress to pass the TPP, the Business Roundtable declared that it also wanted to administration “to quickly address the remaining issues that impact certain business sectors in order to ensure the broadest possible benefits to all sectors of U.S. business, which will enable the broadest support possible for the TPP.” Huh? It’s true that Congress can attempt to clear up purported ambiguities in the text when it writes implementing legislation, but as for changing the text itself? Sorry, but that’s a no-no under TPA. Unless the Roundtable wants to reopen the entire negotiation?

Similarly, the NFTC reported that it is “encouraged by discussions that are underway between Congress and the Administration to address provisions in the agreement in order to further improve trade and investment liberalization, and strengthen the system of international trade and investment disciplines and procedures, including dispute settlement, for all of American business. Early resolution of areas for improvement identified by the business community will speed approval by Congress in 2016.”

With due respect, what on earth are they talking about other than the aforementioned clarifications and interpretations that unfortunately are entirely unilateral, and have no standing under the new TPP regime?

It seems that when the Offshoring Lobby touted the importance of banning Congressional amendments to TPP, it meant all amendments except its own. You can’t blame its organizations for seeking such blatant favoritism; it’s their job. Now we’ll see if Congress believes that enforcing the principle of equality under the law is its job.

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(What’s Left of) Our Economy: The Senate’s Messy but Historic Anti-Fast Track Vote

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2016 elections, Africa, AGOA, currency manipulation, fast track, Harry Reid, Jeff Sessions, Mitch McConnell, Obama, Orrin Hatch, Ron Wyden, Senate, TAA, TPA, TPP, Trade, Trade Adjustment Assistance, Trade Promotion Authority, Trans-Pacific Partnership, {What's Left of) Our Economy

So far, the Senate’s vote this afternoon to block debate on granting fast track trade negotiating authority to President Obama stands out mainly for two somewhat contradictory but equally valid reasons.

First, just one look at the actual roll call is enough to remind that even lawmakers’ decisions on the highest profile, emotionally charged issues can be an incredibly nuanced mix of substantive and procedural considerations. For example, Majority Leader Mitch McConnell of Kentucky, who has helped lead the charge to grant the president a virtual blank check for concluding new trade agreements, voted against proceeding, even though the triumph of the Nays puts fast track’s future in major jeopardy. The reasons reportedly were tactical, related to Senate procedures. Alabama’s Jeff Sessions, one of the few Republicans on Capitol Hill understanding the need for fundamentally new approaches to both trade and immigration policy, is recorded as voting for the measure. Unless that’s a typo, I’m dying to find out why.

Then there’s Ron Wyden, Democrat of Oregon and ranking minority member of the Finance Committee – which takes the lead on trade issues in the Senate. Wyden brokered a fast track compromise with Republican Finance Chairman Orrin Hatch of Utah that resulted in a bill strongly opposed by most Democrats in both Houses of Congress. Yet Wyden cast a ballot against starting a fast track debate on the Senate floor – avowedly because McConnell and other Republican leaders refused to guarantee strongly enough that related trade measures would be voted on as well. So did several other Senate Democrats who normally support standard trade deals.

Even stranger, these related bills are at best a mixed bag when it comes to affecting trade policy, trade flows and, most important, the U.S. economy’s growth and hiring performance – which could certainly use a helping hand. For example, one is a measure that would fund so-called Trade Adjustment Assistance (TAA) for workers who lose their jobs because of import competition or trade-related offshoring. These retraining and reeducation programs are widely viewed as chronic failures by those who have studied their results. Their continued popularity in Washington reflects their ability to enable trade deal supporters to claim genuine concern for Americans whose livelihoods they repeatedly vote to devastate. In other words, TAA support historically has provided a measure political cover for trade liberalization votes. But this year so far it’s throwing a major major monkey wrench into the president’s trade agenda.

Another trade-related demand made by fast track opponents is legislative movement on extending a free trade deal with sub-Saharan Africa. Although this arrangement’s impacts on the U.S. economy are modest, it’s involved a sacrifice of American jobs, mainly in the apparel industry, for African jobs. Even those believing that this tradeoff makes sense for U.S. interests should be troubled by how the African deal has become a back door for shipping Chinese-made garments, and clothing made from Chinese, not U.S.-manufactured fabric, into the American market.

At the same time, despite the byzantine array of motives on display, this Senate vote was a genuine milestone. For whatever their narrower and even cynical concerns, Senators who opposed launching the fast track debate had to know that any delay could well doom the measure, and with it any hopes for new trade agreements for the foreseeable future. The reason? The longer these decisions take, the deeper they get pushed into the already unfolding 2016 presidential cycle, when few politicians relish running as champions of current U.S. trade strategies.

Indeed, for all the White House efforts to dismiss today’s events as an “procedural snafu,” this anti-fast track vote represents the first time in decades that the Senate has rejected a major trade policy measure that didn’t require approval in the House as well. (In 2011, the Senate passed a stringent anti-currency manipulation bill, but many of the Yes voters no doubt knew that the measure was going nowhere in the House.)

As a result, Mr. Obama’s trade agenda, including his proposed Pacific Rim trade deal, is by no means dead. Indeed, Senate Minority Leader Harry Reid of Nevada, till now a bulwark of opposition to fast track and that Trans-Pacific Partnership (TPP) agreement reportedly is already trying to figure out how to save the president from complete humiliation. But given the Senate’s usually friendly disposition to standard trade liberalization policies, and given how its reservations may further stiffen the spine of the traditionally balkier House, there can be no doubt that U.S. trade policy history was made today. And given the current strategy’s record of slowing both economic growth and job creation, it’s history that even the most ambivalent, even Machiavellian fast track opponents can be proud to have made.

(What’s Left of) Our Economy: Hatch Joins Obama in Looking Like a Currency-Related TPP Phony

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Barack Obama, currency manipulation, fast track, House Ways and Means Committee, Michael Froman, Orrin Hatch, Paul Ryan, Senate Finance Committee, TPA, TPP, Trade, Trade Promotion Authority, Trans-Pacific Partnership, U.S. Trade Representative, {What's Left of) Our Economy

The politics of currency manipulation, which are strongly influencing Congress’ views of President Obama’s prospective Trans-Pacific Partnership (TPP) trade deal, just keeps getting more and more interesting.  So do policy moves surrounding the issue. The bottom line:  Both new Senate Finance Committee chair Orrin Hatch and the Obama administration seem to be stepping up efforts to snooker Congress and the public on measures to safeguard American businesses and their employees against this exchange-rate protectionism.

Hatch is drafting new Trade Promotion Authority (TPA) legislation along with his House Ways and Means counterpart Paul Ryan of Wisconsin, and both will have major says over whether the Pacific trade deal and the negotiating authority critical to its approval will pass Congress. And he’s definitely trying to pose as a public servant completely alert to currency threats.

Just look at the widely reported speech the Utah Republican gave on trade at the end of last month. He blasted President Obama for “pretending these [currency] concerns don’t exist” and proudly declared that “we included within our TPA bill, for the first time, a new principal negotiating objective addressing currency manipulation.”

But upon closer inspection, it’s clear that Hatch’s definition of “meaningful” is a low bar. So far he has simply stated, “We need to see commitments from our partners in ongoing trade negotiations to avoid manipulating exchange rates to gain an unfair competitive advantage over other parties to the agreement, a standard reflecting commitments parties have made in the International Monetary Fund.” In other words, Hatch appears to be pushing language in this fast track legislation that merely urges the president’s trade negotiators to try their best to deal with the issue. Worse, it sounds like he would be satisfied with promises from other TPP signatories that they already have often broken whenever they have believed their interests dictate.

In fact, Hatch made no reference in his address to inserting enforceable disciplines against currency manipulation in the TPP. Given the likelihood that the agreement will include a dispute-resolution process giving a major role to countries with a demonstrable fondness for manipulation, such rules are shaky bets at best to safeguard American businesses and their employees against exchange-rate protectionism. But it’s revealing that Hatch seems unwilling even to support this inadequate measure.

At the same time, Hatch’s apparent double-talk on currency manipulation shouldn’t be a surprise. Back in 2005, when the Senate was considering a bill to enable Washington better respond to currency manipulation unilaterally by using U.S. Trade law mechanisms, Hatch supported the legislation – on a vote that was wholly procedural. The bill’s own sponsors eventually withdrew it following (eventually broken) administration promises to increase pressure on China. In 2011, when the Senate took up a similar bill in final form, Hatch flip-flopped and voted “Nay.”

Not that Hatch is looking like Washington’s only currency manipulation phony. President Obama reportedly has told House Democrats that adding the issue to the TPP would be “complicated.” Yet he has also staunchly opposed dealing with foreign currency protectionists unilaterally – in the form of the aforementioned 2011 bill. Moreover, although U.S. Trade Representative Michael Froman has been testifying under oath to Congress that currency issues are the Treasury Department’s province and that Secretary Jack Lew is raising these matters in international fora like the Group of 7 major economies and the International Monetary Fund, journalists keep reporting the opposite.

In October, according to a New York Times piece, Lew and the rest of the administration, along with the Federal Reserve, had decided to accept the lower currency values that inevitably followed foreign central bank monetary easing moves because they were needed to stoke growth overseas. Just yesterday, the Financial Times reported that this enabling of foreign currency manipulation has continued.

The Hatch, Obama, and Froman hokum at least clarify one point. Supporters of U.S. trade policy still don’t think they can steer new agreements through Congress by telling the truth.