Thursday, October 24, 2013

Why the TPPA Needs TPA

With the (temporary?!!) resolution of the funding issues, the US government turned its attention to other matters, including what is known as “Trade Promotion Authority” (TPA).  Under TPA, the US Congress provides authorization to the US President to negotiate trade agreements such as the Trans Pacific Partnership Agreement (TPPA) currently under negotiation.

Obtaining TPA will be necessary for the Obama administration to negotiate and conclude the TPP agreement.  This is because negotiation and implementation powers are not the sole province of the US President for trade agreements.  The US President can negotiate and conclude an agreement, but without TPA, the US Congress is free to amend the agreements during the approval and implementation process. This contrasts with the Westminster parliamentary model which applies in most of the other TPP negotiating parties, in which the government of the day has both negotiation and implementation powers.

Thus, without TPA, the other TPP negotiating parties will be very reluctant to conclude a TPP deal with the US when they know that the US Congress will be able to amend the agreement and change its terms.  This is why the last two GATT/WTO agreements and all recent US free trade agreements (FTAs) were all successfully concluded through the TPA mechanism.  The TPA commits the US Congress to an expedited legislative schedule for the trade agreement, and most importantly, commits the House and Senate to up-or-down votes without the possibility of amending the agreements.

The problem for the TPP talks is that the political sentiment in Washington is mixed on TPA.  Certain factions in the Democratic party are not sympathetic to the need for a TPP agreement, as explained here.  The Republicans are traditionally pro-free trade, but the “Tea Party” faction is loathe to give President Obama any legislative victories, as evidenced here.  TPP negotiating parties reading such articles would become quite pessimistic about the Obama administration getting TPA through Congress.

However, the Obama administration, which had been content not to make trade a priority in the first term, appears committed to getting the TPP and Transatlantic Trade and Investment Partnership (the free trade talks with the EU) concluded in the second term. If this is to happen, the President has to make a personal effort with Congress, not just on the funding issue, but on TPA as well.  Trade has always cut through party lines, and with frictions based more on the economic interests in each member’s constituency rather than ideology.

Congress also has to understand that TPA does not result in the handing over of a blank check to the Obama administration.  Fundamentally, TPA is a legislative rule, and each house of Congress has the constitutional right to organize how it operates.  If the President is deemed to have abused his TPA authorization, either house can vote to withdraw or suspend the TPA authority or process (I wrote about this in 1989). This happened during the George W. Bush administration when the then-Democrat controlled House of Representatives suspended the TPA process for the US-Colombia FTA, delaying its passage for years until Democrat concerns were addressed. 

At the end of the day, TPA is an expression by the US Congress of its prior consent to trade negotiations.  It provides the US President with enough credibility to negotiate and conclude trade deals. Without TPA, the United States will be unable to complete its key economic diplomatic initiative in Asia (including ASEAN), which will have long-term detrimental consequences for America.  TPA was born from a bipartisan initiative during the (Republican) Ford administration and has successfully delivered FTAs that have benefited the United States and its trading partners.   If the United States is to maintain its vital role in Asia, both the Obama administration and Congressional leaders have resume bipartisan cooperation to get TPA approved.