This month’s midterm elections dealt a blow to Democratic power across the board. With a transition to Republican control of Congress, President Obama is officially a lame duck president. While this is a major setback to the Obama administration in terms of reaching its goals for immigration reform, energy policy, and building a resilient health care system, trade policy is one area that might actually benefit from divided government.
If history is any indicator, lame duck presidents typically look abroad to create an international impact when their domestic support wanes. Some see President Obama’s influence on the international stage shrinking as well, but the key to preventing this may be a strong leadership role on trade. Over the past six years, the US has quietly been working on major bilateral trade deals that will position the country favorably within the global economy.
President Obama’s trade agenda is one of the most ambitious of any US president – but, ironically, one of the obstacles to its success was the Democratic controlled Senate. The Republican controlled 114th Congress may well see eye-to-eye with Mr. Obama on America’s trade future.
Earlier this month, President Obama turned his focus to the APEC Leaders Meeting and made his case for the US to pivot to Asia. The prime focus of this shift is the Trans Pacific Partnership (TPP), a comprehensive trade agreement that eliminates tariffs and seeks marketplace harmony between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. US Trade Representative Michael Froman sees TPP as a strategic agreement that will “set the rules of the road” for years to come. Mr. Froman claims that TPP will be a game changer as it attempts to set the highest labor and environmental standards in the region and makes its mark as the first trade agreement to incorporate the digital economy. The countries negotiating the TPP represent close to one third of total trade in the world.
Also still in the works is the current centerpiece of US-EU relations, the proposed transatlantic trade deal, the Transatlantic Trade and Investment Partnership (TTIP). TTIP, like TPP, is one of the most ambitious free trade agreements in the history of the global economy, bringing together the world’s two largest markets. TTIP’s real strength comes from its goal of harmonizing regulations between the United States and European Union in order to cut duplication costs and open markets on both sides of the Atlantic. This is only possible because of the high quality labor, financial institutions, and safety standards that both markets share.
Trade negotiators may be closing in on a deal when it comes to the TPP and TTIP, but that does not mean the debate is over. If TPP negotiators come to a consensus and send a proposed TPP to Congress tomorrow, for instance, the entire framework would likely fall apart. This is because Congress would be able to jump in and make piecemeal modifications to the TPP based on the special interests of the fifty states and hundreds of Congressional districts – leading to the need to renegotiate all of those changes with the partner countries.
In this scenario, members of Congress have the chance to derail negotiations with officials of countries that they never met with. They will not appreciate the compromises that it took to open up Japan’s agricultural industry or the details of what a country like Brunei simply cannot budge on.
That is why all previous major trade agreements have been completed through what is known as Trade Promotion Authority, or TPA, which restricts the ability of Congress to modify the substance of agreements. TPA gives Congress a yes or no vote in which members can either accept the whole trade agreement or they accept none of it. And indeed, TPA is a mechanism that every president has had available, and it has been consistently renewed since the days of President Franklin Roosevelt.
If passed by the Republican Congress, TPA will not simply disappear after the TPP negotiations conclude. The authority will be available for several years after its passage, making it an effective tool – and likely a necessary condition – for passing TTIP as well.
That TPA has not been popular among the Democratic leadership was true in the 113th Congress and will not change in the 114th. Following the 2014 State of the Union address, then Senate Majority Leader Harry Reid spoke out against the Bipartisan Congressional Trade Priorities Act—an act that would reinstate TPA even though during the State of the Union, President Obama spoke of his support for the legislation and free trade agreements like TPP.
In the House of Representatives, Rosa DeLauro and George Miller lead 151 Representatives in opposition to the use of Trade Promotion Authority in ratifying TPP or any future trade agreements. In a letter to the President, the signees refer to TPA as a “twentieth century ‘Fast Track’...[inappropriate] for 21st century agreements” and believe that “Congress, not the Executive Branch, must determine when an agreement meets the objectives Congress sets in the exercise of its Article I-8 exclusive constitutional authority to set the terms of trade.”
Yet the TPA is not an outdated tool, but rather the only tool that would get the job done. The challenge now is establishing new provisions in TPA that will appease members of Congress, but also maintain the basic yes or no vote structure of TPA.
Now, with Republicans in the majority, their leadership in both chambers vocally supports bipartisan trade agreements and TPA. In a rare agreement with President Obama, after the elections Senate Majority Leader Mitch McConnell immediately pointed to trade as a source of consensus. “Most of [Obama’s] party is unenthusiastic about international trade. We think it’s good for America,” McConnell said. House Majority Leader John Boehner has been outspoken on his support for TPA, stating that “it means making it easier for our workers, including the 1.4 million Ohioans whose jobs depend on trade, to be able to compete with China and the world’s growing economies.”
The most likely scenario for the passage of TPA and thus the completion of TPP and TTIP, is with a new majority in 2015. To this end, the USTR has worked adamantly to educate members of Congress on the benefits of free trade agreements. To date, the USTR has held over 1,500 meetings with Congressional members on TPP alone. The two committees with trade jurisdiction, the Senate Finance Committee and the House Ways and Means Committee will now be chaired by Senator Orrin Hatch (R-UT) and Representative Paul Ryan (R-WI).
When it comes to passing the legislation, Speaker Boehner has solidified his control over the House with at least 12 Republican seats gained. In the House, President Obama and Republicans can court the favor of many Blue Dog Democrats for the extra push. But in the Senate, Mitch McConnell controls 53 seats but needs 60 votes to overcome a filibuster, meaning he will need to find some Democratic support.
It is increasingly likely that 2015 will be a major year for US trade policy. While President Obama’s hopes of domestic legislation may be on the ropes, and any hope for enduring bipartisan agreement may be illusory, the parties can come together on trade in order to boost US competitiveness and expand the global marketplace.