Widgets Magazine

OPINIONS

Free trade and negotiations: How much power should Obama have?

Matthew Cohen

Free trade is a smart deal

I rarely agree with Majority Leader Mitch McConnell, but he and President Obama are both correct on free trade. Free trade saves consumers money and makes people in all countries that participate in free trade better off. Currently, President Obama is negotiating a free trade deal known as the Trans-Pacific Partnership (TPP). The 12 countries involved in the agreement, including Canada, Chile, Japan, Singapore and Vietnam, comprise almost 40 percent of the global GDP.

Congress is currently debating Trade Promotion Authority (TPA) legislation, which would prevent members of Congress from making any amendments or modifications to a President’s proposed trade deal. Also known as “fast tracking,” TPA would restrict Congress to only an up or down vote on the trade deal. To approve the trade deal, Congress must first approve TPA. If Congress were allowed to add amendments to the TPP agreement negotiated by President Obama, then Congress would essentially be another negotiating player in the TPP talks. Given Congress’ recent gridlock, it would be disastrous to heavily involve them in formulating the TPP. We would not be able to pass free trade legislation without first adopting TPA. Moreover, by delegating the power to negotiate trade deals to the President, Congress ties its hands and prevents logrolling. Trade agreements should not be riddled with provisions that benefit individual member’s districts.

Even though there are many benefits to fast track legislation, some might still be concerned that passing fast track legislation will greatly expand executive authority and lead to executive abuse. However, TPA has been passed several times, including 1974, 1979, 1988 and 2002. The President, in none of these cases, became a tyrant and abused his executive authority. Congress had the authority to reject any agreement that the President made with other countries. There is no reason to believe that 2015 will be any different. Even Speaker of the House, John Boehner, called this suspicion a “myth” on his government website. (This reassurance should be treated seriously because it comes from a man who sued the President on the grounds that he expanded his executive power.)

Regarding the actual free trade agreement, TPP is is beneficial to everyone involved. The Peterson Institute projects that U.S. income gains could reach up to $59 billion per year by 2020. The gains would continue to grow until 2025, when savings would reach up to $78 billion annually. While this may not appear impressive in the context of our $16 trillion economy, these savings will go to consumers, serving as a financial relief for them and making their lives better. This additional revenue would be generated by increased exports across multiple sectors, including the service and manufacturing industries.

More than seven out of every 10 American jobs can be found in the service industry, which includes telecommunications, financial services, computer services and retail distribution. Currently, the average tariff among the TPP nations is 32 percent. The trade agreement would slash the average tariff by over 50 percent. This dramatic tariff reduction would cause service industry exports to double by 2025.

Moreover, in the manufacturing sector, American car companies will be able to sell their products overseas with greater ease. For example, non-tariff barriers against American cars in Japan cause the price of U.S. autos to increase by over 60 percent. In other countries, such as Malaysia and Vietnam, these barriers increase auto prices by 27 to 50 percent. However, since the TPP will diminish protectionist barriers in other countries, it will likewise do the same in the United States. Protectionist policies in the United States cost consumers $105,000 per job in the auto industry. Eliminating these policies will unfortunately cause the auto industry to shed some jobs. As President Obama did in the free trade deal with South Korea, Colombia and Panama, if the TPP is passed, he will preserve and maybe expand Trade Adjustment Assistance (TAA). TAA is a government program that helps individuals who lost their jobs as a result of free trade policies find new vocations by giving them training in other fields. This government program will offset the main consequences of TPP and will result in a net benefit.

Of course, there are other issues, such as environmental protection, that need to be addressed in any free trade deal. However, the underlying components of free trade make it a compelling option. The TPP will lower consumer costs and generate more wealth in not only America, but also in other participating countries. It’s time for the Republicans in Congress and President Obama to get something done together. This is one of the few issues where both Republicans and (some) Democrats agree. Both parties should take advantage of this opportunity and show the American people that our government is not completely dysfunctional. It’s time to pass TPA and TPP.

Contact Matthew Cohen at mcohen18 ‘at’ stanford.edu. 

Johnathan Bowes

Congressional oversight, not Congress overlooked

The United States seems poised to enter into a new free trade agreement, the Trans-Pacific Partnership (TPP). But in doing so, we also seem poised to watch President Obama become more powerful than the Constitution allows.

Over a decade has passed since the heads of government of Chile, Singaporeand New Zealand met to discuss forming the Pacific Three Closer Economic Partnership, the trade agreement that has now grown into the Trans-Pacific Partnership (TPP). The idea behind the partnership is one of economic cooperation and free trade, and the agreement seeks to connect economies and countries around the Pacific Ocean with one another in new, mutually beneficial ways. The George W. Bush administration began talks with the four original TPP members (the three listed above, plus Brunei) about joining the partnership in 2008, leading seven other nations across four continents to begin similar talks as well.

Now that countries from Canada to Japan and beyond seem poised to join the TPP—broadening the size of the partnership’s potential impact—the prospect of the United States joining the group as well only seems more attractive. Participating in the agreement makes sense in principle, meaning that the snags that have delayed negotiations for the past few years should be treated as problems to work through rather than problems to walk away from.

Nonetheless, slow and steady wins the race. Putting the negotiations for the TPP on a ‘fast-track’ (with the President acting nearly unilaterally in the process) is not only unnecessary, but potentially dangerous.

Such a fast-track procedure has come before Congress in the form of the “trade promotion authority” (TPA) past Congresses have granted the President in order to negotiate past free trade treaties, now up for renewal. That power lets the Executive Branch broker an agreement with the other nation(s) involved in the pact with little (if any) input involvement from Congress; after the deal has been finalized by the President under TPA, Congress has a mere 90 days to vote on the treaty—without the power to amend what it says without throwing the entire agreement out and starting over.

This Congressional concession might seem like an appropriate tradeoff between oversight and speed. After all, delegating the power and work of crafting a free trade agreement like the TPP to Obama and his eventual successor allows for the back-and-forth of negotiations to move more quickly; some even argue that it makes the President more “credible” at the negotiation table. But realistically, TPA only serves to make an already weakened Congress weaker and an already strengthened Presidency stronger.

The Constitution sets up the Legislative Branch of the federal government as the primary repository of power. Though the other two branches can (and should) check and balance the power of Congress, the Framers set up the Congress with more distinct, enumerated powers (18) than both the President (three) and the Supreme Court (one) combined. Part of that division of powers came as a reaction to the tyranny of King George III and the emperors of Rome: Instead of a quicker, authoritarian regime, the Framers chose instead to create a slow and deliberative government that wields its power carefully and conscientiously.

When Congress transfers some of its power to the President, even temporarily, it goes against the spirit of the Constitution, if not the letter. This is particularly true for something like the TPP, which fits squarely into Congress’ third enumerated power (regulating international commerce with the US as well as commerce between the states). Even the treaty power that the President has under Article II exists as secondary to this Congressional regulatory power. But by establishing the TPA in the first place, and seeking to renew it for the purposes of ratifying the TPP, that relationship becomes blurred, and a precedent of Presidential overreach takes hold.

Even without TPA officially in place for the Trans-Pacific Partnership negotiations, the Obama administration has operated as if it had that policy’s carte blanche to leave Congress out of the loop. The Administration has some information available to the general public about what the TPP agreement will look like for the US, but when it comes to the nitty-gritty details of the treaty itself, members of Congress have even less access to the information than we did to our FERPA records this year; students here could not only take notes, but have arcane parts of the records explained to them—both abilities denied to members of Congress in looking at the developing TPP agreement. This exclusion, without even the added weight of the TPA policy backing it up, has set up a catch-22 situation: The final treaty that goes before the Senate will likely force the body to choose between a pact they can’t fully support and going back to square one with the entire trade deal. Adding TPA to the mix will only make such an outcome more likely, and ultimately less palatable.

Instead of pushing for the return of TPA, Congressional leaders should push for greater transparency in the negotiation process behind the TPP—at least for the Senators who will ultimately vote on the treaty, if not the whole Congress. Failing to do so goes against much of what this country was founded to stand for.

Contact Johnathan Bowes at jbowes ‘at’ stanford.edu.