Barack Obama

Obama Lacking "Trade Promotion Authority": A Bad Thing? Or: Imagine There's No Tariffs. It's Easy if You Try.

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Washington Post on Obama's attempts to negotiate (secretive) trade deals while worrying that Congress might muck things up:

Nailing down complicated international trade agreements, with a zillion different interests and moving parts, is no easy feat. The Obama administration is trying to do two at once, one with the European Union and another with nine countries in Asia, both of which will be monumental feats when they're finally signed…

In order for the agreements to be signed, the administration says it needs the power to put them to a vote without legislators being able to make amendments as they would with normal legislation–a "fast track" to approval. And guess who has to grant the president that power? That's right–Congress itself….

"It's hard to see if Congress could ever pass a deal if any kind if it amended every line of every proposed trade agreement," says James Bacchus, a former member of Congress who served as a judge at the World Trade Organization….

But passing a deal–especially one they don't know anything about–isn't top priority for all of them.

A collection of Democratic House freshmen sent a letter opposing fast track authority on the grounds that today's trade agreements involve changing vast swaths of domestic policy, and they'd like to maintain a hold on the process, especially since the Trans-Pacific Partnership negotiations have been kept so secret…..

"There are a lot of members who're saying, 'you've treated me abysmally, why would I give myself handcuffs involuntarily?'" says Lori Wallach of Public Citizen, which opposes fast track.  "It means the president can dictate domestic policy on a whole range of issues. And they can implement all sorts of unpopular provisions, and superglue them into a trade agreement."

Who wants Obama to have this power?

On the other side, however, lies all the force of American industry: An array of business lobby groups, from the Farm Bureau to the National Association of Manufacturers, have been pushing for trade promotion authority all year. The Chamber of Commerce says it's the organization's top legislative priority; its officials have even started running ads on the issue, have already met with all the House freshmen, and are planning meetings with the sophomores….

Process vs. outcome arguments can be complicated from a libertarian perspective; in general autocratic executive power is to be looked down on, though it's possible giving Obama that authority will lead to a better (in terms of trade liberalization and lack of attaching other bad regs to trade deals) outcome than allowing Congress to amend.

But when you consider some aspects of the Asian deal, the "Trans-Pacific Partnership," as discussed in this New York Times op-ed, the dangers of executive deals made in deep consultation with many of Americans most important businesses become clear:

so far the executive branch has managed to resist repeated requests by members of Congress to see the text of the draft agreement and has denied requests from members to attend negotiations as observers — reversing past practice.

While the agreement could rewrite broad sections of nontrade policies affecting Americans' daily lives, the administration also has rejected demands by outside groups that the nearly complete text be publicly released….

There is one exception to this wall of secrecy: a group of some 600 trade "advisers," dominated by representatives of big businesses, who enjoy privileged access to draft texts and negotiators.

This covert approach is a major problem because the agreement is more than just a trade deal. Only 5 of its 29 chapters cover traditional trade matters, like tariffs or quotas. The others impose parameters on nontrade policies. Existing and future American laws must be altered to conform with these terms, or trade sanctions can be imposed against American exports.

Remember the debate in January 2012 over the Stop Online Piracy Act, which would have imposed harsh penalties for even the most minor and inadvertent infraction of a company's copyright? The ensuing uproar derailed the proposal. But now, the very corporations behind SOPA are at it again, hoping to reincarnate its terms within the Trans-Pacific Partnership's sweeping proposed copyright provisions.

From another leak, we know the pact would also take aim at policies to control the cost of medicine. Pharmaceutical companies, which are among those enjoying access to negotiators as "advisers," have long lobbied against government efforts to keep the cost of medicines down. Under the agreement, these companies could challenge such measures by claiming that they undermined their new rights granted by the deal.

And it ain't business, in general, for whom real free trade is good: it's consumers. (See some recent data on this from Daniel Griswold at Cato.) So the more business interests have ins on shaping these deals vs. consumers, likely the worse.

It is worth remembering that we have in our power as nation the ability to do what's good for American consumers, that is, all of us: cut tariffs and allow us to buy things from foreigners at the price they are willing to sell it, without the government taking a cut.

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  1. Can we just invoke Adam Smith, and call this one settled?

    1. He’s even older than our country’s founding charter. If the Constitution’s a dead letter, what hope do we have for Adam Smith being taken seriously?

      Besides, everyone knows his dreaful “invisible hand” was just a metaphor for corporate interests.

      1. Still, you gotta love that The Wealth of Nations was first published in 1776.

  2. something that all economist from left to right understand, comparative advantage and free trade, will never be allowed. it just goes to show that if everyone where libertarians we would still live in a statist society. maybe 3D printers will finally erase the lines of nation-states.

  3. Process vs. outcome arguments can be complicated from a libertarian perspective; in general autocratic executive power is to be looked down on, though it’s possible giving Obama that authority will lead to a better (in terms of trade liberalization and lack of attaching other bad regs to trade deals) outcome than allowing Congress to amend.

    Yeah, and I have some oceanfront property in Wyoming that would pique your interest.

    Gridlock really is the best outcome libertarians can hope for in the current political environment.

    1. Presidents have tended to be better on free-trade issues than Congress, due to their “representation” of the nation as a whole — or at least its rent-seekers.

  4. I have a question. Would it be to our net benefit to simply lift all trade barriers unilaterally?

    1. If, by that, you mean lifting all trade barriers not equivalent to domestic barriers and regulations, then, “Yes.”

      1. Yes, I’m talking about economic barriers, not no-importing-nuclear-weapons stuff. But I mean all of them, even if other countries retain them.

        1. Milton Friedman argues that it would benefit us. It’s been a few years since I read his argument, and I probably wouldn’t do it justice were it still fresh in my mind.

          1. That’s my suspicion, and it may well have come from something of his I’ve read. But people act like we have to keep barriers up because other countries do. I’m not so sure.

            1. You may have also read Walter Williams on this, as he is fond of the “retaliatory suicide” line of rhetoric.

              There is no reason for you to have any doubts about this, for the reason given by Friedman and Williams: Hurting yourself because someone else hurts themselves is fucking retarded.

          2. His argument that unilaterally lifting all trade barriers would benefit the US wasn’t very convincing to me.

    2. Yes. It’s an inherent consequence of the law of comparative advantage that “protective” trade barriers reduce the prosperity of the nation that erects them.

    3. It would be a benefit, unless you very highly estimate them as leverage in negotiating reductions in barriers elsewhere. The value of just abolishing the barriers on just one side would be so incalculable it’s hard to imagine their having served as effective bargaining chips in any reasonable period of time in negotiating down foreign barriers that’d come close in benefit. I’d rather just abolish our own barriers, and threaten to drone anyone who doesn’t get rid of theirs. Like the Opium Wars.

  5. Nailing down complicated international trade agreements, with a zillion different interests and moving parts, is no easy feat

    No, pleasing everyone is impossible. Pandering to your backers is quite a bit easier. Easiest yet, of course, is throwing out the whole pay-to-play apparatus and letting trade find its natural equilibrium.

  6. Free trade between States is defined in just a few sentences in the US Constitution. There is no need to sign a “free trade agreement” that is significantly longer than those passages, and also much reason to expect that longer agreements are really just more crony capitalism wrapped in foreign intervention. In that case, the answer is to simplify the agreements so that Congress can spend its time considering and ratifying any worthy agreement, while rejecting the rest. We have to let our Constitutional system and the free-enterprise system we profess to love, do their jobs!

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