Give Obama Trade Promotion Authority

Trade is now high on the agenda in Washington. President Obama is pushing hard for Congress to give him Trade Promotion Authority (TPA), once known as fast-track authority.  He intends to use it to complete negotiations with 11 trading partners under the Trans Pacific Partnership.  A majority of trade-skeptical Democrats in Congress have lined up on the wrong side on this one, along with some Tea Party Republicans who automatically oppose anything that Obama is in favor of.

Without TPA, trading partners hold back from offering their best concessions to the president’s trade representative in negotiations, fearing correctly that Congress would seek to take “another bite of the apple” when the White House brought the agreement to them for ratification.  Other countries wised up to this trick 40 years ago.  That is why the Congress has given every president since Richard Nixon fast-track authority, which allows only up-or-down approval of the final agreement.  If they don’t give TPA to Obama, it will not only mean no TPP.  It will also be another step in the ongoing self-inflicted American abdication of global leadership.



Foreign Affairs magazine recently surveyed 24 experts (“experts”?), asking “Should Congress Pass Trade Promotion Authority?”   To summarize, 21 of us said yes, 3 said no.   Interested readers can read the names and short explanations.

The one surprise on the list is that Joe Gagnon of the PIIE apparently feels strongly that Congress should not give TPA to Obama, if they can’t pass it without a requirement that currency manipulation language be part of any internationally negotiated agreement. There is in fact no point in legislating such a requirement, because our trading partners would reject any demands that currency manipulation be part of any agreement. Moreover, they would be right to do so, in my view.  Accusations of currency manipulation are way too subjective to go into a formal trade agreement.  If the recent easy monetary policies of Japan, China, or the Eurozone and resulting depreciations were judged to constitute currency manipulation, as many in Congress seem to think, then the US quantitative easing of 2010-11 could be called currency manipulation as well.  (This was the period when the Brazilians originated the phrase “currency war.”).