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Redistributed as a Service of the National Library for the Environment* |
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IB10084: Fast-Track Authority for
Trade Agreements (Trade Promotion Authority): Lenore Sek May 14, 2001 CONTENTS
One of the major trade issues in the 107th Congress will be whether or not Congress approves authority for the President to negotiate trade agreements with expedited, or "fast track" procedures. Under this authority, Congress agrees to consider legislation to implement the nontariff trade agreements under a procedure with mandatory deadlines, no amendment, and limited debate. The President is required to consult with congressional committees during negotiation of nontariff trade agreements and notify Congress before entering into any such agreement. The President was granted fast-track authority almost continuously from 1974 to 1994, but the authority lapsed and has not been renewed. Legislation to renew the President's fast-track authority (H.R. 2621) reached the House floor in 1998, but was defeated by a vote of 180-243 largely along party lines. The major issue was then, as is now, the role of labor and the environment as objectives in trade agreements. The Bush Administration now seeks renewal of fast-track authority, which it refers to as trade promotion authority. On May 10, the President provided Congress with an outline of his 2001 legislative agenda for international trade. Trade promotion authority was at the top of the agenda. The authority would be used for a new WTO round, a Free Trade Area of the Americas agreement, and other regional and bilateral negotiations. The proposal includes 13 negotiating objectives. One objective deals with protection of children and adherence to core labor standards. Another deals with mutually supportive trade and environmental protection policies. Along with the legislative agenda, the President submitted an illustrative list identifying a "toolbox" of labor and environmental actions the United States could take together with trade negotiations. Reaction to the President's proposal has been mixed. The Administration has favored the idea of an omnibus trade bill containing fast-track provisions and other trade measures. Democrats oppose the omnibus bill proposal. There are partisan differences on how to address the questions of labor and the environment as negotiating objectives. Many Republican Members insist that labor and environmental provisions not be a part of fast-track legislation, while many Democratic Members maintain that labor and the environment must be principal objectives. Even where there is agreement on inclusion of labor and the environment in trade agreements, there is little consensus over whether or how these provisions shall be enforced. Several bills now in the 107th Congress deal with fast-track authority. Two bills (S. 136, S. 599) would extend the trade negotiating authority provisions of the 1988 Trade Act, respectively, through the end of 2004 and permanently. Another bill (H.R. 1446) would establish a commission to report on labor and environmental issues before the start of any negotiations. Other bills would extend trade negotiating authority for specific agreements. The Chairman of the Senate Finance Committee has said that the Committee could act on trade negotiating authority in June. Senate leadership has announced that a trade bill probably will not be considered before the fall. The Administration has said that it would like to have trade promotion authority approved by the end of the year. On May 10th, President Bush provided Congress with an outline of his 2001 legislative agenda for international trade. He placed trade promotion authority at the top of the agenda. The authority would be used for a new WTO round, a Free Trade Area of the Americas agreement, and other regional and bilateral negotiations. The proposal lists 13 negotiating objectives. One objective deals with protection of children and adherence to core labor standards, and another deals with mutually supportive trade and environmental protection policies, both "in a manner consistent with U.S. sovereignty and trade expansion." Along with the legislative agenda, the President submitted an illustrative list identifying a "toolbox" of labor and environmental actions the United States could take together with trade negotiations. The proposal does not include a definite time period for the authority, rather "a sufficient time" for the various negotiations. The Constitution gives Congress the primary power over trade policy: Article 1 empowers Congress "to regulate commerce with foreign nations" and "to lay and collect taxes, duties, imposts, and excises." For 145 years, Congress exercised this power through frequent enactment of tariff acts, setting in detail duty rates for individual imports. Since Congress was elected by local interests that often benefitted from protection against imports, there were incentives for keeping tariffs at high levels. Early Presidential Authority to Cut Tariffs By virtue of his constitutional power to conduct foreign affairs, the President technically has the authority to negotiate and enter into agreements with foreign countries, including those dealing with trade and tariff policy. The President, however, has no authority to impose duties unless Congress delegates that authority. The Reciprocal Trade Agreements Act of 1934 made a major change in these legislative and executive roles. Under the 1934 Act, Congress authorized the President to negotiate reciprocal reductions of tariffs, within a limited range and time period, and to implement them by proclamation without the need for implementing legislation. Because the President was less accountable to local interests than Members of Congress were, the President could negotiate reciprocal reductions in tariffs (within the limits allowed) without the political liability faced by Members. For the next several decades, Congress extended the President's tariff-cutting authority several times. Under this authority, the President negotiated reductions in tariff levels multilaterally in five rounds under the General Agreement on Tariffs and Trade. After agreements were reached at these rounds, the President proclaimed the lower tariffs under the authority Congress had delegated. Nontariff Barriers and Fast-Track Authority The sixth round of multilateral trade negotiations, called the Kennedy Round (1964-67), involved negotiations on nontariff as well as tariff barriers. Congress had extended presidential tariff-cutting authority for the Kennedy Round by the Trade Expansion Act of 1962. That authority did not include negotiation of nontariff barriers. Nonetheless, the Administration reached agreements on two nontariff barriers: (1) the American Selling Price (ASP), which was an artificially high import valuation based on domestic producers' prices; and (2) a code, or set of rules, on antidumping. Although the 1962 Act authorized (as did the 1934 Act) the President to negotiate a reduction of "any existing duty or other import restriction," the general view at the time was that by entering into the antidumping agreement, the President had overstepped his delegated power. Congress subsequently not only did not enact legislation to implement it, but actually enacted a provision which would nullify any provision of the antidumping agreement inconsistent with the U.S. antidumping law. The decision by Congress not to approve the ASP or antidumping agreements showed that there was a dilemma regarding negotiations on nontariff barriers. Trading partners wanted assurance that U.S. negotiators could reach a deal with likelihood of approval back home. By then, tariff levels had been reduced through prior rounds, and nontariff barriers were becoming increasingly important in restricting trade. Without an advance grant of authority from Congress, U.S. negotiators were concerned they would have no credibility in future trade talks. In the early 1970s, in anticipation of a seventh round of multilateral negotiations that was sure to include nontariff barriers, President Nixon submitted legislation for a new type of negotiating authority. The proposed legislation would have granted to him proclamation authority for nontariff barriers much like the previously granted authority for tariffs. He proposed that he be able to reach a nontariff agreement, submit it to Congress, and unless Congress legislatively disapproved the agreement, the President would put the changes into effect by proclamation. There would be no need for implementing legislation. The Nixon proposal was passed in the House. That proposal, however, was stopped in the Senate. Senate Members and staff reached a different, substantially new arrangement with the Administration. Under this compromise, which was enacted in the Trade Act of 1974, Congress gave the President temporary authority to negotiate nontariff trade agreements. Congress specified negotiating objectives. The President was required to consult with appropriate congressional committees before and during the negotiation and to notify Congress at least 90 days before entering into the agreement. The President had to submit implementing legislation, along with a statement of administrative action to be taken and reasons why the agreement serves the interests of U.S. commerce. Once the bill was submitted, Congress was to follow an expedited legislative procedure. This procedure included mandatory deadlines, no amendments, and limited debate. The authority to negotiate nontariff trade agreements with an expedited procedure for implementing legislation became commonly known as fast-track authority. At the time the compromise was approved, there was little if any controversy about the procedural restrictions. The 1974 Act gave Congress an enlarged role in trade negotiations through the consultation and notification requirements. The negotiating authority in the 1974 Act enabled the Administration to negotiate the Tokyo Round of multilateral trade negotiations (1974-79). After the Round was completed, there was an important development in the role of Congress regarding the implementation of the Round's results. When it was time to construct the implementing legislation, Senate staff argued that Congress should have an active part in that process. The result was that Congress took a draft bill through a "mock" legislative process, with committee consideration, amendments, and conference committee. The President then submitted legislation based on the final draft bill. Although not formally outlined in any document, the executive and legislative branches thus agreed on a process that allowed congressional involvement in crafting legislation to ensure expedited procedures once a bill was submitted. The 1974 Act granted fast-track authority to the President for agreements reached over the next five years. The Trade Agreements Act of 1979 (P.L. 96-39) extended the authority another eight years. After a brief lapse, the Omnibus Trade and Competitiveness Act of 1988 (P.L. 100-418) renewed the President's fast-track authority for agreements reached through May 1993 (the latter two years of that renewal depended on whether the President requested the two-year extension and Congress did not pass a disapproval resolution). The 1988 Act was subsequently amended (P.L. 103-49) to extend fast-track authority for Uruguay Round agreements reached before April 16, 1994. After that, the President's trade negotiating authority expired and has not been renewed. Fast-track authority had been instrumental in negotiating and implementing five major trade agreements. Two of those five agreements were multilateral agreements reached during the Tokyo Round and the Uruguay Round negotiations in the GATT. The other three agreements were free trade agreements: the U.S.-Israel free trade agreement, which was negotiated under special authority in the Trade and Tariff Act of 1984 (P.L. 98-573); the U.S.-Canada Free Trade Agreement; and the North American Free Trade Agreement. No agreement was disapproved under fast-track procedures. Stalemate on Fast-Track Renewal During the 104th Congress (1995-1996), President Clinton proposed an extension of fast-track authority for agreements reached before December 31, 1999, with a two-year extension beyond that date if the President requested the extension and Congress did not pass a disapproval resolution. The President's intent was to use fast-track authority to extend the North American Free Trade Agreement to Chile. Democrats supported the President's proposal. A Republican-supported alternative was approved by the House Ways and Means Committee on September 21, 1995. This bill, H.R. 2371 (H.Rept. 104-285, Part 1), listed five principal negotiating objectives, but omitted objectives related to labor and environmental standards. H.R. 2371 would have limited fast-track implementation to provisions that are "directly related" to the specified principal negotiating objectives, unlike previous fast-track authorization, which provided for fast-track consideration of provisions that are "necessary and appropriate" in the President's discretion to negotiate trade agreements that include areas that are not specified in the fast-track authorization. Under the proposal, if negotiators went beyond the mandated objectives, fast-track implementation could be denied. The bill did not reach floor vote. Disagreement over the inclusion of labor and environmental issues was a major reason why fast-track authority was not renewed in the 104th Congress. A major push to enact fast-track legislation occurred during the 105th Congress (1997-1998). In the first half of 1997, President Clinton did little on a fast-track bill because of attention to the budget and other priorities. In spite of warnings from both Democrats and Republicans, he waited until after Labor Day to submit a proposal to Congress. He submitted his proposal on September 16, 1997. The proposal was met with criticism by both Democrats and Republicans. Many Democrats opposed the proposal because it did not include labor and the environment in the core objectives. Many Republicans said that they did not want to include labor or the environment in the agreement at all. Two weeks later, on October 1, 1997, the Senate proceeded more quickly. The Finance Committee reported out S. 1269 (S.Rept. 105-102). The bill included labor and the environment only as they related to trade, and limited fast-track to provisions that were necessary for the implementation of the agreement, not "necessary or appropriate." In early November, the Senate approved a motion to proceed to floor consideration, but stopped there to wait for the House to act. On October 8, 1997, the House Committee on Ways and Means approved H.R. 2621 (H.Rept. 105-341, Part 1), which was similar to the bill in the Senate. The committee vote was 24-14, with only 4 of the 16 Democrats on the Committee voting for the bill. Republicans wanted President Clinton to assure at least 60-80 votes on the floor, but this was never attained. Labor interests had been lobbying hard, and few Democrats wanted to support the measure. Some Democratic Members urged a floor vote to try to get the undecided Members to commit. House Speaker Gingrich agreed, and set the floor vote for November 7th then delayed it to Nov. 9th. President Clinton lobbied hard, but there were not the votes for passage, and House Speaker Gingrich and President Clinton agreed to hold off on the floor vote. House Speaker Gingrich reportedly said that the vote was about 5-25 votes short of passage. The following year, on July 1, 1988, the Senate Finance Committee voted 18-2 to approve S. 2400 (S.Rept. 105-102), a comprehensive trade bill that included essentially the same fast-track provisions that the Committee had approved the year before (S. 1269) plus other trade programs such as trade preferences for sub-Saharan Africa and the Caribbean and renewal of the Generalized System of Preferences. (Democrats in the House had opposed the idea of a comprehensive bill the year earlier.) S. 2400 did not reach the Senate floor. On July 23, 1998, House Speaker Gingrich announced that a vote would be scheduled on fast-track legislation that September. President Clinton and some Democratic Members opposed a vote that close to the November elections. They wanted the vote postponed until the next year. Some Republicans claimed that the Democrats did not want to vote for trade authority against their labor supporters just before an election. Democrats claimed that the Republicans scheduled the vote to get agriculture and business support and to hurt the Democrats. On September 25, 1998, the House voted down fast-track bill H.R. 2621 by a vote of 180-243. The vote was along strongly partisan lines. Some observers had wondered if the bill's defeat would hurt the international markets, but that did not happen. Some also wondered whether the vote might hurt prospects for fast-track legislation in the future, since it might be hard for Members to reverse their votes. During the 106th Congress (1999-2000), there was little done on fast-track renewal. In 1999, the Senate Finance Committee considered the idea of another omnibus trade bill with fast track provisions, but decided to split up the proposals and didn't act on fast-track. With the presidential election in 2000, there was virtually no activity on fast track that year. Developments During the 107th Congress From its start, the Bush Administration has made trade negotiating authority a priority of its overall trade policy. During his February 27th State of the Union address, President Bush said, "Each of the previous five Presidents has had the ability to negotiate far reaching trade agreements. Tonight I ask you to give me the strong hand of presidential trade promotion authority, and to do so quickly." On May 10th, the Administration outlined its 2001 legislative agenda for trade, with trade negotiating authority the top priority (see below). The Administration has introduced a new phrase to replace the term "fast-track authority." During his January 30th confirmation hearing, U.S. Trade Representative (USTR) nominee Robert Zoellick said that he would promptly follow up with the Senate Finance Committee and the House Ways and Means Committee "to consider how to reestablish trade promotion authority for the President, based on the fast-track precedent and the broadest possible support." The term "trade promotion authority"is now widely used interchangeably with "fast-track authority." In considering negotiating authority for the President, the 107th Congress may seek a compromise on how labor and the environment should be treated in trade agreements. Some Members support fast-track reauthorization, but only with strong labor and environmental provisions. They maintain that high domestic labor and environmental standards put U.S. producers at a competitive disadvantage, and that increased trade with countries with lax standards may lead to pressure to lower U.S. standards. Other Members favor excluding labor and the environment and limiting the authority for fast-track implementation to provisions that relate strictly to removal of trade barriers. They are concerned that, if trade agreements allow trade sanctions to be used to enforce environmental and labor rules, such sanctions might be used as protectionist barriers. Some Members view the U.S.-Jordan free trade agreement (FTA) as a model for how to address labor and the environment in future agreements, although it has yet to be approved by Congress. The FTA includes provisions on labor and the environment in the main text of the agreement, unlike the side agreements of the NAFTA. It allows a party to call on the agreement's dispute settlement provisions where the other party fails to effectively enforce its national labor and environmental laws in a manner affecting trade between the parties. Others point to the Canada-Chile free trade agreement, which includes monetary penalties for violation of labor and environment provisions. USTR Zoellick and several Members emphasize there is no one-size-fits-all model and support a "toolbox" approach that offers a variety of solutions from which to choose. In addition to treatment of labor and the environment, another issue is the legislative form for a fast-track bill. The Administration has proposed folding trade negotiating authority for the President into an omnibus trade package that would include approval of the bilateral trade agreements with Jordan and with Vietnam, renewal of the Generalized System of Preferences enhanced trade preferences for Andean countries, and other trade provisions. Most Democrats oppose this "bundling" proposal. They insist that the bilateral agreements must be considered separately first, as a way to build confidence between the Administration and Congress. Trade negotiating authority, they say, should be brought up later on its own. There are now individual bills in Congress that would renew fast-track authority. Two bills (S. 136, S. 599) would extend the trade agreement negotiating authority and fast-track procedures of the 1988 Trade Act. That Act included worker rights among its principal objectives, but had no provision for the environment. S. 136, introduced by Senator Gramm, would extend the authority of the 1988 Trade Act through the end of 2004. S. 599, introduced by Senator Roberts, would extend the authority permanently. Representative English introduced H.R. 1446, which would extend fast trade procedures permanently if a newly established Commission on Labor and the Environment submitted a report to the President and Congress, and the President received prior authorization from Congress, before the start of negotiations. The bill would exempt agreements under the WTO. Some bills propose fast-track trade negotiating authority for specific agreements. S. 137 (Gramm) would authorize negotiation of free trade agreements with countries of the Americas. S. 140 (Gramm) would authorize negotiation for the accession of the United Kingdom to the North American Free Trade Agreement. S. 138 (Gramm) and S. 586 (Dodd) would authorize negotiation for the accession of Chile to the North American Free Trade Agreement. On May 10th, President Bush provided Congress with an outline of his 2001 legislative agenda for international trade. He placed trade promotion authority (TPA) at the top of the agenda. The agenda also included worker training and education, implementation of the U.S.-Jordan Free Trade Agreement, renewal of the Andean Trade Preference Act, reauthorization of the Generalized System of Preferences, bilateral agreements with Vietnam and Laos, and legislation providing trade benefits for southeast Europe. The President's proposal for TPA (see box) states that the authority would be used for a new WTO round, a Free Trade Area of the Americas agreement, and other regional and bilateral negotiations, including free trade agreements with Chile and Singapore. The proposal lists 13 negotiating objectives. One objective encourages protection of children and adherence to core labor standards, and another encourages mutually supportive trade and environmental protection policies, both "in a manner consistent with U.S. sovereignty and trade expansion." (Exact wording of these two objectives is shown in the box.) The Administration proposes that additional measures be taken into account when making decisions on negotiations. It also affirms that Congress and advisory committees would be consulted at key stages of each negotiation. The proposal does not include a definite time period for the authority, rather "a sufficient time" for various negotiations. It also includes authority to reduce tariffs. Along with the legislative agenda, the President submitted an illustrative list identifying a "toolbox" of actions the United States could take together with trade negotiations. Examples of toolbox actions include using labor standards in existing trade programs, employing U.S. assistance programs to encourage enforcement of labor standards, and strengthening the ability of the International Labor Organization to hold member countries accountable for violations of core labor standards. Regarding the environment, examples include improvement in the effectiveness of United Nations environmental programs, highlighting in the National Trade Estimate report measures that hurt the environment, and using the U.S. Export Import Bank to build enforcement of environmental protection laws. The reaction in Congress to the President's proposal has been mixed. Senator Grassley, Chairman of the Senate Finance Committee, said, "The President's agenda includes a lot of fresh ideas about how to address concerns about labor and the environment in trade agreements." However, a spokesperson for Senator Baucus, the leading Democrat on the Finance Committee, reportedly said, "...there's a long way to go to ensuring that labor and environmental concerns are properly addressed...." The AFL-CIO expressed disappointment with the proposal, while the high-tech sector praised it. Action on fast-track legislation might occur during the rest of this year. Chairman Grassley has said that the Finance Committee might act on trade negotiating authority in June. Senate leadership has announced that a trade bill probably will not be considered before the fall. The Administration has said that it would like to have trade promotion authority approved by the end of the year. H.R. 1446 (English)
S. 136 (Gramm) S. 599 (Roberts, et al.)
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS U.S. Congress. House. Committee on Agriculture. Subcommittee on General Farm Commodities. Fast track trade negotiating authority. Hearing, 105th Congress, 1st session. Sept. 23, 1997. U.S. Govt. Print. Off., 1997. 133 p. U.S. Congress. House. Committee on Ways and Means. Reciprocal Trade Agreement Authorities Act of 1997. Report together with dissenting views to accompany H.R. 2621, October 23, 1997. H.Rept. 105-341, Part 1. 105th Congress, 1st session. U.S. Govt. Print. Off., 1997. 48 p. U.S. Congress. House. Committee on Ways and Means. Subcommittee on Trade. Implementation of Fast Track Trade Authority. Hearing, September 30, 1997. Serial 105-65. 105th Congress, 1st session. U.S. Govt. Print. Off., 1999. 184 p. ----- The Importance of Trade Negotiations. Hearing, February 11, 1999. Serial 106-61. 106th Congress, 1st session. U.S. Govt. Print. Off., 2000. 51 p. ----- Importance of Trade Negotiations in Fighting Foreign Protectionism: Active U.S. Involvement. Hearing, March 4, 1999. Serial 106-71. 106th Congress, 1st session. U.S. Govt. Print. Off., 1999. 110 p. ----- United States Negotiating Objectives for the WTO Seattle Ministerial Meeting. Hearing, August 5, 1999. Serial 106-52. 106th Congress, 1st session. U.S. Govt. Print. Off., 2000. 372 p. U.S. Congress. Senate. Committee on Commerce, Science, and Transportation. President's request for fast track trade negotiating authority. Hearing, 105th Congress, 1st session. Sept. 30, 1997. U.S. Govt. Print. Off., 1998. 79 p. U.S. Senate. Committee on Finance. Reciprocal Trade Agreements Act of 1997. Report together with additional views to accompany S. 1269, October 8, 1997. S.Rept. 105-102. 105th Congress, 1st session. U.S. Govt. Print. Off., 1997. 34 p. 1934 - In the Reciprocal Trade Agreements Act of 1934, Congress begins a policy of delegating authority to the President to negotiate tariff agreements within limits and to implement the new tariff levels by proclamation. 01/03/75 - The Trade Act of 1974 is enacted. Under the Act, Congress continues to delegate to the President the authority to negotiate tariff agreements and implement them by proclamation. Congress also delegates to the President the authority to negotiate nontariff trade agreements subject to consultation and notification requirements. For nontariff agreements reached by specified deadlines, Congress agrees to consider such agreements under an expedited ("fast track") procedure. 04/16/94 - After almost continual reauthorization since 1975, the President's trade negotiating authority expires. 11/05/97 - The Senate agrees to proceed to floor consideration of fast-track bill S. 1269 by a vote of 68-31. There is no floor action on the bill. 11/10/97 - House leadership, in agreement with the Administration, decides not to proceed with floor consideration of fast-track bill H.R. 2621. 07/21/98 - The Senate Finance Committee approves omnibus trade bill S. 2400, which includes the provisions of fast-track bill S. 1269 and other trade measures. 09/25/98 - The House disapproves H.R. 2621 by a largely partisan vote of 180-243. The Administration opposed the vote. 10/24/00 - The U.S.-Jordan free trade agreement is signed. The agreement's labor and environment provisions become a focus of congressional debate on fast-track authority. 02/27/01 - In his State of the Union speech, President Bush asks Congress to quickly give him presidential trade promotion authority. 05/07/01 - In a speech to the Council of the Americas, President Bush urged the Congress to restore authority to negotiate trade agreements. He also says he will send the outline of his trade agenda to Congress within the week. Destler, I. M. and Peter J. Balint. The New Politics of American Trade: Trade, Labor, and the Environment. Institute for International Economics. Policy Analyses in International Economics. October 1999. 66 p. Negotiating trade agreements: presidential fast track authority; pro and con. Congressional digest, v. 76, Dec. 1997: whole issue (289-320). Slow road to fast-track: does it matter? The Economist (US), Oct 3, 1998; v. 348, n. 8088. p. S32. CRS Report 97-817, Agriculture and fast track trade legislation, by Geoffrey S. Becker and Charles E. Hanrahan. CRS Report 97-41, Fast-track implementation of trade agreements: history, procedure, and other options, by Vladimir N. Pregelj. CRS Report 98-888 (pdf), "Fast-track" or expedited procedures: their purposes, elements, and implications, by Stanley Bach. CRS Report 97-943 (pdf), Fast-track trade authority proposals: which environmental issues are included in the principal negotiating objectives?, by Arlene E. Wilson. CRS Report 97-861, NAFTA labor side agreement: lessons for the worker rights and fast-track debate, by Mary Jane Bolle. CRS Report 97-896, Why certain trade agreements are approved as congressional-executive agreements rather than as treaties, by Jeanne J. Grimmett. CRS Report 96-661 (pdf), Worker rights provisions and trade policy: should they be linked?, by Mary Jane Bolle. CRS Report 96-661 (pdf) E. Return to CONTENTS section of this Issue Brief. |
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