by I. M. Destler, Peterson Institute for International Economics
Testimony before the Subcommittee on Trade Committee on Ways and Means
United States House of Representatives
September 30, 1997
Fast track is one of the great innovations of the past quarter-century in the Congressional process, doing for trade policy what the budget process has done for taxes and spending. Thus my basic conclusion is a simple one—fast track is should not only be renewed; it should also be made permanent. Since its inauguration in the Trade Act of 1974, it has effectively bridged the division of power between the two branches. It gives executive branch (USTR) negotiators needed credibility to conclude trade agreements by assuring other nations' representatives that Congress won't rework them; it guarantees a major Congressional role in trade policy while reducing members' vulnerability to special interests.
The second point is worth elaborating, for as I explain in my new study, fast track is a Congressional, not an executive branch invention. It was developed when Congress rejected a procedure the Nixon administration had proposed and substituted one where Congress retained the power of final up-or-down action on trade agreements which reduce non-tariff barriers.
Fast-track in practice, as actually carried out, has reinforced the Congressional role. Beginning with the Tokyo Round in 1979, members have insisted on playing an active part in the drafting of Presidential implementing bills. Your committee and its Senate counterpart participate in drafting sessions labeled “non-markups,” and Presidents from Clinton to Carter have included the Congressionally-recommended language in their non-amendable implementing legislation.
But despite the efforts of this committee, President Clinton has lacked this trade-negotiating authority for three-and-a-half years—from April 15, 1994 to the present. The longest previous period since 1974 when a President lacked this authority was less than eight months, from January 3rd to August 23rd 1988. It is past time for the President and Congress to agree on a formula for fast-track extension and end this very bad situation.
Why does the United States need fast-track now? The general answer is that market-expanding trade negotiations enable our government to shape the terms of globalization to the advantage of Americans. Globalization itself is inevitable: blocking fast track will not stop it, just as the absence of fast track hasn't stopped it over the past three-and-a-half years. But in an age where the US economy depends more and more on export expansion for its dynamism, and where export jobs are especially good jobs—paying more, offering benefits superior to jobs in import-competing industries—we need to empower our trade negotiators to strike deals which bring down foreign import barriers, which in most cases are much greater than our own.
The specific answer to the “why now” question is that there is an important negotiating agenda which requires fast-track for its effective pursuit: free trade with Chile and other steps toward a Free Trade Area of the Americas (FTAA); scheduled negotiations under the World Trade Organization presenting particular opportunities for the United States (in agriculture, services, and other economic sectors); and opportunities for market liberalization with East Asia, especially with nations in the Asia-Pacific Economic Cooperation (APEC) forum.
What should be the content of the fast-track legislation? At minimum, it should give the President and USTR a negotiating mandate through the current Presidential term, with provision for extension—both the President and this committee have proposed such a time period. I have set forth a more ambitious proposal in my book, and I will get to this in a minute. But to make it clear where I stand, I think fast track should be extended whether or not the specific refinements I propose are adopted. I find it hard to imagine a proposal that the President and the pro-trade forces in Congress can agree on that would not be a major improvement on the present situation.
That being said, I have made several specific proposals in my new book, and I will summarize them here. I believe that Congress should:
1) Recognize the permanence of US engagement in the global economy by making fast track permanent. Congress should write fast-track into law without a time limit. Sixty-three years after the Reciprocal Trade Agreements Act of 1934, it is time to recognize that trade-expanding negotiations are the ongoing policy of the United States.
2) Assure effective Congressional oversight by providing that Congress must authorize, in advance, the specific negotiations to which fast track applies. This was the way fast track worked initially—the two major laws, those of 1974 and 1988, were written for the multilateral Tokyo and Uruguay Rounds. Things grew more complicated, however, when the authority was broadened to include free-trade agreements. No one anticipated when Congress acted that Mexico would seek a such an agreement, and Congress didn't get a truly clean shot at that before the agreement was completed. This weakened, I believe, the legitimacy of the fast-track process. My proposal would prevent a recurrence, and buttress fast track's legitimacy.
When I say Congress should authorize in advance, I don't mean that the Clinton administration should have to come back later to get approval for its current trade agenda. The bill enacted this year, or early next, should in my view include both a permanent reenactment of fast-track process and explicit authorization for its use for a range of negotiations, which would be clearly indicated. This authorization could be very specific—free trade with Chile—or more general—any agreement advancing free trade with Western Hemisphere countries, if Congress wished to endorse that general policy direction. It should certainly include the sectoral negotations on the WTO's current schedule. The point is that administration should make a case for what negotiations it wants to be free to initiate under fast track, and Congress should review that case and decide whether and to what extent to endorse it.
My proposal is not without its disadvantages—there are problems, in the words of one critic, with having Congress ”vote twice on everything,” once at each end of a negotiation. It could reduce the administration's negotiating flexibility. On the other hand, if Congress had voted explicitly to authorize NAFTA—standing alone—in 1991, and I believe it would have, the vote in 1993 would probably have been a bit easier. And if my proposed formula had been in effect since 1994, it is highly likely we'd have negotiated free trade with Chile: the administration would have proposed it, and Congress would surely have approved. So I think that, on balance, a permanent, two-tiered fast-track law is best for trade and for democratic process.
3) Find a constructive compromise on labor and environmental issues. As stated, this may strike you as neither brilliant nor helpful. But it reflects a conviction first, that these issues are too important to be ruled out and second, that there is currently neither national nor international consensus in favor of including, in trade agreements, binding provisions on labor and environmental standards enforced by the threat of trade sanctions.
Clearly globalization affects US workers and the environment, sometimes adversely. The nation and the world need to confront these connections if workers are to win an equitable share of the gains from trade, and if trade is to reinforce, rather than undermine, steps toward a better global environment. Hence we should explore whether some problems in these spheres that are clearly trade-related can be addressed by the trade negotiating process.
But the short-term yield of any such negotiations, particularly on labor standards, is likely to be modest. Nor is it clear that trade negotiations are, in most cases, the best arena for addressing these problems. The circumstances, therefore, demand a compromise. The Clinton administration proposal represents one genuine effort in this direction; this committee has suggested another. My sense is that, in their practical impact, the two are not very far apart. If the political will is there, I am sure you can reach common ground which recognizes that first, the Clinton administration will (and, I believe, should) continue to raise these issues internationally and second, that any viable agreements on labor and environmental standards will require bipartisan support, including some support within the business community.
4) Develop, along with action on fast-track, a serious program to help American workers make the most of globalization. Many workers gain from globalization, but many do not. International agreements on labor standards, even if achievable, are unlikely to have more than minuscule impact on those who are hurt. Much more relevant to their immediate situation is actions we can take within the United States. Therefore, President Clinton and Congress should complement the enormous emphasis he has put on expanding opportunities for higher education with a broad new effort to give workers the wherewithal to engage in the marketplace even when forced to change jobs. Apprenticeship and retraining assistance should be available to all in need, specifically including those disadvantaged or displaced by trade and globalization.
5) Narrow the provision in prior legislation that fast-track implementing bills can contain any provision “necessary or appropriate” to carrying out a trade agreement—it is too permissive. But I think it would be unfortunate to eliminate all flexibility here—either by confining legislation to what is clearly “necessary” or by drawing a tight connection between the implementing bill and statutory negotiating objectives. A solution may lie in a combination of measures:
I also suggest opening fast-track implementing bills to amendment on the money provisions required under Congressional rules to offset the budgetary impact of loss of tariff revenue.
Let me conclude as I began. Fast track procedures have served the nation well. They have made it possible for the executive branch to negotiate credibly on complex, non-tariff trade measures that require Congressional action to implement. They have protected Congress's democratic, constitutional role. They need renewal now so that the Clinton administration, working with the Congress, can move US trade policy foward once again.