Restoring Congressional Oversight of International Trade Agreements: The Trade Act of 2009 by Matthew Bohenek

The Trade Reform, Accountability, Development, and Employment (TRADE) Act of 2009, filed by Representative Michael Michaud and Senator Sherrod Brown, proposes to add extra Congressional oversight to trade agreements that are currently negotiated with little such oversight by agents of the executive branch, in particular the United States Trade Representative.  Some of these trade agreements, while removing barriers to global trade, can have unintended consequences on local, state, and national policies that are unrelated to the goals of trade.  For example, some provisions of the General Agreement on Trade in Services could render federal, state, or local regulation of issues such as online gambling or the siting of liquefied natural gas terminals moot, effectively requiring that any regulations be only as restrictive as those of the least restrictive signatory to the Agreement.  This could essentially subjugate the authority of state and local, and even federal policymakers to international actors who are not accountable to the American people on matters of critical local importance.  Subordinating matters such as regulation of online gambling to federal interests in liberalizing international trade raises legitimate federalism concerns.

Both the legislative and executive branches have authority under the Constitution that relates to the formation of trade policy.  Congress’s authority in this arena derives from the express constitutional authority to “lay and collect .  .  .duties” and to “regulate commerce with foreign nations.”[1]  The House Ways and Means Committee and the Senate Finance Committee exercise primary responsibility over trade matters.[2]

The President’s authority over trade policy derives from the express constitutional authority to make treaties with foreign nations subject to the approval of two-thirds of the Senate.[3]  With regard to international trade, the President can only exercise authority to regulate foreign commerce as “Congress’ ‘agent’.”[4]

Congress first delegated authority to the president to negotiate reductions in tariff barriers in the Reciprocal Trade Agreements Act of 1934.[5]  Under the authority provided by this act, the President could negotiate and implement reciprocal reductions in tariffs without needing to pass legislation.[6]

In the Trade Act of 1974, Congress expanded upon the Reciprocal Trade Agreements Act of 1934, delegating to the president the authority to negotiate nontariff trade barriers, effectively allowing the President to negotiate multinational trade agreements.[7]  In addition to expanding this delegation of negotiating authority, Congress also established what came to be known as fast-track procedures, which expedited Congressional consideration of such agreements, provided that the President met certain criteria.[8]

Fast-track negotiating authority was in effect from 1974 until it expired in 1994, and again from 2002-2007;[9] during the periods under which fast track was in effect, the United States approved not only the Uruguay Round of negotiation (which essentially created the World Trade Organization and the General Agreement on Trade in Services), but also bilateral trade agreements with countries such as Chile, Singapore, Australia, Morocco, Bahrain, and Oman, as well as the North American Free Trade Agreement.[10]

The TRADE Act of 2009 (hereinafter, “the Act”), proposed by Representative Michael Michaud and Senator Sherrod Brown would take a number of steps to increase Congressional oversight of international trade agreements to which the United States is a party.             The overarching objective of the Act is to reform the United States’s international trade policy; the Act purports to “mandate trade pact reviews, establish standards, protect workers, and help restore congressional oversight of future trade agreements.”[11]  In brief, this multifaceted piece of legislation not only looks ahead to determine a framework for what must be included in future trade agreements, but also requires the President to review past agreements to bring them in line with this framework, as set forth in the Act.

While fast-track negotiating authority facilitates the creation of international trade agreements between the United States and other nations across the world by allowing the president the flexibility to be responsive to the concerns of the nation(s) with which the president is negotiating and the credibility by which other nations may rely on such negotiations (through the likelihood that such agreements will be approved by Congress), it also significantly diminishes Congress’ role in making informed, deliberate, and deliberative policy choices and weighing them against international trade concerns.  The consolidated timeline for committee consideration and for floor debate under fast-track leaves Representatives and Senators with very little time to weigh the interest served by the final negotiated agreement (very broadly defined) against federal and state priorities.  The pressure of voting up-or-down for a trade agreement where the ramifications are adverse, unknown, or inadequately evaluated puts Congress in a difficult position.  Congress’ hasty enactment of implementing legislation can ultimately leave policymakers in the unenviable position of making a post hoc choice between abandoning strong national priorities (such as anti-gambling laws) to remain in compliance with international trade agreements, adhering to the national priorities but facing sanctions for violating international trade agreements, hurting imports and harming American business, or finding a compromise that might leave the United States vulnerable.  The TRADE Act should be refiled and passed by Congress because it restores Congress’ role in the implementation of international trade agreements while still allowing for the type of flexibility that the president needs to actually negotiate.

[1] U.S.  Const.  art.  I § 8, cl.  1, 3.

[2] Staff of H.  Committee on Ways and Means, 111th Cong., Rules of the Committee on Ways and Means for the 111th Congress Rule 8.1 (Comm.  Print 2009); Raymond J.  Ahearn, Congressional Research Service, Trade Primer: Qs and As on Trade Concepts, Performance, and Policy 14 (2010).

[3] U.S.  Const.  art.  II § 2, cl.  2 (“He shall have power, by and with the advice and consent of the Senate, to make treaties, provided two thirds of the Senators present concur”).

[4] Canadian Lumber Trade Alliance v.  United States, 30 Ct.  Int’l Trade 391, 426 (2006) (citing Field v.  Clark, 143 U.S.  649, 692–94 (1892)).

[5] 19 U.S.C.  § 1351(a) (2006); see also Carolyn C.  Smith, Congressional Research Service, Trade Promotion Authority and Fast-Track Negotiating Authority for Trade Agreements: Major Votes 1 (2007).

[6] 19 U.S.C.  § 1351; see also Lenore Sek, congressional Research Service, Trade Promotion Authority (Fast-Track Authority for Trade Agreements): Background and Developments in the 107th Congress 2 (2003).

[7] 19 U.S.C.  § 2191 (2006); see also Jeanne J.  Grimmett, Congressional Research Service, Why Certain Trade Agreements are Approved as Congressional-Executive Agreements Rather Than as Treaties 2 (2008); Smith supra note 9 at 1.

[8] 19 USC § 2191; see also Smith supra note 9 at 1.

[9] Staff of S.  Committee on Finance, 110th Cong., Trade Promotion Authority Annotated (Comm.  Print 2007) available at[1].pdf. 

[10] See Smith, supra note 9.

[11] See Michaud Press Release, supra note 92.

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