The Senate approved the much-debated, and delayed, trade promotion authority (TPA) bill just in time to head off for the Memorial Day recess. The fate of the bill in the even more fractious House of Representatives remains uncertain, as does the US role as leader of an open, rules-based trade system.
TPA allows Congress to articulate objectives and consultation procedures for the negotiation of US trade agreements. And it assures trading partners that Congress will vote on the final deal in a set period of time and without amendments. President Obama wants TPA now to help him conclude the negotiations to create a Trans-Pacific Partnership (TPP) trade deal that would lower barriers and create new trade rules for the 12 Pacific Rim countries negotiating it. But many Democrats in Congress oppose TPP, and TPA to facilitate it, because of concerns about the impact on jobs, wages, and inequality.
In CGD’s 2008 book, The White House and the World, I devoted substantial space to discussing the need for stronger domestic policies to bolster the US commitment to a liberal trade policy. I argued that policymakers need to strengthen the safety net for those left behind by globalization and provide all Americans with “the tools needed to grasp globalization’s opportunities,” such as access to quality education, and pension and healthcare benefits that are not tied to one’s job.
The Council on Foreign Relations’s Edward Alden recently offered a similar argument for why this year’s TPA debate is so charged:
The argument in favor of freer trade, and it’s a powerful one, is that the aggregate benefits outweigh the costs. But success in a more competitive global economy requires a commitment to help the losers as well – through job retraining, income assistance, targeted subsidies and other measures that soften the blow.
But as Alden also pointed out — the title of his piece is “Stuck in a Time Warp on Trade” — this debate is not a new one. Almost two decades ago, President Clinton was negotiating the Free Trade of the Americas when he tried, and failed, to get fast track legislation from a Republican-majority Congress. E.J. Dionne’s column from November 14, 1997, paraphrased Barney Frank (former Democratic congressman from Massachusetts) on why so few Democrats were willing to support the president:
If business and the administration want more open trade … the socially responsible (and politically necessary) trade-off is to offer real help to those who, with reason, fear it most — families in vulnerable economic situations.
Frank explained bluntly: "We're in a bargaining situation…. We're willing to hold globalization hostage to equity."
President Clinton never did get fast track legislation and the Free Trade of the Americas agreement never came to fruition. In 2002, trade promotion authority sought by President George W. Bush squeaked through a Republican-led Congress by just 3 votes and with only 27 Democrats voting in favor.
Today, inequality is higher, and the safety net for American workers and their families is more fragile than ever. Failure to pass TPA would be a blow to America’s global leadership, and therefore to developing countries that depend on an open trade system. Sadly, that could be another result of ignoring trade’s losers for so long.