TWN Info Service on Free Trade Agreements

13 March 2008


Bush, USTR Have No Authority to Bind US to Trade Deals

Trade talks in the WTO are gaining pace with the aim to conclude the Doha round by this year. However, according to the analysis below, the Bush administration has no authority to bind the US to any trade deals, meaning that whatever the US agrees to will have no legal basis. A future US president and Congress would not be bound to any such agreement initialed or signed by President Bush or the US Trade Representative.

This situation also applies to the proposed bilateral trade deal between Malaysia and the US whereby the US is trying to wrap up talks and conclude a deal by this year (http://www.bernama.com.my/bernama/v3/news_business.php?id=320297), even though its 'Fast Track' authority has expired with no prospects of another to be issued this year.

Despite the lack of authority, and the possibility that any agreement reached now would fail to pass Congress, the US may still successfully extract concessions from Malaysia in these FTA negotiations, which it could then continue to insist that Malaysia concedes to in future. It is therefore a very important reason why the Malaysia-US FTA talks should not proceed.

The article below was published in the South-North Development Monitor (SUNS) on 11 March 2008. It is reproduced here with permission.


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South-North Development Monitor (SUNS) #6432 Tuesday 11 March 2008


Trade: USTR and Bush Administration have no authority to sign Doha deal

Washington DC, 10 Mar (Lori Wallach*) -- Media and other reports out of Geneva on activities at the World Trade Organization, and public pronouncements of trade officials, suggest that yet another scenario on how the Doha Round could be completed and signed this year is now being promoted and circulating among WTO delegations.

Such a scenario is entirely implausible, given current US legal and political realities.

The Bush administration currently has no Congressional authority to sign a Doha Round trade agreement. Between now and the end of this session of Congress in September 2008, there is no prospect that Congress will provide President Bush such authority.

It is increasingly bizarre that WTO Doha Round negotiations have continued, given negotiations do not normally take place unless all parties have authority to make a deal.

If WTO countries were pushed into a deal this year and Bush administration officials "initialed" such a deal, say in December, that deal would have no US legal authority. A future US president and Congress would not be bound to any such agreement initialed or signed by President Bush or the USTR.

PRESIDENT BUSH HAS NO AUTHORITY TO BIND THE UNITED STATES TO A DOHA ROUND DEAL

A US president may negotiate at will, but the United States can only be bound to a trade agreement through a vote of Congress; and a US president may enter into international trade agreements prior to such a congressional vote only when Congress has explicitly delegated to the President the authority to do so. This is because of specific features of the US Constitution that create "checks and balances" designed to ensure that no one branch of US government has undue power over the others.

The US Constitution (Article 1-8) grants the legislative branch - Congress - exclusive authority "to regulate commerce with foreign nations" and to "lay and collect taxes, duties..." The US Constitution gives exclusive authority to the Executive Branch - the president and his administration - to conduct relations with foreign sovereigns.

Through the years, Congress has created various means to delegate to the president the authority to enter into a trade agreement. (For instance, Congress has granted what is called "tariff proclamation authority" which delegates to the President the right to enter into agreements that cut tariffs within certain parameters without requiring Congress to approve each deal.) Although it has only been used twelve times out of hundreds of US trade agreements, the mechanism best known internationally is Fast Track.

Fast Track is an extraordinary process under which the Congress authorizes the president to sign trade agreements committing the United States to the terms of the deal before Congress votes on the deal. Congress must still approve whatever agreement is so entered into, but under Fast Track, the President is given the authority to bind the United States to the terms of a deal by initialing (or later signing) it - locking in the terms of the agreement. When an agreement is thus signed and sent to Congress, under Fast Track, Congress is required to vote on whatever agreement the President signed within a certain specified period of time, with limited debate and no amendments. It can only vote "yes" or "no".

President Bush's Fast Track authority ended on June 30, 2007. Congress has refused to grant him new Fast Track or otherwise provide him with a delegation of Congress' exclusive constitutional trade authority. Mechanisms other than Fast Track could have been provided. However, since Fast Track concentrates so much power in the hands of the president, it is unlikely that the exact same Fast Track delegation of authority that has been used in the past will be again granted to any future president.

The real issue is not whether a US president has Fast Track authority, but whether a US president has any authority from Congress to enter into an agreement. This means that while other countries' signatures on or initialing of a final deal would bind them - including to whatever final concessions they offered - after June 30, 2007, President Bush's signature or initialing of an agreement does not bind the United States to the agreement's terms. Basically, President Bush's signing or initialing an agreement, without authority from Congress to do so, is merely his personal consent to the deal, but does not in any way bind the United States, given under the US Constitution only Congress - or a president who has been delegated such authority by Congress - can do so.

Of course, the approval processes for trade agreements in many WTO signatory nations require that a signed agreement must be approved by parliaments and this raises the prospect that a signed agreement could be rejected. However, what is different in this context is that a future US president and Congress would not be bound to the contents of a deal signed by President Bush without Congress' authority. In contrast, if President Bush had been delegated authority from Congress to bind the United States to a deal by his signature, then under the now-expired Fast Track procedure, it would become the responsibility of the next president to present the deal as signed to Congress and Congress would be forced to vote on it within a set number of days with no amendments allowed.

In practical terms, Bush's lack of authority means that Congress could simply refuse to consider and vote on a deal that Bush signs now; this means it would not go into effect for the United States with implications on whether it would go into effect for other WTO signatory nations and/or whether the new president could return to the WTO negotiating table asking for alterations to the agreement so that it becomes something he or she is willing to obtain proper authority to sign and bring to Congress. As US negotiating partners consider whether to offer final concessions in coming weeks, it is important for them to understand that the US Trade Representative or President's unauthorized consent to whatever deal might be made does not bind a future president to that deal nor does it require Congress to vote on such a deal.

Some analysts have noted that the United States has entered into numerous trade agreements - over one hundred during the Clinton presidency alone - without the use of Fast Track. No doubt trade agreements that do not require tariff cuts or changes in US law can be entered into without a vote by Congress. But, if a president negotiates a trade agreement without some form of delegated authority from the Congress, then that agreement's contents are only locked in place when Congress has approved the agreement. An example of such an approach was the US-Jordan Free Trade Agreement, which was passed by Congress in 2001 without Fast Track under normal congressional procedures. Passing an agreement through normal congressional procedures requires that the contents of the agreement are broadly supported by Congress.

It is worth noting that many Republican Senators, who might otherwise be inclined to support a Doha deal that favoured US corporate interests, have joined Democrats in opposition to the Rules texts (in the Doha round) regarding certain anti-dumping and CVD rules. Other Senators and Representatives have issued expansive demands for new USagricultural market access and have opposed any non-reciprocal tariff cuts.

In a parliamentary form of government, where the prime minister, or a ruling coalition, has a parliamentary majority, the prime minister controls what legislation comes to the parliament for a vote. However, in the United States, whether an initiative of a president is even brought to the floor of each chamber of Congress for a vote is decided by each chamber. The reason that so many in Congress have come to oppose Fast Track is because it eliminates the normal congressional procedures that create incentives for the president to consult on the front end with Congress about the contents of US trade agreements. For an agreement to be approved under normal congressional procedure, the chairs of relevant House and Senate committees (trade, agriculture, commerce, etc.) must agree to review an agreement, write implementing legislation and pass such legislation out of the committees.

If the committees have been involved in negotiations and thus support the agreement, this process could occur in a timely fashion and then the implementing legislation would move towards the House and Senate floors. Given that President Bush has largely circumvented the committees regarding Doha Round negotiations, the committee process could pose a significant obstacle. This disconnect may be most evident regarding agriculture. The Congress sets US agriculture policy. The congressional agriculture committees are now finalizing a Farm Bill that bears little resemblance to what the Bush Administration is pushing on agriculture in Doha Round negotiations. If the committees do not report out implementing legislation, the process of approval ends there.

If the committees report out legislation, then the leaders of the House and Senate must agree to bring such legislation to the floor for consideration and vote. The US House of Representatives operates under rules that allow the Speaker of the House - the majority party's leader - to control what legislation comes to a vote. The House Speaker would have to agree to schedule a vote on the agreement, which typically only occurs if a majority supported a proposal and thus it can be passed.

In contrast, in the Senate, any motion to close debate on legislation and move to a vote requires the agreement of three-fifths, or sixty, of the one hundred senators. Absent sixty votes in the Senate, legislation gets "talked to death." Eventually, when a measure cannot obtain 60 votes, it is pulled from the floor, debate ends and the measure in effect dies. Each year, high profile legislation passed by the House is killed in the Senate when a super-majority of 60 fails to support it. This means that even if the next US president decides to submit to Congress a Doha deal signed by President Bush without delegated authority, because President Bush has not worked with the Congress to ensure his negotiating positions represent the will of the Congress, whether such an agreement would even go to a congressional vote, much less approved, is extremely uncertain at best.

CONGRESS WILL NOT GRANT PRESIDENT BUSH FURTHER FAST TRACK OR OTHER TRADE AUTHORITY

It is reported that at the WTO, claims are being made that if a Doha Round deal were agreed, then the US Congress would grant President Bush new Fast Track authority that would enable him to sign and lock the deal. For a variety of reasons, this is an outlandish claim.

Firstly, since this is a presidential election year, the formal schedule of Congress is abbreviated. Taking into account various congressional recesses and holidays, at best there will be only eighteen weeks of legislative session between now and when Congress adjourns in September for the November election. Moreover, as each week passes towards November, the focus of Congress will shift increasingly to the election. That is to say that while Congress formally will be in session until September (and perhaps the Senate technically kept in session, until the new Congress convenes in 2009, to block recess appointment by the President), most Members will be focused on the elections - both the presidential and their own re-elections.

As a result, votes between now and adjournment will be limited to those necessary to make appropriations and pass a budget to keep the US government running until the new Congress convenes in 2009, re-authorization of major programs that are expiring such as the Farm Bill, disaster relief funding or other national emergency responses, and matters that are quick and non-controversial, such as renaming federal buildings. Legislation from the first session of this Congress in 2007 that already is well along the way toward passage may also be given floor time.

It is important to understand that Bush's expired Fast Track authority was not and is not subject to any sort of automatic extension. In 2005, President Bush exercised the option of extending for two more years - through June 30, 2007 - the initial three years of Fast Track that Congress adopted narrowly in 2002. The automatic extension was granted when Bush asked for extension by a certain date and Congress did not pass a disapproval resolution by June 1, 2005 - meaning that congressional inaction resulted in extension.

Thus, the only way President Bush could now obtain Fast Track authority is for new legislation to move through the regular legislative process set out above with passage of new legislation by both chambers of Congress. In this context, even if a Doha Deal were reached today, it is inconceivable that by September, Congress would initiate the process of reviewing such a deal, decide it was agreeable, negotiate with the White House over the terms of a Fast Track to authorize President Bush to sign such a deal, get such new Fast Track legislation through the committees and adopted in both chambers (which would require obtaining a super-majority 3/5th Senate vote and the agreement of a Senate majority leader who has never supported Fast Track.)

And, that is the case without considering the second point: both chambers of Congress are controlled by Democrats who have no interest in providing President Bush with any more authority over anything and who are counting the days until Bush is gone and his high-handed, extremely partisan reign ends. The theme of the Bush presidency has been abuse of power and to the extent that the Democratic Congress is paying attention to anything beyond passing the essential legislation needed to keep the government running, it is investigating the administration's abuse of its existing authorities. The Democratic majority controls what legislation comes to the House and Senate floors for votes. In early 2007, some of the Democratic trade committee leaders stated that they would be open to considering a Doha Round-only Fast Track for Bush - if a deal was agreed that they supported and the administration worked in a bipartisan manner with the Democratic Congress on trade. Even then, this position did not enjoy the support of the Democratic congressional leadership - which controls whether a proposal obtains a vote. However, even those Democrats most favourably disposed to the concept of a Doha Round no longer make statements about the possibility of a Doha-only Fast Track.

That is because, first, the time frame for such a scenario has passed with last year and now the trade committee Democrats are focused on wrapping up leftover business before Congress adjourns, such as passing various trade preference programs that will expire imminently. Second, the trade committee Democrats' aspirations for a new bipartisan working relationship with the Bush Administration on trade imploded last year, when President Bush issued veto threats against the Trade Adjustment Assistance bill Democrats passed and worked to torpedo various China-related proposals. Now, the administration is threatening to send a Colombia Free Trade Agreement to Congress that the Democrats strongly oppose so as to create a political problem for the Democrats. Relations between the Bush Administration and congressional Democrats are beyond chilly.

Third, as a political matter, Fast Track, WTO and President Bush are highly unpopular. Even if President Bush had a magic wand that would allow him to put a Doha Round Fast Track grant on to the House and Senate floor, it is improbable that he would have the votes to close debate in the Senate much less the simple majorities in both chambers to pass it. In the past, Bush could count on most Republicans to support his priority trade policies. However, he is now not only a lame duck, but is so wildly unpopular with the American public (approval ratings around 30%) that Republican members of Congress are working to distance themselves from Bush as they run their re-election campaigns. Since the commencement of reliable polling in the 1940s, only one twice-elected president has seen his ratings fall as low as Bush's in his second term: Richard Nixon, during the months preceding his resignation in 1974 in the midst of the Watergate scandal.

If the question were polled, Fast Track and WTO would probably have similarly abysmal popularity ratings. The United States has lost one out of every six manufacturing job - over three million net - since WTO and NAFTA went into effect. Although worker productivity has doubled, median real wages are now at 1972 levels. The US trade deficit last year was almost $800 billion - six percent of GNP - which now even longtime defenders of the trade status quo label as both a drag on US growth rates and a threat to US and global economic stability. A recent Wall Street Journal/NBC poll found that Republican voters - by a margin of two to one - have now joined independents and Democrats in concluding that current US trade and globalization policies are damaging to them and to the nation.

This strong public sentiment is one reason why not only the Democratic presidential candidates, but also many Senate and House candidates - including now some Republicans - are running on platforms of changing current trade policies. The notion that a majority of both the House and the Senate would be willing to vote for a Fast Track to implement more of the same policy is ludicrous. Indeed, even if there were more time and someone other than Bush were now president, it is quite unlikely that a Fast Track authority would be forthcoming. Consensus is growing in the US Congress that the Fast Track system is outdated and no longer appropriate to the reality of today's complex international commercial agreements. More likely, some new mechanism will be created to coordinate the US Executive Branch and Legislative Branch authorities over trade.

(* Lori Wallach is the Director of Global Trade Watch, at the Public Citizen organization based in Washington DC.) +