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Don’t Give Him What He Wants

Beware Obama’s trade deals.

Jan 27, 2014, Vol. 19, No. 19 • By IRWIN M. STELZER
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Republicans are being urged to support President Obama’s request for TPA so that he can complete negotiations on TPP and TTIP while pursuing other deals at the WTO. For those who do not often feast on this alphabet soup: Obama wants what we used to call fast-track authority to make a trade deal.

Obama

Can he be trusted?

In today’s lingo, the president seeks Trade Promotion Authority (TPA) so that he can put any deal he negotiates before Congress on a take-it-or-leave-it basis, no amendments allowed. The two deals he wants to consummate are a 12-country Trans-Pacific Partnership (TPP) with Canada, Mexico, Chile, Brunei, and several other parties, and a Transatlantic Trade and Investment Partnership (TTIP) with the 28-nation European Union. The administration also hopes to work out a freer trade agreement with the 159-member World Trade Organization (WTO), but the chances of doing that are somewhere between remote and nil, which is one reason the administration is pressing for regional trade deals.

The president has a problem. The same group of Democrats that shot down Larry Summers, his first choice to replace Ben Bernanke at the Federal Reserve, are threatening to deny him TPA authority: His overseas negotiating partners are reluctant to offer any quid pro quo in return for some U.S. concession if Congress can later vote to pocket the other parties’ concessions while canceling the president’s. Gary Hufbauer, senior trade expert at the Peterson Institute for International Economics, reckons that at least half of congressional Democrats will vote against giving the president the authority he seeks, some because history teaches he won’t bother consulting with them, some because they fear he will make concessions that damage their constituents. Hufbauer concludes that Obama needs “three-quarters of the Republicans” to get a trade deal passed.

Republicans’ business backers are engaged in an all-out effort to round up those votes. Former U.S. trade representative and head of the World Bank Robert Zoellick, a victor in trade wars past, has returned to the fray to urge Republicans to “lead in opening markets .  .  . and make 2014 the year the U.S. reclaimed global leadership on trade.” With all due respect to the estimable Mr. Zoellick, and to House speaker John Boehner, a reflexive free-trader, congressional Republicans should just say no.

Theoretically, free trade allows every nation to specialize in what it does best, and trade that output for the stuff other nations produce more efficiently than it can. Result: Every nation’s resources—labor, capital, land—are put to their best possible use, capital flows around the globe to wherever it is most productive, consumers get goods and services at the lowest possible prices, and all is for the best in this best of all possible free-trading worlds. Except that it isn’t.

TPA might under some circumstances be a good idea—but only if it empowers a president who respects the legislation passed by Congress, and if the trade agreements it facilitates are also a good idea. Neither criterion is met these days.

Start with the particular president who is requesting this authority. He is no George W. Bush, to whom Congress granted such authority. President Obama has made it clear that he will enforce those parts of any legislation or treaty that suit him, de facto amend legislation without seeking congressional approval, and write regulations that order nonenforcement of laws he does not like. Congress refused to pass his Dream Act, so he ordered the authorities to treat illegal aliens as if it had; enforcement of Obamacare’s employer mandate at the date specified in the law became inconvenient, so he unilaterally postponed it; he has decided not to enforce the federal law against the sale of marijuana. There’s more, but you get the idea.

It is therefore not unreasonable to suppose that a provision in one of these trade pacts that benefits some industry or company that later fails to toe the presidential line or pay financial obeisance to Democratic campaign committees will disappear in a haze of bureaucratic rulings. In short, whatever the theoretical benefits of free trade, they must be weighed against increasing this president’s ability to exercise even more extralegal power over American businesses. One example: The Asia deal might include a concession from Japan to ease imports of made-in-America vehicles. It is not beyond imagining that the president will interpret that to apply only to the green vehicles of which he is so fond.

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