From shipping to staffing, the Chamber and its partners have the tools to save your business money and the solutions to help you run it more efficiently. Join the U.S. Chamber of Commerce today to start saving.
On May 3, Sen. Jeff Sessions (R-Ala.) circulated a memorandum outlining his “Top 5 Concerns With ‘Fast-Track’ Trade Promotion Authority.”
New trade agreements hold great promise as a tool to stimulate economic growth and job creation, as the Chamber has explained in detail. However, to make any growth-driving trade agreements a reality, Congress must first approve Trade Promotion Authority (TPA).
In his memo, Senator Sessions levels some serious charges about the TPA bill that was recently approved by the Senate Finance and House Ways and Means committees. But are they well founded? Let’s take a closer look.
“1. Consolidation Of Power In The Executive Branch.” Sen. Sessions claims that congressional approval of TPA would cede power and authority to the administration. Here’s how U.S. Chamber President and CEO Thomas J. Donohue addressed this issue before the Senate Finance Committee two weeks ago:
A few people have claimed that this is a presidential power grab. I may be uniquely qualified to comment on this. After all, the Chamber has not been shy to criticize this administration or any other when we see overreach.
Indeed, the U.S. Chamber of Commerce has sued the Obama administration repeatedly when we’ve seen legal or regulatory overreach—over health care, financial regulation and a host of other issues. Donohue continues:
But TPA isn’t about Congress ceding power to the president. On the contrary, TPA strengthens the voice of Congress on trade. Without TPA, the administration can pursue its own priorities at the negotiating table and consult with Congress only if and when it chooses. TPA lets Congress set negotiating goals and sets forth detailed requirements for constant consultation during negotiations.
As House Ways and Means Committee Chairman Paul Ryan (R-Wis.) said in January, “I’d no sooner trust this administration with more power than I’d trust the Patriots with the footballs at Lambeau.” Here’s how Ryan and Sen. Ted Cruz (R-Texas) described the TPA bill in The Wall Street Journal:
Under TPA, Congress lays out three basic requirements for the administration. First, it must pursue nearly 150 specific negotiating objectives, like beefing up protections for U.S. intellectual property or eliminating kickbacks for government-owned firms. Second, the administration must consult regularly with Congress and meet high transparency standards.
And third, before anything becomes law, Congress gets the final say. The Constitution vests all legislative power in Congress. So TPA makes it clear that Congress--and only Congress--can change U.S. law.
“2. Increased Trade Deficits.” Sen. Sessions contends that trade agreements lead to larger trade deficits. This argument has been pushed vigorously by anti-trade activists, and it could not be more wrong, as we’ve explained at length.
In fact, for those worried about the U.S. trade deficit, trade agreements are clearly part of the solution—not the problem. The United States has a trade surplus with its 20 trade agreement partners as a group.
The U.S. trade surplus with these 20 countries includes a $55 billion surplus in manufactured goods, according to the U.S. Department of Commerce. The United States has large trade surpluses in services and agricultural products.
So where does this misinformation come from? Rep. Rosa DeLauro (D-Conn.), who is among the leading opponents of TPA, cites a modified set of trade statistics to charge that the United States has a trade deficit with our trade agreement partners. These modified statistics distort the official data by subtracting goods dubbed “re-exports.” These are goods imported into the United States and then exported again without modification.
The problem is that Rep. DeLauro still counts these goods as imports when they enter the United States. This sleight of hand is intended to inflate the overall trade deficit and hide the fact that the United States actually has a trade surplus with our 20 trade agreement partners as a group. This twisting of data would merit an “F” in algebra class.
“3. Ceding Sovereign Authority To International Powers.” Sen. Sessions is mistaken here as well. Far from surrendering U.S. sovereignty, Senate Finance Committee Chairman Orrin Hatch (R-Utah) has explained that the TPA bill:
- “Provides that any provision of a trade agreement inconsistent with U.S. federal or State law will have no effect.”
- “Confirms that U.S. federal and State law prevail in the event of a conflict with a trade agreement.”
- “Affirms that a trade agreement cannot prevent the United States or the States from changing law in the future.”
- “Confirms that the Administration cannot unilaterally change U.S. law.”
In 2001, Edwin Meese III wrote a brief for the Heritage Foundation entitled, “Why Trade Promotion Authority is Constitutional.” Would President Reagan’s attorney general have favored “ceding sovereign authority to international powers”? Of course not, and he didn’t.
As Claude Barfield, resident scholar at the American Enterprise Institute, recently wrote of TPA:
U.S. sovereignty is closely guarded and reinforced through specific clauses that nullify any section of an agreement that is inconsistent with U.S. law. … Without TPA, the United States would not be able to achieve its own negotiating goals, as our trading partners would hold back their own bottom-line compromises out of fear that the president and the USTR could not guarantee the steadfastness and good faith of the US political process.
“4. Currency Manipulation.” Sen. Sessions cites concerns about currency manipulation as a reason to oppose TPA. However, the TPA bill actually includes a negotiating objective that parties to a trade agreement avoid manipulating exchange rates to gain an unfair competitive advantage.
The Chamber strongly agrees the United States should continue to press economies to adopt market-determined exchange rate systems that reflect economic fundamentals, and there are several fora for such discussions. In recent years, the G-7 economies have affirmed that they will not target exchange rates to achieve domestic economic objectives. G-20 members have made similar commitments to avoid persistent exchange rate misalignments and refrain from competitive devaluations.
Here’s how the Chamber’s Donohue addressed this issue before the Senate Finance Committee last month:
The notion that you can use trade policy tools to address monetary policy challenges causes concern in many quarters. Here’s one example: It is not in the U.S. interest to enter into an international agreement that would handcuff U.S. monetary policy and limit the flexibility of the Federal Reserve to respond to in an economic crisis. The TPA bill’s negotiating provision relating to currency reflects a careful and reasonable balance.
“5. Immigration Increases.” Sen. Sessions charges that there are “numerous ways TPA could facilitate immigration increases above current law—and precious few ways anyone in Congress could stop its happening.”
This just isn’t true. Only Congress can change U.S. visa or immigration policy.
More than a decade ago, Congress spoke definitively about immigration and trade agreements when Rep. Jim Sensenbrenner (R-Wis.) was chairman of the House Judiciary Committee. In 2003, after the United States agreed to provide a number of professional visas to Chile and Singapore in bilateral trade agreements with those countries, the practice was definitively discontinued.
Chairman Sensenbrenner extracted a commitment from the Office of the U.S. Trade Representative not to include any immigration or visa provisions in new trade agreements, and this commitment has been upheld in trade pacts with a dozen countries in the intervening years. USTR has respected the will of Congress in every instance. Only Congress can create new visa categories, as Sensenbrenner insisted at the time.
As recently as last month, Sen. Charles Grassley (R-Iowa), a strong opponent of the administration’s immigration policies, pressed U.S. Trade Representative Michael Froman in a hearing on this issue. Froman again confirmed that neither the TPA bill before Congress, nor the Trans-Pacific Partnership (TPP) agreement now under negotiation, will create any new categories for visas or in any way change U.S. immigration policy.
In a letter to Chairman Orrin Hatch and Sen. Grassley, Froman made clear that:
“… the United States is not negotiating and will not agree to anything in TPP that would require any modification to U.S. immigration law or policy or any changes to the U.S. visa system.”
Hatch and House Ways and Means Committee Chairman Ryan, one of the TPA bill’s authors, have affirmed that their bill will not alter U.S. immigration policy. Ryan called it “an urban legend.” House Judiciary Committee Chairman Bob Goodlatte (R-Va.) agreed emphatically.
Again, only Congress can change U.S. visa or immigration policy. The notion that TPA or possible future trade agreements will do so is baseless.
The trade debate is growing heated, but it’s unfortunate that so much misinformation is making the rounds. Hopefully, facts and reason will prevail -- and Congress will act soon to approve TPA and advance a market-opening, growth-driving, job-creating trade agenda.