The president’s “fast track” trade negotiating authority expired July 1, after a five-year run that was equal parts fanfare, contentious debate, partisan rancor, and a notable expansion of liberalized trade with the world. Trade Promotion Authority, as the legislation providing fast-track was called, slid under the waves quietly, its only accompaniment a frankly tired and misleading debate between “free” versus “fair” trade in the nation’s papers. Now that fast-track is gone, its absence will not necessarily be immediately missed.
The fact of the matter is that fast-track died well before TPA legislation expired July 1. The 110th Congress set about reclaiming its grant of constitutional authority to negotiate trade agreements back in January, and since then has been engaged in an examination of the nation’s approach to globalization that has been at once necessary and difficult. Necessary due to the fact that, as modern trade agreements have evolved, they have increasingly come to influence sovereign regulatory powers and domestic economic sectors far more than predecessor treaties focused on moving boxes across borders. Difficult because these new “behind-the-border” issues, such as investment, standards and trade related migration are custom-made for protectionist rhetoric and populist policies.
The 110th Congress, in the process of reasserting authority over trade, essentially rewrote entire sections of the negotiating mandate for the U.S. Trade Representative before TPA expired, and has intervened in the negotiating process as more of a direct player. While these actions have certainly made many trade partners nervous, they also likely strengthened the USTR’s hand in negotiations toward a new global WTO agreement and invigorated the enforcement of U.S. trade remedy laws. In addition, Congressional activism did not prevent the successful closure of negotiations for a free trade agreement with Korea (KORUS), which will be the most economically significant trade agreement concluded by the United States since the NAFTA in 1992 and the WTO Uruguay Round in 1994.
Yet the next step in the process is certain to be a test of the Democratic leadership in the legislature – will this Congress ratify the very agreements it has a hand in negotiating? The critical test will be the KORUS, and on this, Congressional leadership is already struggling. The foreign consequences of a KORUS vote are far greater than the state of U.S. trade with Korea. Key countries China, Japan and India are laboring mightily to hack out preferential trade agreements in East and Southeast Asia, making progress that threatens to leave American exporters and investors at a competitive disadvantage. If the Congress passes KORUS, expect foreign confidence in the U.S. commitment to the region to soar. If Congress falters, expect Beijing to occupy the vacuum.
The Bush Administration has repeatedly risen to the economic challenges in Asia, seeking various new trade and investment agreements across the region to solidify the country’s ability to compete with China and remain engaged with major Asian partners. U.S. Trade Representative Schwab, traveling to Australia during the first week of July to attend the regional APEC forum, broached the possibility of U.S. participation in a regional free trade arrangement.
An Asia trade pact is an integrative approach that would put the U.S. economy on solid footing in Asia for the next generation. The ideal first step in that direction is ratification of the KORUS FTA. The next step would be for the United States to engage Japan, its largest partner in Asia, in the meaningful pursuit of a broad, liberalizing economic agreement.
Japan has been warming to the idea for the past year. Leading industries have lobbied the Koizumi and Abe governments for real progress on bilateral Japan-U.S. trade. Now, the conclusion of the KORUS FTA has moved the conservative bureaucracy in Tokyo to seek rapid actions to prevent Japan from lagging behind Korea and China on trade. Last month, Prime Minister Abe’s cabinet endorsed the possibility of a U.S.-Japan economic agreement.
Congress should recognize the regional politics at play and the opportunities presented by ratification of the KORUS FTA. By passing the Korea agreement, the Democratic leaders can secure long-term strategic value for the U.S. economy that far outweighs the benefits or risks to any single commercial constituency. The prospects of a new open door in Asia should be enticing to business and government alike, the first test is for Congress to get past the threshold.