Trade Policy Is Low-Hanging Fruit for a Bipartisan Win | Commentary

Posted February 11, 2015 at 5:03pm

The president’s State of the Union address laid out the White House’s priorities for the coming year and gave policy wonks an indication of what is likely to happen, or not, in the year ahead. While several items in President Barack Obama’s remarks, including tax and energy policy initiatives, are unlikely to move ahead in the Republican-controlled Congress, there was one bright spot which may elicit bipartisan cooperation: trade policy.

The president touched on a couple of important points: American businesses are exporting more than ever and exporters tend to pay higher wages. In fact, according to a recent Department of Commerce study, exports have contributed more to the growth of the U.S. economy during the current recovery than in previous recoveries and was responsible for 30 percent of gross domestic product growth over the past five years. He is also correct about wages: According to analysis by International Trade Administration economist David Riker, in the U.S. manufacturing sector exports contribute an additional 18 percent to worker’s earnings, and for blue-collar workers it is even higher at 20 percent.

There are a number of trade deals currently in progress, but the president specifically mentioned the Trans-Pacific Partnership. This is a particularly important deal: The region is growing fast and the negotiating parties represent 40 percent of total U.S. trade in goods and 25 percent of U.S. trade in services. If finalized, the TPP will become the largest free-trade agreement for the U.S. and would provide considerable economic benefits both to the U.S. and globally. Other trade deals under consideration, such as the Transatlantic Trade and Investment Partnership and the Trade in Services Agreement, could also provide economic gains for U.S. if they are finalized.

Given the economic facts, one could argue that we should take every step to promote free trade and help shape these trade deals. The obvious first step would be to provide the president with Trade Promotion Authority (previously known as fast-track authority). This authority is even more relevant in the current politically divided environment. In a nutshell, granting Trade Promotion Authority to the president, Congress agrees on an expedited legislative procedure without amendments, provided the president observes certain statutory obligations. Without the TPA, the possibility of unlimited congressional debate and amendments could result in hesitation by other negotiating parties, negatively impacting the future of any trade deal.

So what is holding back Congress from granting TPA? Despite enjoying bipartisan support in the past, TPA seems to have fallen victim to the increasing polarization in Washington, D.C. Some critics wrongly assume that TPA either excludes or minimizes the role of Congress in the decision-making process. In reality, the whole process is based on continuous consultation with Congress through trade advisers and oversight groups formed by congressional members. In addition, Congress still has the final decision on whether to implement the trade agreement with a “yes” or “no” vote.

Some other opponents of both the TPA and trade deals are using “secrecy” as their main argument. In this age of social media, opening up the whole process to public discussion, will surely slow down or stop any progress. In fact, TPA helps shield the negotiators from constant attacks and demands from interest groups, so that they can focus on overall economic picture. One should remember the last time the Social Security system was reformed in 1983. Many credit President Ronald Reagan for providing political cover to the secret “gang of nine” that shaped Social Security reform away from the constant attacks of special interest groups.

While it is true that trade can be a very contentious issue and that there will be winners and losers in any agreement, the economic facts point to overall gains for the country. To remain dynamic and innovative, U.S. companies must engage with the world. To remain viable in the eyes of a very dissatisfied electorate, Congress and Obama must chalk up a bipartisan win. As a low-hanging fruit that has enjoyed across the aisle support in the past, TPA may be just the ticket to an economic victory domestically and globally.

Dr. Pinar Çebi Wilber is a senior economist for the American Council for Capital Formation, a nonprofit, nonpartisan organization promoting pro-capital formation policies and cost-effective regulatory policies. Want More Stories Like This? Subscribe to our Thought Leaders Newsletter.