RIP, Trade Promotion Authority. The law that allowed Congress to fast-track consideration of trade agreements expired on July 1. Trade agreements will now be subject to regular order in Congress, making it more difficult for the Biden administration to enter any new pacts.
Not that the administration seems concerned about it. President Joe Biden never bothered to formally request a renewal of Trade Promotion Authority, a customary act for past administrations. His inaction signals that trade agreements are not even on the agenda.
Congress can, of course, advance a new TPA bill (which should include robust reforms to the process) without an ask from the White House. But even if they did, it’s not clear that the president would use the authority. Last December, Biden declared, “I’m not going to enter any new trade agreement with anybody until we have made major investments here at home and in our workers and in education.” Not much incentive for congressional action in that statement.
If not through new trade agreements, how will the Biden administration advance free trade?
Last month U.S. Trade Representative Katherine Tai said the administration intends to view trade “through the lens of ‘Build Back Better’,” rather than pursue “clean” free trade agreements. Clearly, the administration hopes to exercise its executive powers to regulate and control trade flows in ways that will advance items higher on its agenda. But tying trade to unrelated issues like climate change, gender policies and policies that stack the deck in favor of labor unions can’t help but muddy trade relationships.
The administration is already flexing its executive powers in this way. For example, it is pursuing two cases under the rapid response labor enforcement mechanism outlined in the United States-Mexico-Canada Agreement — even though the guidance for new labor rules under the agreement is not yet finalized. The premature action is not calculated to win friends in Mexico City and Ottowa. Even the U.S. Chamber of Commerce has denounced it as “inappropriate and unfair.”
To be fair, the administration has taken some important steps to de-escalate trade disputes with other allies. It signed five-year deals with the European Union and the United Kingdom that eliminate retaliatory tariffs arising from a decades-long airline subsidy dispute.
Tai also announced an agreement with the EU on steel and aluminum tariffs, forestalling further retaliation while the two sides negotiate a resolution to the dispute the U.S. started in 2018.
These deals don’t fully eliminate the relevant trade barriers, but they do temporarily prevent further tariff increases and make steps to mend trade relations with U.S. allies.
The Biden administration also announced in June that it would restart talks with Taiwan under the Trade and Investment Framework Agreement (TIFA). This is welcome news, but the administration should go further, pursuing even freer trade between the two parties.
Taiwanese officials are ready. They are on record as hoping that the renewed talks will eventually lead to a full free-trade agreement. Congress has also called on the Biden administration to pursue a free-trade agreement with Taiwan. New TPA legislation could make this possible.
With these few efforts, the Biden administration is only scratching the surface of the benefits available through free trade. Trade liberalization creates and adds value, capitalizes on competitive advantages, and further harnesses the power of freedom and choice. Advancing trade freedom is critical, especially as Americans are recovering from the pandemic.
There is little hope of achieving an ambitious trade agenda without TPA. Without the discipline of this tool, political appointees are left free to try to lard up trade deals with provisions meant to benefit well-connected interest groups rather than the American people as a whole. That inevitably bogs down negotiations, creates ill will with our trading partners, and leaves Congress on the sidelines.
If the administration is unwilling to fully embrace free trade, Congress should take a more active role in setting and executing a growth-oriented trade agenda. They can start with aggressively cutting tariffs on all manufactured goods, renewing and expanding trade preference programs, and advancing TPA legislation that ensures that trade agreements focus solely on eliminating barriers to trade.
ABOUT THE WRITERS
Tori K. Smith is the Jay Van Andel Trade Economist in The Heritage Foundation’s Roe Institute for Economic Policy Studies. Anthony Kim is the research manager and editor of the think tank’s annual “Index of Economic Freedom.”
___©2021 Tribune Content Agency, LLC.