Congress Should Slow Down ‘Fast Track’ for USMCA
Somewhat surprisingly, leadership of the House Ways and Means Committee and the Senate Finance Committee have asserted that the USMCA implementing legislation is procedurally eligible for expedited approval under the current Trade Promotion Authority (TPA) law, the Bipartisan Congressional Trade Priorities and Accountability Act of 2015.
In general, fast-track procedures are designed to guarantee to the executive branch—as well as foreign trading partners—rapid consideration of new trade agreements in the House and Senate. As a result, the TPA has historically played an important role in facilitating trade expansion: Since 1979, various iterations of fast track have been used to approve 14 free trade agreements, as well as the United States’ participation in the World Trade Organization in 1994. In exchange for a privileged vote to approve and implement a trade agreement, the executive must meet various prerequisites under TPA rules, including progress in meeting negotiating objectives, notification and consultation requirements, and adherence to a procedural timeline.
The USMCA does not meet these requirements, which means that it should not receive fast-track privileges—including a simple majority vote—when it reaches the Senate floor in the coming weeks. More importantly, however, if the Senate does strip the agreement of fast-track privileges, there would be limited downsides in exchange for long-term benefits. The USMCA’s ultimate ratification would still be virtually guaranteed under regular order, and the Senate could reinforce Congress’ role as an active stakeholder in U.S. trade policy, preserve the legitimacy of the TPA and potentially codify via amendment—to legislation that President Trump will undoubtedly sign—measures to increase congressional authority over trade. For example, the Senate could attach legislation to reform “national security” tariffs—a stated priority of Senate Finance Committee Chairman Chuck Grassley (R-Iowa)—or a provision requiring a congressional vote before the United States can terminate its participation in the USMCA under the agreement’s sunset clause. Both of these policies have bipartisan support and would not be in tension with the agreement text itself.
Critically, Section 103(b) of the TPA law states that a trade agreement is eligible for congressional consideration under expedited procedures “only if such agreement makes progress in meeting the applicable objectives described in subsections (a) and (b) of section 102 and the President satisfies the conditions set forth in sections 104 and 105” (emphasis added). These three sections of the TPA cover detailed negotiating objectives for trade agreements, requiring the president to consult closely with Congress throughout the negotiations and issue certain formal notifications on a prescribed timeline.
There is compelling evidence that the executive branch has violated all three of these requirements.
First, with respect to the TPA’s negotiating objectives, the USMCA is a dramatic step backward from the investment protections originally enshrined in NAFTA. As a principal negotiating objective, the TPA directs the president to secure for American investors specific, substantive rights such as “fair and equitable treatment” (e.g., due process), protection from expropriation, prohibitions on performance requirements (e.g., local input requirements), the free transfer of capital and the elimination of legal exceptions that allow foreign governments to treat domestic investors more favorably than American investors. The TPA also directs the president to ensure these commitments are enforceable via “meaningful procedures for resolving investment disputes.” In practice—and under NAFTA—“meaningful procedures” include a mechanism called an Investor-State Dispute Settlement (ISDS), which permits aggrieved investors to pursue independent international arbitration of investment disputes instead of relying on a country’s domestic court system. Under the USMCA, however, this mechanism would be virtually eliminated except with respect to a few selected sectors operating in Mexico—a change to NAFTA that directly contravenes the congressionally mandated negotiating objective on foreign investment.
Free traders of good faith come down on different sides of the ISDS debate, but Republican members of Congress in particular have been vocal supporters of ISDS provisions, which are included in every U.S. Free Trade Agreement (FTA) with the exception of Australia. In fact, Republican members of Congress care so much about preserving ISDS that, in the midst of USMCA negotiations, 103 of them sent a letter to U.S. Trade Representative Robert E. Lighthizer warning that “[e]xcluding ISDS altogether or making it optional in a modernized NAFTA similarly will jeopardize Republican support.” They also cited the TPA’s negotiating objectives:
As NAFTA negotiations progress, we look forward to continuing to work with you to achieve the negotiating objectives, including those concerning ISDS, that Congress established through statute, which is necessary to successful consideration of a modernized NAFTA by Congress.
It would appear that the Trump administration has failed to achieve these objectives.
Indeed, at the Senate Finance Committee’s hearing on the USMCA last week, Senator Bill Cassidy (R-La.) took specific issue with the agreement’s rollback of protections for U.S. investors. He ultimately voted against reporting the agreement favorably out of committee and criticized the lack of a substantive process for Finance Committee members to provide input on the legislation. “I think we continue to cede power from this committee to others to the detriment of society,” he concluded.
The sentiments expressed by Sen. Cassidy allude to the Trump administration’s second violation of the TPA: the lack of close consultation with Congress. The TPA, as originally conceived, should facilitate collaboration between Congress and the executive—during both the negotiation process for trade agreements and the drafting of legislation to implement those agreements. This approach would allow the United States to act with “one voice” in trade discussions with foreign governments, while also permitting members of Congress to provide input into the negotiations. In theory, this approach should incentivize the executive to keep Congress fully informed, because fast-track approval is contingent on adequate consultation with Congress. That is why the TPA contains two mechanisms—the “Consultation and Compliance Resolution” and the “Procedural Disapproval Resolution”—whereby Congress can effectively shut off fast-track privileges if the administration does not sufficiently consult.
Alas, the close consultations envisioned by the TPA did not occur. Public comments from influential GOP senators (a “lousy way to treat the Senate,” said Senator John Cornyn (R-Texas)), underscore the reality that only a handful of Democratic members of the House Ways and Means Committee had influence over the final USMCA text. Over a period of several months, they negotiated with the USTR and the Mexican government such significant changes to the agreement that a protocol of amendments had to be signed by all three parties on Dec. 10, 2019. Implementing legislation was made public three days later—the same day that the White House formally transmitted it to the House for introduction and it became procedurally unamendable under the TPA. Traditionally, the revenue committees have held “mock markups” on a draft version of such legislation, which gives Congress the opportunity to provide feedback on the bill by adopting mock amendments. Although not procedurally mandatory, this important feedback process was entirely jettisoned for the USMCA.
Next, in addition to ignoring statutory negotiating objectives on foreign investment and failing to consult with key congressional stakeholders, the administration has arguably violated another requirement for fast track: the TPA’s notification timeline. Section 105 of the TPA mandates that the president submit detailed information about the agreement to the International Trade Commission (ITC) 90 days prior to signing it, so that the ITC can prepare an economic assessment of the trade deal’s provisions. Although the administration completed this step when it initially concluded USMCA negotiations in 2018, the TPA also states that “the President shall keep the Commission current with respect to the details of the agreement.” The changes to the USMCA announced on Dec. 10 fundamentally altered key aspects of the agreement—for example, by eliminating Canadian and Mexican obligations to extend market exclusivity periods for biologic drugs—which would suggest that the ITC should be given the additional information necessary to update its analysis of the deal.
Finally, it is worth noting that Section 106 of the TPA law—while not explicitly tied to the definition of a “103(b) agreement” qualifying for fast-track privileges—says that an agreement “shall enter into force with respect to the United States if (and only if)” a procedural timeline is followed. Specifically, Section 106 requires that the president transmit to Congress the “final legal text of the agreement” at least 30 days prior to transmitting the agreement’s implementing legislation. The 30-day waiting period was quickly discarded by the administration, this time with an assist from House Democrats: Only three days transpired between the signing of the final USMCA text by all three parties on Dec. 10 and the transmission of the implementing legislation on Dec. 13.
Despite these procedural transgressions, Congress continues to push forward with fast-track protections for the USMCA. This is baffling, because maintaining TPA privileges for the USMCA is not necessary for passage: The agreement has already been approved by wide margins in the House, and there is more than enough support in the Senate to ratify the deal with 60 votes. By granting fast track protections to the USMCA, Congress is both undermining the utility of the TPA and needlessly forfeiting its Article I prerogative to mark up, debate and amend a bill that will significantly alter the future of North American trade. This is a monumental missed opportunity for Congress to reassert its constitutional authority over trade, and the full Senate should consider overturning the TPA when the USMCA reaches the floor.
Image credit: Angel Soler Gollonet