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Trade Promotion Authority, finally

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There is a sound criticism of the legislation commonly referred to as Trade Promotion Authority: it’s overdue. A bill was put forward yesterday and hits the right notes on commerce and American leadership, while promoting transparency. Introducing it two years ago would have been better, but some may even see a benefit in the delay.

The title of the bill, “The Bipartisan Congressional Trade Priorities and Accountability Act of 2015,” just rolls off the tongue. Opponents focus on granting the president an up or down vote on trade agreements and claim this diminishes Congress’ role. “Priorities and Accountability” is the response.

In the past, Trade Promotion Authority (TPA) focused on priorities – Congress indicating what it wants in a trade treaty. This bill gives equal time to accountability, with much of the text devoted to how the president must consult Congress throughout the negotiation process.

Even better, it requires the administration to inform the public. Negotiating objectives must be made public during the process and the treaty itself must be public for 60 days before the president can sign it.

The bill guides American negotiators, it cannot guarantee specific outcomes. Its emphasis on agriculture and cross-border data flows, though, fits what the US does best in trade. A treaty that advances American interests in these areas would have considerable benefits.

In contrast, the bill deals only briefly with exchange rates. Critics of US trade policy strongly overstate the importance of currency policy. Their main argument is that currency manipulation costs American jobs. But this is only true if we simply assume trade deficits cost jobs, which seems reasonable to some but is not supported by evidence.

A more subtle benefit of TPA involves American leadership. It lets our partners know the US is committed to trade liberalization and can act accordingly. It provides additional policy tools, most appealing to those focused on economic development. The US can be the country to turn to for long-term prosperity, not only in times of crisis.

The politics of TPA are unusual: the White House and most Congressional Republicans pitted against most Congressional Democrats and some Republicans. The “White House” in this case does not really mean President Obama. Because TPA has been delayed for so long, President Obama will only have 20 months or so of authority, while the next president will have twice that.

The one major trade agreement likely to see a vote while President Obama is in office is the Trans-Pacific Partnership (TPP). It is important to recognize that a vote for TPA is a vote for better trade policy, but it is not a vote for the TPP. If the TPP is not a good free trade agreement, those who support TPA can and should oppose it.

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