US Lacks Legal Mechanics for a WTO Deal

Trade Promotion Authority (TPA), also referred to as ‘fast track’ authority, expired under US law at the beginning of July 2007. With this expiry went the authority that Congress grants the President to enter into certain trade agreements, and the authority for Congress to consider the agreements’ implementing legislation under expedited procedures. Notably under TPA Congress either accepts or rejects a trade deal brought home by the trade negotiators without the option of evaluating the text on a clause by clause basis. A detailed line by line approval in Congress would almost certainly ensure that any preliminary agreement never comes to fruition. Currently, the US Administration is negotiating a number of trade agreements that have not been settled prior to TPA having expired. Not least of these is the pending yet elusive WTO Doha Agreement. With these trade pact activities unlikely to cease, future TPA renewal is going to be a proverbial ‘hot potato’ in US politics.

Fast track authority is not technically necessary to conduct negotiations, but is crucial to ratify the resultant agreement. As a technical matter, the US negotiators do not need trade promotion authority until the agreement is fully negotiated. This being said very few trading partners are likely to be comfortable in closing a negotiated deal with the US, as absent of trade promotion authority there is a real risk to other countries that the US will renege on negotiated commitments as Congress takes the draft deal apart in order to satisfy the proponents within the domestic political economy. This is equally valid for the pending Doha Round Agreement as it is for bilateral trade agreements.

Within the US legislative machine the question that arises is whether all the Democrats oppose TPA while all Republicans support it, along partisan lines. The answer is certainly ‘no’ and this ‘no’ is premised upon the US Presidential race in 2008. At this the present juncture, it is unclear who the next US president will be. This uncertainty is giving rise to both Republican and Democratic members being reticent on extending fast track as neither wants do a possible opposition president any favours, especially on the trade front.
The overriding sentiment from Washington seems to be that ‘it is more important to get trade promotion authority done right than to get it done fast’. There is an element of circular logic present with the interrelationship between this stance and the Doha Deal in that one has to ponder how a Doha deal is possible without TPA, which in turn will not be forthcoming without a good deal for the US in the WTO.
Since the beginning of the Doha Round in November 2001, US Trade Promotion Authority has been used as a mechanism to try and spur negotiators to a timely conclusion of the Doha Round. The reasoning adopted has been that negotiators would have little to no chance of concluding the Doha Round without the US having TPA in place. The looming expiry of TPA has thus been a veiled and ever present sanction, used to spur actions for the conclusion of the Round before 1 July 2007, at the very latest. The question arises as to whether the current TPA expiry is really a calamity for the WTO? In looking back to the early days of the Doha Round, it seems perhaps not. Almost exactly 5 years ago back in July 2002, the US TPA was up for renewal, and this was successfully obtained by the Bush Administration. The question remains as to whether the Round is really in trouble now, as if the round has failed to progress thus far with TPA – what are its future chances without any TPA? The WTO director general, Pascal Lamy, took great pains in addressing the US Chamber of Commerce recently to encourage US law makers to renew their Trade Promotion Authority. He recognised that any ‘contract’ between the two branches of the US government is an internal US matter. This cannot be denied and it is clear, legally speaking, that having valid TPA will only be needed to enact the results of a Doha Round agreement, but does not prevent the Administration from negotiating a Doha deal with the WTO Members. However, many US trade partners, including those within the African contingent, consider that no movement on TPA means that the US has ‘lost faith’ in the Doha Round. Lamy refers to this perception as ‘the US shifting gear from drive into park’, which in his view will certainly have an impact on the dynamics of the negotiations.

There has been an expectation in Geneva that progress in the Doha Round and the prospects for a rapid conclusion of the negotiations would be taken into account by members of the US Congress as they discussed and considered the renewal of TPA. There is no surprise in the reality that many WTO Members believe that a window of opportunity is closed unless there was clear progress to retain, or now resuscitate, TPA. It is perhaps in recognition of this dynamic that the WTO has been completely silent on the actual expiry of the TPA. There is no doubt a swift change in tack now, playing down the relevance of TPA as opposed to the previous policy, practiced to date, of raising the TPA’s profile as a negotiation driver.

There is still a chance, albeit slim, that a Doha breakthrough this September based on modalities friendly to US interests could see a limited extension of TPA just sufficient to ratify the Doha Deal. However as time elapses and events draw nearer to the US Presidential race, TPA and thus Doha will increasingly fade into a significantly diluted US priority imperative.