This week represents the start of the 114th Congress, and to say that recent sessions have been polarized is an understatement. Voting has been divided among partisan lines at an unprecedented scale, correspondingly generating historic levels of gridlock and record lows for laws enacted. Almost 400 bills passed by the Republican-dominated House of Representatives, some of which even had bipartisan support, died at the desk of Senate Majority Leader Harry Reid (D, NV).
While Republican control of both the House and the Senate will likely end such disconnect, it also sets up two years of political paralysis between the executive and legislative branches – potentially continuing the bitterly partisan politics that have plagued Congress. Both politicians and analysts have pointed to international trade policy as a potential site of bipartisan agreement with enormous economic benefits. However, it’s imperative that action be taken on such issues early in the current Congressional cycle to avoid being derailed by continuing partisan bickering.
Interestingly, the new Republican majority in the Senate will bring in leadership more aligned with President Obama’s views on trade. Republicans already back trade promotion authority (TPA) legislation, which would let Congress consider proposed free trade agreements on an expedited basis once the President’s team finishes negotiations. By assuring other nations that Congress cannot undermine the President’s agreements, approving TPA would make it easier for U.S. negotiators to complete the deals. Yet since 2008, Democrats Reid and Nancy Pelosi, both previously free trade skeptics, have opposed such authority. On the other hand, incoming Republican Senate Majority Leader Mitch McConnell has expressed a belief that “potential for agreement” exists on trade issues.
Such agreement would come at a welcome time for the United States. The most important ongoing trade negotiations that would be affected include the Trans-Pacific Partnership (TPP) with Asian nations and the Transatlantic Trade and Investment Partnership (TTIP) with the European Union. Both could significantly improve America’s economic vitality and image abroad. The former, involving the United States and eleven Asian nations, would be the largest trade deal ever completed, with close to 40 percent of the world’s GDP represented at the negotiating table. According to a recent Peterson Institute report, a deal could increase annual global income by $295 billion ($78 billion for the U.S.) by 2025. Improving trade relations is essential to deepening America’s relationships with rising regional powers and regional multilateral institutions, thus lending more credibility to President Obama’s ongoing “pivot to Asia.” Without the agreement, the shift today is purely military; peace in a tense region that is vital to the global economy requires deeper economic integration, rather than more troops and missiles. Expanding America’s trade ties will thus only increase regional stability.
In addition to eliminating already low tariffs between the U.S. and EU, the latter deal would harmonize regulations generally considered to be “non-tariff trade barriers,” like car and pharmaceutical safety standards. Continued tariff reductions could create huge savings for companies that do the most transatlantic trade, resulting in 0.5 percent annual increases to the U.S. and EU GDPs by 2027. Stimulating struggling economies in the eurozone can also benefit America’s geopolitical interests in the region. For instance, expediting currently-stalled liquefied natural gas export deals could reduce countries’ dependence on Russian energy and strengthen joint U.S.-EU sanctions on the adventurous Putin regime. Such deepened isolation may help deter further aggression in Ukraine and elsewhere.
Unfortunately, despite the litany of potential benefits, passage of TPA legislation is far from guaranteed. Republican House Speaker John Boehner has said the White House needs to rally support from at least 50 House Democrats to get the bill through the lower chamber – a difficult task, considering that many of the trade-friendly Democrats lost to Republicans in the last election.The recent Democratic opposition to the omnibus spending bill, which barely passed, illustrates the strength of these intraparty detractors. Plus, even if the votes can be had, the upcoming presidential campaign may see Democratic support again grow scarce as the 2016 election moves ever closer.
With both foreign policy and the economy turning the corner, President Obama must capitalize upon his sudden strength and use it to broker a deal as soon as possible. With the Republican Senate poised to unveil legislation in coming weeks, the window of opportunity has arrived. International officials from TPP countries have stated that the first six months of 2015 will be critical to finish up talks and hammer out details. Thus, it is imperative to pass domestic legislation sooner, rather than later. Effective leadership and support from the President can avoid election year politics and the partisanship that has plagued contemporary Congress. On the other hand, starting the year by picking the wrong fight, such as environmental conservation or health care, could destroy compromise and tank the president’s political capital altogether.
A new year provides new opportunities for compromise. Trade promotion authority could provide a sustainable basis for America’s economic health and international relations. The ball is in the President’s court – it’s up to him to play it correctly.
Contact Debnil Sur at debnil ‘at’ stanford.edu.