The Rise and Fall of Fast Track Trade Authority Todd Tucker and Lori Wallach The Congress shall have power ... to regulate commerce with foreign nations. 3 The Rise and Fall of Fast Track Trade Authority Todd Tucker and Lori Wallach © 2008 by Public Citizen’s Global Trade Watch. All rights reserved. ISBN 978-0-937188-66-8 No part of this document may be reproduced or utilized in any form or by any means, electronic or mechanical, including photography, recording, or by information exchange and retrieval systems, without written permission from the authors. Acknowledgments: This report was written by Todd Tucker and Lori Wallach. Additional writing and research provided by Lauren Forbes. Amy Bruno, Isaac Raisner and Rebecca Rid- dell provided research assistance. Thanks to Heather Boushey, James Decker, Bill Holland and Adina Rosenbaum for additional support. Thanks to Steve Charnovitz, Alfred Eckes, Ben Francis- Fallon, James Galbraith, Allen Matusow and Rick Perlstein for their historical insights. The authors are solely responsible for the paper’s content. Cover design by James Decker. Public Citizen’s staff is represented by the Service Employees International Union, Local 500. All photographs herein are believed to be in the public domain, and come primarily from government websites. Additional copies of this document are available from: Public Citizen’s Global Trade Watch 215 Pennsylvania Ave SE, Washington, DC 20003 (202) 546-4996 PC Product ID No: E9031 Other Titles by Public Citizen’s Global Trade Watch Federalism and Global Governance: Comparative Analysis of Trade Agreement Negotiation and Approval Mechanisms Used in U.S. and Other Federalist Governance Systems (July 2008) Prosperity Undermined: Economic Outcomes During the Era of Fast Tracked NAFTA and WTO Model Trade Agreements (June 2008) International Trade Agreements’ Constraints on State Government Procurement Policy Authority and Practices (March 2008) Presidential Candidates’ Key Proposals on Health Care and Climate Will Require WTO Modifications (Feb. 2008) Santa’s Sweatshop: Made in D.C. With Bad Trade Policy (Dec. 2007) Trade Deficit in Food Safety (July 2007) Implication of the WTO’s General Agreement on Trade in Services (GATS) for Universal Health Care, Nonprofit Hospitals and State Health Care Reform Initiatives (June 2007) States Rights and International Trade: A Legislator’s Guide to Reinvigorating Federalism in the Era of Globalization (Feb. 2007) Analysis of Election 2006 Results: No To Staying the Course on Trade (Nov. 2006) The WTO’s Empty Hong Kong “Development Package”: How the World Trade Organization’s 97% Duty-Free Proposal Could Leave Poor Countries Worse Off (June 2006; with ActionAid) Big Box Backlash: The World Trade Organization and Preemption of Local Control Over Land Use (Dec. 2005) NAFTA’s Threat to Sovereignty and Democracy: The Record of Chapter 11 Investor- State Cases 1994-2005 (Feb. 2005) Impact of NAFTA on the U.S. Latino Community (Aug.2004, with Labor Council for Latin American Advancement) Addressing the Regulatory Vacuum: Policy Considerations Regarding Public and Private Sector Service Off-Shoring (June 2004) Whose Trade Organization? A Comprehensive Guide to the WTO (New Press, 2004) CONTENTS IntroductIon ......................................................................1 regIme I. U.S. Trade Agreement Policymaking for the First 100 years ..........................................................................8 regIme II. Baby Steps Towards Delegated Tariff Authority, 1890-1934 ..............................................................15 a. Initial Delegation of Tariff Authority Raises Supreme Court Challenge, 1890-97 .........................................15 b. Second Delegation of Tariff-Cutting Authority, 1897-1909 ...............................................................19 c. Congress Provides Executive More Flexibility in Tariff Authority, 1909-1934 .................................................21 regIme III. Executive Dictation of Tariffs, 1934-1967 ...............26 a. Reciprocal Trade Agreements Act Dramatically Increases Executive Trade Authority, 1934-45 ...........................26 b. Rise of the GATT, 1945-51 ......................................................31 c. Congress Begins to Reassert Its Constitutional Trade Authority, 1948-1962 .....................................................36 d. Yet another Congressional-Executive Trade Authority Showdown, 1962-67 ................................................42 regIme IV. Lapse in Authority, 1967-1975 ...............................47 regIme V. Executive Hegemony over Non-Tariff Rules: Fast Track’s Rise and Fall Through 2008 ...................................................52 a. On the Fast Track in Nixonland, 1973-1975 ............................52 b. Fast Track’s First Uses Expand GATT from Tariffs to other Issues, 1975-1980............................................................72 c. Fast Tracking the “Reagan-Thatcher” Agenda, 1980-1988 ...............................................................................76 d. Failure of Attempts to Reform Fast Track, 1988-1994 .............81 the rise and Fall of Fast track trade authority e. Fast Track is Dead, Part I, 1995-2001 .......................................93 INTrOduCTION F. George W. Bush administration kills Fast Track’s remaining legitimacy, 2001-2008 ..............................................................98 The U.S. Constitution creates “checks and balances” designed to ensure no one branch of government has undue power over conclusIon: Toward A New Consensus, 2008-? ................115 the others. For instance, under the Constitution, the president reFerences ........................................................................129 may negotiate international trade agreements at will, but the United States can only be bound to a trade agreement through boxes: a vote of Congress. The legislative branch — Congress — has The Bricker Amendment: Criticism of Executive exclusive authority “to regulate commerce with foreign nations” Unilateralism Grows ..........................................................................40 and to “lay and collect taxes [and] duties.”1 The executive branch Core Aspects of Fast-Track Trade-Authority Delegation ....................66 — the president and his administration — has the authority NAFTA And WTO Not About Tariffs ..............................................91 to negotiate international agreements with foreign sovereigns. Fast Track Not Necessary For Trade Expansion ..................................95 Throughout the years, Congress has created various means to coordinate the roles of the legislative and executive branches regarding U.S. trade agreements. Congress maintained tight control over trade agreements’ contents during most of the nation’s history. However, during the last century, Congress has utilized a variety of mechanisms to delegate to the president ever-expanding aspects of the legislature’s constitutional trade authority, primarily through authorizing the president to proclaim tariff modifications within certain limits. In some cases — most recently from 1967-75 and 1995-2002 — Congress made no delegation of its authority whatsoever. Yet trade has expanded and trade agreements have proliferated under each regime. The trade delegation mechanism best known internationally and the focus of much of this paper is Fast Track, which was initially established in the 1973-75 period. The essential difference between this and previous delegation regimes is that Fast Track 1. U.S. Constitution, Article I-8. 1 the rise and Fall of Fast track trade authority the rise and Fall of Fast track trade authority authorized executive-branch officials to set U.S. policy on non-tariff, discussed, but extremely important, is the domestic non-trade and indeed non-trade, issues in the context of “trade” negotiations. regulatory implications of Fast Track providing expansive new Under the extraordinary Fast Track process, Congress authorized authority for the executive branch. the president to choose partners for international agreements that go beyond trade, determine the contents of such agreements, When the Nixon administration first lobbied Congress for and sign the United States up to the terms of the deal… all before Fast Track authority, it maintained that the executive branch Congress had a vote. The mechanism also preset special rules for would only negotiate non-tariff issues closely related to trade. congressional consideration of such pacts, allowing the executive Instead, over the last 35 years, the scope and content of “trade” to write implementing legislation, while circumventing normal agreements have been quietly but dramatically transformed congressional-committee processes. Specifically, the president into wide-ranging international commercial pacts that contain could submit the executive-branch written bill for a mandatory hundreds of pages of provisions that set non-trade policy in many vote within a set number of days, with all amendments areas traditionally reserved for Congress and state legislatures. forbidden, normal Senate rules waived, and limited debate in Indeed, in practical terms, Fast Track has become a means for both chamber of Congress. the president to “diplomatically legislate” on an array of non- trade matters. The mechanism has allowed successive presidents Since Congress first passed it in 1974 (it was signed into law the since Nixon to establish rules related to domestic environmental,