Fast track and trade

The oil and gas industry should support renewal of fast-track negotiating authority for the U.S. President in matters of trade.

As trade goes, so goes a large measure of economic growth. And as economic growth goes, so goes demand for oil and natural gas and for the services and supplies essential to production, transportation, and processing.

President Bill Clinton on Sept. 16 sent Congress legislation that would renew fast-track authority suspended since August 1994. Before the authority lapsed, it had been in effect, except for 8 months in 1988, since the Trade Act of 1974. Congress has renewed it five times.

It should do so again.

Trade and growth

According to the White House, more than one third of U.S. economic growth of the past 4 years has come from expanded trade. It is no revelation to oil and gas companies that business in general is more global now than ever.

But protectionist barriers remain in place in many parts of the world. Trade thus depends on agreements between governments to lower tariffs and reduce effects of the sundry other means by which countries shelter their industries against international competition.

Congress has long recognized that in negotiations aimed at lowering these barriers to U.S. sales abroad, the President needs extra room to maneuver. Under the Constitution, the executive branch negotiates international agreements, and Congress sets tariffs and makes laws. Separation of the authorities makes international negotiations cumbersome. In 1934, Congress extended to the President power to negotiate mutual reductions in tariffs, which by then were receiving blame for the Great Depression. The 1974 law gave the executive branch practical ability to deal with nontariff trade matters as well, subject to legislative consent.

The essence of the latter law is the fast-track provision. Under it, Congress must act within 90 days, without proposing any amendments, on implementing legislation submitted by the President for a trade agreement. The legislature thus doesn't surrender ultimate authority over trade pacts. But the fast-track authority strengthens executive branch bargaining positions by assuring foreign governments that what negotiators sign is what Congress will promptly approve or reject. The authority essentially accommodates constitutional separation of power to the practicalities of international negotiation.

Congress hasn't renewed fast-track negotiation authority because labor unions and some environmental groups have turned the issue into a referendum on the North America Free Trade Agreement (Nafta). Unions say Nafta sent U.S. jobs abroad. And the environmental groups opposing Nafta dislike anything that promotes economic activity, which they equate with degradation of natural values.

Congress should not sacrifice trade-and, by association, U.S. economic growth-to either of these objections. With the U.S. economy operating at essentially full employment, the labor union position is unsupportable. Furthermore, it takes a rigid view of labor that is unrealistic-however bad it may be for union membership-in a world of increasingly mobile capital. And the environmentalist aversion to economic activity, ignoring as it does the coincidence of growth and environmental improvement, deserves no place in policy-making.

Compelling arithmetic

"We cannot create enough good jobs and increase wages if we don't expand trade," Clinton said last week at the AFL-CIO biennial convention in Pittsburgh. And he offered his doubtful audience some compelling arithmetic: "If we want to keep the 22% of the wealth we (Americans) have as 4% of the world's people, we have to sell something to the other 96%."

He's right. And the energy business at stake in those prospective sales, while not something Clinton is likely to make part of his argument, is a strong reason for the industry to support his legislation.