97-885 E
Updated May 3, 1999
CRS Report for Congress
Received through the CRS Web
Fast-Track Legislative Procedures for Trade
Agreements: The Great Debate of 1991
(name redacted)
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
Summary
The last debate on whether or not to grant the President authority to negotiate trade
agreements with "fast-track" legislative procedures was in 1991. Many issues that were
raised in that debate are the same as those still being considered, including the role of
labor and the environment in trade negotiations and whether legislation to implement
trade agreements should be amendable. The result of the debate in 1991 was that
Congress allowed the President an extension of negotiating authority with fast-track
legislative procedures. At the same time, however, it gave strong directives to the
Administration on issues to be addressed in the negotiations and threatened to withdraw
the fast-track procedures if its directives were not followed.
Background
Trade negotiating authority with fast-track legislative procedures was introduced in
the Trade Act of 1974. It was approved for a given period principally for the Tokyo
Round of multilateral trade negotiations (1973-1979). The fast-track legislative
procedures were part of an understanding between the executive and legislative branches,
whereby the Administration agreed to consult closely with Congress during trade
negotiations, and Congress agreed to a definite up-or-down vote on the trade agreement
without changes.
Trade negotiating authority with fast-track procedures was extended in the Omnibus
Trade and Competitiveness Act of 1988 (P.L. 100-418) (Trade Act of 1988) principally
for the Uruguay Round of multilateral trade talks (1986-1994). The 1988 Act provided
that if a trade agreement was signed before June 1, 1991, fast-track procedures would
apply to implementing legislation. The June 1991 deadline was expected to be sufficient
for the conclusion of the Uruguay Round. If negotiators were making progress but could
not meet the deadline, the Act allowed a two-year extension for fast-track procedures.
Congressional Research Service ˜
The Library of Congress
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The extension was automatic as long as the President requested it and neither House of
Congress disapproved it by simple resolution.
By early 1991, it was clear that President Bush planned to request the two-year
extension. The Uruguay Round could not be completed by the June 1 deadline. Further,
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subsequent to the 1988 Act, Mexico had requested talks on a North American Free Trade
Agreement (NAFTA). On March 1, 1991, President Bush formally requested the two-year
extension, and five days later, disapproval resolutions (H.Res. 101, S.Res. 78) were
introduced in both houses.
There was widespread opposition to the talks with Mexico because of concern about
possible adverse effects of a trade agreement on U.S. wage levels, working conditions,
and environmental standards. On March 7, 1991, Senator Lloyd Bentsen, Chairman of the
Senate Finance Committee, and Representative Dan Rostenkowski, Chairman of the
House Ways and Means Committee, wrote a joint letter to the President asking how he
intended to address these concerns. On March 27, House Majority Leader Richard
Gephardt wrote to the President that worker and environmental issues should be objectives
in the Uruguay Round and in a NAFTA. On May 1, the President responded with an
extensive plan of action. The plan of action included labor-related provisions such as a
possible worker adjustment program and future cooperation with Mexico on health and
safety issues, and environment-related provisions such as design of a joint border
environmental plan and appointment of environmental experts to trade advisory
committees. On May 9, Majority Leader Gephardt introduced H.Res. 146, which
expressed the sense of the House that on the basis of the commitments in the President's
action plan and the expectation that the commitments would be carried out, fast-track
procedures should be extended. The 1988 Trade Act required that if the two-year
extension was to be disapproved, a vote on the resolutions of disapproval had to be taken
before June 1, 1991.
Issues in the 1991 Debate
Several issues were raised during the 1991 debate on extension of fast-track
authority. Among these were (1) differences in how Congress viewed the multilateral and
regional trade negotiations; (2) anticipated effects of a trade agreement with Mexico; (3)
concern over nontraditional topics such as worker rights and the environment; and (4)
delegation of congressional authority to the executive branch.
Multilateral and Regional Trade Negotiations
The multilateral talks in the Uruguay Round and the bilateral/regional talks on the
NAFTA were tied together procedurally. Under the 1988 Trade Act, the extension of
fast-track procedures would apply to implementing legislation for trade agreements
reached between June 1, 1991, and May 31, 1993. Therefore, if one house of Congress
had disapproved the extension, fast-track procedures would have been denied in the case
of a Uruguay Round agreement, a NAFTA agreement, and any other relevant trade
agreement reached during that period. The 1988 statute did not allow separate votes to
extend fast-track procedures for the Uruguay Round or NAFTA. Congress would have
had to take procedural action to separate the two.
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Although both sets of negotiations depended on the same vote on extension, it was
the NAFTA, specifically trade with Mexico, that was the magnet for most congressional
interest. From March to May 1991, the number of hearings on trade with Mexico
exceeded those on the Uruguay Round by almost 10 to 1. Floor debate overwhelmingly
dealt more with the effects of trade with Mexico than with the more than 100 trading
nations in the General Agreement on Tariffs and Trade (GATT), the predecessor of the
World Trade Organization.
One reason why there was so much concern over the bilateral, but not the
multilateral, talks might have been that the United States had a different position going
into each of the negotiations. In the case of the Uruguay Round, the United States was
the chief proponent of the talks and was seen as pressing for concessions favorable to the
United States. In the case of Mexico, the United States did not initiate the talks. In fact,
some Members wanted the Administration to move slowly on the idea, because the United
States was already absorbed in the Uruguay Round and because the proposal for talks with
Mexico seemed to be opening the U.S. market to imports from a country that had a
different set of rules. Another reason might have been that the potential effects of a
bilateral agreement are more easily discernible compared to an agreement with over 100
countries. Further, the difference in U.S. and Mexican incomes was significant, and many
feared U.S. jobs would be lost to Mexico.
Congress had not contemplated a NAFTA when it approved fast-track procedures
in 1988. At that time, Congress had debated and voted on objectives and fast-track
procedures for the Uruguay Round. The disapproval resolution votes and the vote on
H.Res. 146 were an opportunity to debate the trade talks with Mexico.
There was some congressional interest in splitting the extension vote by providing
separate ground rules for the Uruguay Round and the NAFTA. If the two had been split,
the negotiations with Mexico might not have been granted fast-track procedures, given the
opposition to those talks. However, Congress did not split the vote, so it was possible that
opposition to one set of negotiations could have caused disapproval of fast-track
procedures for all other negotiations. In such a case, it probably would have been the
NAFTA that halted the Uruguay Round. A situation where multilateral trade negotiations
in the GATT were threatened by domestic opposition to a U.S. bilateral trade initiative
was unprecedented.
Effects of a Trade Agreement with Mexico
A central element of the opposition to a trade agreement with Mexico was based on
the anticipated loss or deterioration of U.S. employment. During the debate, some
Members argued that an agreement with Mexico would seriously harm the U.S. middle
class. Some argued that manufacturing plants would move to Mexico and that the
industrial base of America would suffer.
In support of an agreement with Mexico, some Members said that forming a trading
bloc would give the countries of North America a competitive advantage against a unified
Europe. Some said that the free-trade agreement with Canada had resulted in economic
benefits for the United States, suggesting the same would be true of a free trade agreement
with Mexico. Others said that an agreement would support U.S. export industries, aid the
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border region, and help the U.S. energy sector. The Administration argued that exports
were a major area of economic growth in recent years.
Economic studies available before the fast-track extension vote provided some
understanding of the potential economic effects, but like all studies of this type, they did
not provide precise forecasts of future events. Some major studies showed small but
positive effects on the U.S. economy of a NAFTA and suggested that few sectors would
be hurt by an agreement. However, a central problem was that a NAFTA was expected
to have effects that were difficult to model, such as how greater protection under patent
laws could affect bilateral trade flows. Another weakness was that the models might have
been based on the best possible assumptions about the amounts and conditions of capital
flows, but these assumptions might not have reflected the real world. Some research
organizations at the time argued that capital flows would be a major factor in the effect of
a NAFTA on the U.S. economy.
Several other subjects were discussed in the fast-track debate. One subject was the
foreign relations aspect of Mexico's request for free-trade negotiations. Some Members
argued that if the United States refused to negotiate with Mexico, or if Congress denied
fast-track procedures, there would be political repercussions. Another subject was
political reform in Mexico. Some Members said that a free-trade agreement would ensure
economic improvement, which would lead to political reform, while others argued that the
United States should use the trade negotiations to spur political reform and improved
human rights in Mexico. The scope of the agreement was another subject: some Members
argued that the negotiations should include illegal drugs and immigration, while other
Members and the Administration said that the negotiations should be limited strictly to
trade issues.
Expanded Talks to Include New Issues
Traditionally, labor unions and workers in import-competing industries have been
among the strongest opponents of trade negotiations that open U.S. markets to foreign
products. In 1991, these groups were joined by others with different concerns but the
same goal--to stop the trade agreement with Mexico. They formed an effective opposition
force that was new to the trade debate. The key groups in the broad coalition were labor
unions, environmentalists, human rights groups, and consumer groups.
Labor unions argued that the economic effects of a NAFTA were not clearly
understood and so the negotiations should be put on hold until more information was
available. They feared the loss of wages and jobs for U.S. workers and advocated
improvements in workers' conditions in Mexico. Environmentalists had become more
active in the trade area during the Uruguay Round. They had called for those trade
negotiations to take into account the environmental effects of the changes resulting from
an agreement and pressed for inclusion of discussions on the environment in the Uruguay
Round and in NAFTA. Human rights groups wanted improvements in the political
process in Mexico. Consumer groups argued that health and safety standards in the
United States would decline.
These groups influenced the agenda for the U.S.-Mexico talks. They appealed to
Members of Congress to consider the differences in the U.S. and Mexican systems and the
possible harmful results of such differences. Some of their arguments were economic:
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lower environmental standards in Mexico were an economic incentive for companies to
move factories there. Other arguments were more socially oriented: workers should have
rights such as union participation and a safe workplace.
Congressional Delegation of Authority to the Executive Branch
Apart from the substance of the negotiations, Members also had concerns about
delegation of authority under the fast-track process. They were concerned about retaining
the right to amend legislation to implement trade agreements. They saw the formulation
and full consideration of such legislation as a serious constitutional responsibility of the
legislative branch, arguing that since the Constitution had given Congress the power to
regulate foreign commerce, Congress should not delegate this authority to the executive
branch.
The fast-track procedure is an exercise of the rulemaking power of either House and
hence can be changed by either House with respect to its procedure for changing its rules.
In several other ways, Congress indicated that, although it might delegate authority to the
President to negotiate trade agreements with fast-track procedures, it still had the right to
withdraw or modify those procedures. For example, in the 1988 Trade Act, Congress
provided a means for terminating the fast-track authority delegated to the President. And,
as mentioned earlier, H.Res. 146 tied fast-track procedures to the President's achieving
commitments on labor and environmental issues.
Some Members introduced resolutions to modify fast-track procedures to allow
amendments on certain issues. One resolution would have allowed amendments in the
areas of labor standards, environmental protection, rules of origin, dispute settlement, and
worker adjustment assistance. Other resolutions would have changed or modified the
rules for consideration of legislation to implement trade agreements.
A few Members who argued for the prerogative to amend implementing legislation
expressed suspicion about how the Administration would follow directives from Congress.
They believed that the consultation process was inadequate. At least one Member said
that the Administration had misled Congress during the free trade negotiations with
Canada.
Some Members asserted that the fast-track process was the best process possible,
given the need for U.S. negotiators to reach an agreement and then submit the agreement
for a timely vote without changes that might undo the agreement package. Others said
that Members should not deny fast-track procedures in advance, because they could decide
later, after an agreement was reached, whether or not to approve the agreement and
implementing legislation. They emphasized that Congress retains the ultimate right to
approve or disapprove the agreement. Others pointed out, however, that it would be more
difficult to vote against an agreement once it was reached. The sense of the discussion
was that the question of delegated authority was an issue for continued debate.
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Outcome
On May 23, 1991, the House voted down disapproval resolution H.Res. 101 and
endorsed H.Res. 146, the resolution that set out goals for the negotiations. Although a
large number of House Members opposed the NAFTA negotiations, if the talks were
going to proceed, they wanted strong congressional guidelines for U.S. negotiators in the
talks. On May 24, 1991, the Senate defeated disapproval resolution S.Res. 78, thereby
assuring the extension of fast-track negotiating authority for another two years. The votes
on the disapproval resolutions showed that opposition to the trade talks was stronger in
the House. Neither the House vote nor the Senate vote was an endorsement of a NAFTA.
Given the strong opposition expressed during the fast-track debate and the clear intent in
the House to monitor the trade talks, any negotiations or final agreement probably would
be scrutinized closely.
Negotiators from the United States, Canada, and Mexico formally began NAFTA
talks in June 1991 and reached a final agreement in August 1992. In a campaign speech
in October 1992, then-candidate Clinton said he wanted to negotiate supplemental
agreements on the environment and on labor with Canada and Mexico. After the Clinton
Administration began, negotiations on the environment, labor, and import surges were held
from March through August 1993, and supplemental agreements on these three topics
were signed in September 1993. Legislation to implement these agreements was enacted
in December 1993, and the NAFTA went into effect January 1, 1994.
With the extension of fast-track procedures in May 1991, negotiators anticipated a
Uruguay Round final text by the end of 1991. They did not reach an agreement by that
time, nor by the mid-1993 deadline of the fast-track extension. In July 1993, Congress
approved another extension of fast-track procedures for a Uruguay Round agreement,
with a deadline for concluding the agreement by December 15, 1993. A final agreement
was reached in time, and countries had the formal signing on April 15, 1994. Legislation
to implement the Uruguay Round agreement was signed into law in December 1994, and
the agreement went into effect January 1, 1995.
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