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The amendment to FastTrack that could save America
Howard Richman, 5/11/2015

Tomorrow, the Senate will start voting on whether or not to give President Obama Fast-Track power (Trade Promotion Authority). As my father, son and I noted in a commentary last week (Fast Tracking America's Economic Destruction), the Trans Pacific Partnership will give our treaty partners permission to manipulate exchange rates.

Even worse, the court system in TPA would make it impossible for the United States to ever combat currency manipulation because, if the United States were to promulgate tariffs against a currency-manipulating treaty country, businesses exporting to the United States from that country could sue the U.S. government for billions of dollars of damages in TPP's private court system. We wrote:

The Worst Thing about Fast Track

The worst aspect of Fast Track is not that it would permit the currency manipulations that tilt the playing field against American workers. It would set up a private court system that could render billions of dollars of judgment against the United States government should a future president decide to balance its trade with the currency-manipulating countries through tariffs.

In contrast, WTO rules include a provision that lets trade deficit countries impose trade-balancing tariffs. President Nixon took advantage of that provision when he imposed an across-the-board 10% tariff in August 1971, which quickly forced changes that brought U.S. trade into balance by 1973. The United States could take advantage of this WTO provision today. Doing so would give the U.S. more factories, more R&D, and more economic growth.

But the new private court system changes everything. It ensures that no future president can ever solve America’s trade deficits.

Here is the text of the simple amendment that would give future presidents the ability to balance trade. It should be added to all trade treaties that are negotiated by the U.S. government:

DEFINITIONS.

(1) BILATERAL TRADE DEFICIT.— A country has a bilateral trade deficit with another country if the total value of its imports of goods and services from the other country is more than 110% of the total value of its exports of goods and services to that country over the most recent year period.

(2) OVERALL TRADE DEFICIT.—A country has an overall trade deficit if the total value of imports of goods and services from all countries is more than 101% of the total value of its exports of goods and services to all countries over the most recent year period.

IMPOSITION OF DUTIES

A country having an OVERALL TRADE DEFICIT may impose duties upon goods and services that are entered into its customs territory from any country with which it has a BILATERAL TRADE DEFICIT. The country imposing such duties will recalculate its OVERALL TRADE DEFICIT and its BILATERAL TRADE DEFICIT quarterly (4 times) each year. Duties will be suspended immediately if the conditions permitting them have ended.

This week, the Senate is planning to throw up a smokescreen to hide the fact that they are voting for currency manipulation. After enabling currency manipulation in Fast-Track, they will vote for a separate bill that is against currency manipulation.

Keep in mind that that bill would not apply to TPP countries, because, if the United States were to take action against currency manipulation, the businesses upon whom the tariffs are imposed could sue the United States in TPP's courts.

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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

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  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

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  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]