Why Certain Trade Agreements Are Approved as Congressional-Executive Agreements Rather Than Treaties
Released: 2013-04-15T00:00:00

Statutory Authority for Trade Agreements

The broad-gauged trade agreements entered into by the United States in the 1990s—the North American Free Trade Agreement (NAFTA), the World Trade Organization (WTO) Agreement, and the multilateral trade agreements that a country must accept as a condition of WTO membership—were negotiated by the President and submitted to Congress under the terms of the Omnibus Trade and Competitiveness Act of 1988 (OTCA) and the Trade Act of 1974. The OTCA provided the President with authority to negotiate and enter into tariff and nontariff trade barrier (NTB) agreements until June 1, 1993, authority that was later extended to April 15, 1994, in order to complete the General Agreement on Tariffs and Trade (GATT) Uruguay Round.

The OTCA also provided that NTB agreements negotiated under the statute could not enter into force for the United States unless, among other things, the agreements were submitted to Congress along with an implementing bill and the bill was enacted into law. Such legislation was entitled to so-called fast track or expedited consideration. The law, Section 151(a), defines "implementing bill" as a bill that contains, inter alia, a provision approving the trade agreement or agreements and, if changes to existing laws are needed, provisions "necessary or appropriate to implement such trade agreement or agreements ... either repealing or amending existing laws or providing new statutory authority." It is the provision approving the agreement or agreements, once enacted, that makes the Uruguay Round agreements, as well as the NAFTA, other free trade agreements and earlier GATT-related agreements, congressional-executive agreements.

Development of the Statutory Trade Agreements Program

The trade agreement authorities and requirements embodied in the OTCA reflect a congressional approach to international trade policy that evolved over a number of years. As early as 1890, Congress delegated tariff bargaining authority to the President and authorized him to suspend existing duty-free treatment on particular items by proclamation. The Supreme Court subsequently held that the authorizing statute, Section 3 of the Tariff Act of 1890 did not unconstitutionally delegate either legislative or treaty-making authority to the President. In the Reciprocal Trade Agreements Act of 1934, as amended and extended, Congress authorized the President, for limited periods, to enter into reciprocal tariff agreements with foreign countries and, within a designated range, to proclaim tariffs needed to implement these agreements without subsequent congressional approval. This authority was used to enter into numerous reciprocal trade agreements, to proclaim new tariffs as a result, and to enter into the General Agreement on Tariffs and Trade (GATT). The President's modification of tariffs under this statute was likewise held to be valid under the Treaty Clause, federal courts having acknowledged that not all international undertakings of the United States are concluded as treaties and that congressional-executive trade agreements could find a constitutional basis in the joint exercise of Congress's tariff and commerce authorities and the President's foreign affairs power.

As GATT parties began to negotiate more extensively to eliminate nontariff trade barriers in a number of areas, Congress enacted legislation that would both provide the President with negotiating credibility and ensure that Congress carried out its constitutional responsibilities regarding legislative implementation of the agreements. Since NTB agreements could address a variety of regulatory matters (e.g., subsidies, government procurement, product standards), these agreements might require more elaborate changes in federal law than tariff agreements, which for the most part could be implemented through a pre-authorized presidential proclamation reducing tariffs on particular items. In contrast, if legislation were needed to implement NTB agreements, Congress could choose not to vote on such legislation or could add amendments that might be viewed as inconsistent with agreement obligations. At the same time, overly broad delegations of authority to the President to implement NTB agreements or legislative vetoes of executive implementing actions might not comport with constitutional requirements regarding the passage of legislation. In the Trade Act of 1974, Congress provided the President with new authority to negotiate multilateral trade agreements for a limited period of time, allowing him to proclaim certain tariff reductions and modifications but requiring him to submit NTB agreements to Congress, which would vote on their approval and on legislation necessary or appropriate to implement them. Because of the complexities of multilateral negotiation, Congress sought to provide the President with a sound negotiating posture by providing that it would consider trade agreement implementing legislation submitted under the terms of the statute (including requirements that the President notify and consult with Congress) within a prescribed period of time and without amendment. To this end, Section 151 of the act sets out procedural rules according an introduced bill expedited consideration and ensuring a final floor vote.

The fast-track procedure in the 1974 act was first used with respect to the GATT Tokyo Round Agreements, which were approved and implemented in 1979. Temporary statutory authority for bilateral free trade agreements (FTAs) was added in the Trade and Tariff Act of 1984 and was again provided for in the OTCA. Congress approved bilateral FTAs with Israel and Canada, the NAFTA, and the GATT Uruguay Round agreements under one or the other of these authorities. The FTA with Jordan was statutorily implemented in 2001, though not under a fast-track authorizing statute and without an express approval provision.

The Bipartisan Trade Promotion Authority Act of 2002 (BTPAA), contained in Title XXI of the Trade Act of 2002, granted renewed trade negotiating authority to the President. Although the authority expired during the 110 th Congress, implementing bills for trade agreements entered into before July 1, 2007, remained eligible for expedited legislative consideration. Eligibility continued because only the agreement needed to be entered into before July 1, 2007, for its implementing legislation to qualify for consideration on an expedited basis. The 2002 act did not require that implementing legislation for any such agreement be submitted to Congress by a given date. Agreements that had been entered into before July 1, 2007, but that had not been approved by that date, included U.S. free trade agreements with Colombia, Korea, and Panama. Congress approved the three agreements in October 2011 under the expedited BTPAA procedures. Agreements with Chile, Singapore, Australia, Morocco, Bahrain, Oman, the Dominican Republic-Central America-United States FTA (DR-CAFTA), and Peru had been approved earlier under this process.

Additionally, the United States Trade Representative (USTR), on behalf of the President, notified the House and Senate by letter in December 2009 that the President intended to enter into negotiations aimed at a regional, Asia-Pacific trade agreement, called the Trans-Pacific Partnership (TPP). Notwithstanding the expiration of BTPAA authorities, the USTR stated in a December 2009 Federal Register notice that "USTR is observing the relevant procedures of the Bipartisan Trade Promotion Authority Act of 2002 (19 U.S.C. 3804), which apply to agreements entered into before July 1, 2007, with respect to notifying and consulting with Congress regarding the TPP trade agreement negotiations." These include the President's written notice to Congress of the President's intent to enter into trade agreement negotiations with one or more countries at least 90 days before the President initiates any such negotiations. Notably, discussions to reinstate TPA through legislation have recently gained attention. In March 2013, the Acting U.S. Trade Representative, Demetrios Marantis, stated that the Obama Administration will work with Congress to enact new TPA legislation.

Along with the United States, TPP negotiating parties include Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam, with Mexico and Canada having recently joined the talks. Japan has expressed its intent to join the negotiations. Were Congress to enact trade negotiating authority with expedited legislative procedures in the future, it would have the option of including ongoing TPP negotiations within the scope of the statute. Congress took this approach in the BTPAA with respect to ongoing FTA negotiations with Singapore and Chile and other trade negotiations under way at the time.

Constitutionality of the Congressional-Executive Trade Agreement: Judicial Views

The question whether trade agreements could constitutionally be entered into as congressional-executive agreements rather than treaties emerged during consideration of Uruguay Round implementing legislation. The question originally was posed because of the perceived effect of the agreements on states. The issue also arose in a judicial challenge to the NAFTA, in which it was alleged that the failure to use the treaty process rendered the agreement and its implementing legislation unconstitutional. In Made in the USA Foundation v. United States , an Alabama federal district court held in July 1999 that "the President had the authority to negotiate and conclude NAFTA pursuant to his executive authority and pursuant to the authority granted to him by Congress in accordance with the terms of the Omnibus Trade and Competitiveness Act of 1988 ... and section 151 of the Trade Act of 1974 ... and as further approved by the [NAFTA] Implementation Act." In the court's view, the Foreign Commerce Clause, combined with the Necessary and Proper Clause and the President's Article II foreign relations power, provided a constitutionally sufficient basis for the agreement. The court preliminarily held that institutional, but not individual plaintiffs, had standing to sue, and that the political question doctrine did not bar it from ruling on the merits.

On appeal, the U.S. Court of Appeals for the Eleventh Circuit (Eleventh Circuit), while agreeing that appellants had standing, held that the issue of whether an international commercial agreement such as the NAFTA is a treaty that must be approved by two-thirds of the Senate was a nonjusticiable political question. The court dismissed the appeal and remanded to the district court with instructions to vacate. The Supreme Court denied certiorari in the case.

Under the political question doctrine, a court will decline to rule on the merits if it finds that the underlying matter is committed to the discretion and expertise of the legislative and executive branches. In the case at hand, the Eleventh Circuit applied a tripartite inquiry that it said was suggested by Justice Lewis Powell in Goldwate r v. C arter , a distillation of criteria for determining justiciability originally identified in Bak er v. C arr . The three questions posed by the court were the following: "(i) Does the issue involve resolution of questions committed by the text of the Constitution to a coordinate branch of government? (ii) Would resolution of the question demand that a court move beyond judicial expertise? (iii) Do prudential considerations counsel against judicial intervention?"

Regarding the first question, the court stated that "with respect to commercial agreements, we find that the Constitution's clear assignment of authority to the political branches of the Government over our nation's foreign affairs counsels against an intrusive role for this court in overseeing the actions of the President and Congress in this matter." The court also pointed to the "vast" express constitutional grants of power conferred upon the political branches in foreign affairs and commerce, and the Supreme Court's long-standing recognition of the power of the political branches, to conclude "agreements that do not constitute treaties in the constitutional sense."

Regarding the second question, the court concluded that a ruling on the merits would require it to consider areas beyond its expertise, noting, inter alia, that the Treaty Clause did not set forth circumstances under which Clause procedures must be followed when approving international commercial agreements, and that having to determine the "significance" of an international agreement as the key factor in determining whether it should be a treaty or not would "unavoidably thrust [the court] into making policy judgments of the sort unsuited for the judicial branch."

Addressing the third question, the court cited, inter alia, the need for the nation to speak with uniformity in the area of foreign affairs and commerce, and the fact that a judicial order declaring the NAFTA invalid "could have a profoundly negative effect on this nation's economy and its ability to deal with other foreign powers," noting that such an order "would not only affect the validity of NAFTA, but would potentially undermine every other major international commercial agreement made over the past half-century."