Editor's note: Joe Logan is CPA’s Chief Co-Chair for Agriculture.
Imagine you and your spouse going into your bank to settle on the purchase of a home. When you sit down with the loan officer, you are informed that the interest rate for the loan, the payoff period of the loan, the down payment for the loan, the terms of the loan and all the details about other aspects of purchasing the house have been negotiated in advance by the bank and the real estate agent. You can either sign on the line or walk away, but no changes are permitted.
[by Joe Logan | April 12, 2015 | Cleveland Plain Dealer]
Even more daunting, you know that the banks and realty companies have a long track record of negotiating such deals, which have performed marvelously well for those institutions, but have been horrible for the customers.
Although this scenario seems almost unfathomable for anyone who has ever ventured into the housing market, this is exactly the type of scenario President Barack Obama is requesting when he asks Congress to renew Trade Promotion Authority -- also known as "fast track."
Fast track moves an important responsibility, the negotiation of trade agreements, that was constitutionally delegated to the Congress into the almost exclusive domain of the president. It allows the president to negotiate trade deals in secret and then present them to Congress for an up-or-down vote, with no amendments. This process might have been workable for the more simple straightforward agreements to lower tariffs, but for today's complex agreements, such a process simply is clearly inappropriate, even irresponsible.
The Trans-Pacific Partnership, or TPP, for example, has been negotiated behind closed doors with little input from the public or Congress. Members of Congress have very limited access to the agreements until negotiations are finalized and the agreement is formally presented to them.
Congress, however, should have full opportunity to review and discuss the provisions of a trade agreement, consistent with the authority and power endowed by the Constitution. Yet this has not happened. The lack of transparency in negotiating TPP is particularly egregious, considering its expansive scope.
International trade can be a prudent and effective business practice (who doesn't enjoy bananas in January?), but when considering agreements of this magnitude, the overall trade deficit for our nation must be considered. The trade deals that this nation is marching into are being touted as potential cornucopias of wealth for the United States, but similar past trade agreements have increased, not decreased, the trade deficit.
For 30 years and after several free trade agreements, including the North American Free Trade Agreement, the Central American Free Trade Agreement and the U.S.-Korea Trade Agreement, that trade deficit has continued to balloon. In 2014, the trade deficit increased to $505 billion, representing nearly 3 percent of gross domestic product and slowing growth for the overall economy. Yes, the positive trade balance of U.S. agriculture trade is good news -- but it is massively overshadowed by the alarming overall U.S. trade deficit.
There are many other factors that also must be considered when negotiating these huge trade agreements, and one of them is currency manipulation. Several countries involved in the TPP negotiations are known currency manipulators, including China, Malaysia, Singapore, and Japan. Recent reports noted that the U.S.-Japan trade deficit reached nearly $80 billion in 2013, and currency manipulation was the most significant cause of the deficit. The Economic Policy Institute estimates that this trade deficit with Japan resulted in 896,600 jobs eliminated in the United States in nearly every congressional district.
Another massive agreement in the works with Europe, known as the Transatlantic Trade and Investment Partnership, offers more of the same. We clearly need to take a new approach to trade, which includes three important guidelines:
* All future U.S. trade agreements should have the goal of balancing imports and exports, thus eliminating the U.S. trade deficit.
* The United States must not enter agreements that will subvert the jurisdiction of our important and hard-fought domestic laws protecting workers, the environment and our children.
* We need to stop thinking of trade as a tool to change the behavior of nations. It was exactly this failed mentality that led to the embargo against Cuba, which in the end hurt nobody but hard-working Cubans and did nothing to change their government.
I seriously doubt any of you would buy a home or sign a long-term deal with a blindfold on, and neither should Congress. It's time to say no to fast track and yes to smart trade that is truly in our national interest.
Joe Logan is president of the Ohio Farmers Union. He lives in Kinsman Township, Trumbull County.