Sen. Elizabeth Warren is raising an unusual alarm over President Barack Obama’s trade push: “Fast track” trade legislation, she says, could help a Republican president eviscerate the financial rules Congress enacted after the financial crisis.
Hers a complicated, roundabout argument, but Ms. Warren insists it’s not a hypothetical. Still, a very specific series of events would have to occur for her warning to prove prophetic.
First, the backdrop: Mr. Obama is trying to win passage of a trade agreement with 11 nations around the Pacific. To get that through Congress, he will also need fast track authority, which would allow him—and the next president—to put any trade deal before Congress for an up-or-down vote without amendments.
That’s where Ms. Warren’s argument comes in. At a dinner Tuesday night hosted by the liberal-leaning Institute for New Economic Thinking, Ms. Warren cautioned that the next president—should he or she be a Republican—could use that authority to pass another trade deal with the European Union that could roll back the Dodd-Frankfinancial law and its related rules for Wall Street.
“Big banks on both sides of the Atlantic are gearing up to use that agreement to water down financial regulations,” she said.
But for that to happen, several shifts would have to occur.
A new Republican president would have to embrace Mr. Obama’s early-stage negotiations with the EU and put financial regulation on the table. Despite pleas from Brussels, the Obama administration has firmly objected inclusion of financial regulation in the EU negotiations, which could someday lead to a pact called the Transatlantic Trade and Investment Partnership, or TTIP. The Treasury prefers to negotiate international financial rules through other international forums.
Then, the Republican administration would have to make the conscious decision to negotiate with foreign officials on domestic Dodd-Frank rules, not just international rules for banks. Such a step is unlikely, at least at first, because the new president would likely just choose to roll back Dodd-Frank directly through changes to U.S. law, with ordinary legislation through the Republican-controlled Congress, assuming the GOP maintains control of both the House and Senate after 2016. No trade deal or fast track would be needed to take that route.
But if that didn’t work, then a TTIP deal—which would also comprise everything from agricultural tariffs to auto-safety rules—could in theory be brought to Congress for fast-track approval, with softer rules for Wall Street wrapped inside.
To read the full article, please click here.