Federal Trade Agreements Act

In 1979, the outgoing Jimmy Carter administration signed the Federal Trade Agreements Act. Its provisions are not well known, since it was promoted at the time as a mere addendum to the Trade Act of 1974 and hence unimportant. It is far more than this, and authorizes an increase of the power of the president over trade policy.

Purposes

The act itself summarizes its purposes. Primarily, the act permits the president to intervene wherever possible or necessary to create a free-trade global economic order. The rationale for this is that the United States benefits from free trade, and therefore, the executive branch has the right to independently negotiate with foreign states for a lowering of trade distortions, such as subsidies or tariffs. In other words, the act is about the enforcing of free trade globally through the executive branch of government.

Barriers

The elimination of trade barriers is the focal point of the act. To a great extent, trade policy here is made a part of the executive, rather than the legislative, branch of government. The only control over the president here is that the House Ways and Means Committee must be "consulted" in any trade negotiation. There is an explicit exception to the state of Israel (section 2112), where Israel can have tariffs against the United States. All states engaging in free trade with the United States also must have free trade with Israel. This is the only country excepted in the act.

U.S. Law

The primary text of the law is confusing concerning the status of U.S. law. The first section of this issue area holds clearly that American law is paramount. However, it quickly states thereafter that the president has the right to "amend, repeal, or enact a statute of the United States" whenever these acts or laws conflict with free trade. The bill holds that the president must submit a bill to this effect, though the president always has had that power. The bill, as later sections indicate, is merely an informal notice to the House that the president is repealing a certain law concerning free trade. It must be signed by the president to take formal effect. The only stipulation is that the action must be published in the "Federal Register."

Standards

This act also legislates that all foreign products are to be treated the same as all domestic products. While the act holds that American law is to be paramount in all disputes, the act also stipulates that, "wherever possible," international standards concerning trade policy and customs should apply. The only time when international standards should not apply are in cases of national security, deceptive products, or advertising and health and safety issues. U.S. law is not explicitly an issue here.

References

• Cornell University Law School: Federal Trade Agreements Act of 1979 -- Statement of Purpose
• Cornell University Law School: Federal Trade Agreements Act of 1979 -- Barriers to and Other Distortios of Trade
• Cornell University Law School: Federal Trade Agreements Act of 1979 -- Relationship of Trade Agreements to United States Law
• Cornell University Law School: Federal Trade Agreements Act of 1979 -- Federal Standards-related Activities