Obama vs. Warren on Fast Track: Why This Fight Is Getting So Nasty
Policy + Politics

Obama vs. Warren on Fast Track: Why This Fight Is Getting So Nasty

President Obama and Sen. Elizabeth Warren (D-Mass) never were particularly close, even when Obama backed the Consumer Financial Protection Bureau she proposed as part of the Dodd-Frank financial overhaul legislation.

But their relationship has become downright chilly lately in a bitter fight over fast-track legislation pending in the Senate that would pave the way for Obama’s cherished Trans-Pacific Partnership trade deal with 11 Pacific Rim countries.

Related: Obama’s Key Foreign Policies Live or Die in GOP Hands

The trade promotion authority would allow the president to finish negotiating the deal in relative secrecy. However, the final agreement would be subject to an up-or-down vote by Congress, although it couldn’t be amended. The pact would set new tariff and regulatory terms for trade and business investment in the U.S. and the 11 other Asian countries that represent roughly one-third of world trade.

Obama and other proponents say the pact would be an important U.S. “pivot” towards Asian countries like Malaysia, Brunei, Japan, Singapore and Vietnam to counter China’s rising influence. They also claim the trade deal would unlock opportunities and address vital modern-day issues within the global economy.

By contrast, opponents view the trade deal as primarily a boon to big business with high risks for average workers. They contend it would encourage U.S. multinationals to continue exporting manufacturing jobs to low-wage nations while restricting competition.

Arguably one of the biggest controversies is over an obscure provision that would allow multinational to challenge regulations and court rulings before special tribunals that operate outside the domestic legal systems of the U.S. and other participating countries.

Warren has made this provision – formally known as “investor-state dispute settlement” or ISDS -- one of the primary targets of her critique of the legislation. She argues that the appeal process would potentially expose U.S. taxpayers to massive monetary damages outside of the U.S. legal system if corporations sue the government over new laws to protect the environment or workers.

Related: Senator Warren Hits Back at Obama in Pacific Rim Trade Fight

The Massachusetts Democrat also has argued that the framework of the trade agreement is structured in such a way that would allow a future president to undercut provisions of the 2010 Dodd-Frank financial reform law that was enacted in the wake of the 2008 economic crisis

A miffed Obama said in an interview with Yahoo News over the weekend that Warren, a former Harvard Law professor, was “absolutely wrong” in her warnings about ISDS

“Think about the logic of that, right?”  Obama said in the interview with Matt Bai. “The notion that I had this massive fight with Wall Street to make sure that we don’t repeat what happened in 2007, 2008. And then I sign a provision that would unravel it?  I’d have to be pretty stupid.”

“She and I both taught law school, and you know, one of the things you do as a law professor is you spin out hypotheticals,” Obama added in lashing out at Warren and other Democratic critics of his signature trade initiative. “And this is all hypothetical, speculative.”

Related: Warren 'absolutely wrong' on trade pact threat to Dodd-Frank: Obama

With so much at stake, Obama and his one-time White House consumer adviser Warren have gone public with their opposing views on the fast-track trade bill awaiting a vote in the Senate. Here is a summary of the three points that the two former allies are making, based in part on interviews with other publications and news media including The Washington Post, Yahoo News and NPR.

What Warren Says:

  • The review process is too secretive. The president said in his Nike speech last week that he’s confident that when Americans read the agreement for themselves that they will see it’s a good deal, but the documents are currently classified and only available to members of Congress and others on a highly restrictive basis. Obama has committed to letting the public see the tentative deal after Congress votes to authorize fast track. At that point it will be impossible for Congress to amend the pact – it can only vote up or down.
  • Investor-State Dispute Settlement provision is dangerous. The ISDS could undermine or discourage public-interest regulations in the United States and other participating Asian countries where there is need for reforms in working conditions and employee rights. The danger is that large, multinational corporations may decide they don’t like the new regulations and challenge them by filing suit in quasi-judicial bodies outside traditional court systems.
  • U.S. workers could be harmed by the trade deal.  In order to grow our economy, we need to sell our products to the rest of the world, but we have to have a level playing field. That means strong trade laws and strong enforcement as well as labor and environmental standards. The U.S. must protect its intellectual property rights by getting tough on the knock offs that undercut our ability to compete and, in the long run, cost us money and jobs. And it means putting pressure on foreign currency manipulation that artificially makes our goods less competitive.  The president’s trade proposals don’t adequately protect U.S. workers and businesses.

What President Obama Says:

  • Why the U.S. must support the trade agreement. There are 525 million middle-class consumers in Asia alone. By 2030, there are expected to be 3.2 billion middle-class consumers there, more than 8 times the size of what the U.S. market is expected to be then. Whose goods and services are these consumers going to buy? And who will set the international standards that define world trade? If it’s not America, it’s going to be competitors like China.
  •  The trade deal would have scores of positive economic benefits. It would result, for example, in a further reduction in tariffs on American goods and streamlined and simplified customs rules for American businesses. Participating countries would be required to put in place progressive labor standards, including a minimum wage, a ban on child labor and the right to join a union. Finally, countries covered by the pact would be required to put in place progressive environmental standards, including a ban on wildlife trafficking, illegal logging and overfishing.
  • Why Warren is wrong on the ISDS process. Notwithstanding her warnings about secretive international tribunals that would benefit multinational corporations, ISDS provisions are already included in over 50 trade deals the U.S. is party to and are meant to protect American companies operating in nations with underdeveloped legal systems. Moreover, the U.S has never lost a case when challenged by a multinational company over a U.S. law or regulation.

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