Here is another interesting issue that came up at last week's House Ways and Means Committee hearing with U.S. Trade Representative Robert Lighthizer:
Congressman Johnson: Can you tell me what the sunset clause is and what they are trying to accomplish with it?
Ambassador Lighthizer: Absolutely, Congressman. So, the way the sunset clause works is that at the end of five years, the president would make a decision as to whether or not the agreement should continue. It would not require congressional action; it would not be a difficult decision. The thought behind it is, number one, we have a number of members in this committee, particularly on the Republican side, that believe we ought to be sunsetting things. So I would have thought this would have been something that would be consistent with that. And the idea is ‘If it is such a good agreement, we will naturally roll it over. If it is not a good agreement, we won't.’ So, after a period of time, we ought to be sitting down and reviewing what happens to these agreements. There is nothing about trade in my opinion that makes it above all other logic in the way we approach the legislation. So the basic idea of an agreement like this is that you have baseline WTO trade, and then we are giving someone a benefit – a benefit versus the rest of the world. And they are giving us approximately a similar benefit. And that's how you create an FTA. If you find yourself in a position at some point, and I would suggest five years is a reasonable period of time, where what we gave and what we got is so out of balance, it’s reasonable to suggest that we ought to rebalance it. Things change, the economy changes. Indeed, I would think NAFTA is a classic example of why we have this problem. We have a 24-year agreement and that agreement… the whole economy has changed. We have gotten way out of whack in terms of what our deficits are – it’s having a peculiar effect on various industries, and it’s reasonable to sit back and look at it. But if the agreement is as business people tell me that it is going to be so spectacular, it strikes me that the president looking at it after five years won't be a huge hurdle. But’s it’s a reasonable thing to expect people to do, and that's the nature of it.
If the idea is that, "after a period of time, we ought to be sitting down and reviewing what happens to these agreements," I'm just not sure why we need a new clause in the agreement in order to do so. Isn't this exactly what the Trump administration has set in motion with KORUS and NAFTA right now? Any individual party can undertake an internal review, or push for the other parties to review a trade agreement, at any time. And there already are provisions in place for the parties to review an agreement jointly, though the Joint Committees or Commissions set up to supervise the implementation of the agreement. Thus, as things stand now, parties can have a review whenever they want. A sunset clause wouldn't add to that.
What the administration really seems to want is more executive branch power over the agreement: "at the end of five years, the president would make a decision as to whether or not the agreement should continue." Congress has already delegated a lot of its constitutional power over trade to the President; I'm not sure it will be very enthusiastic about giving up more. If there is going to be a review of trade agreements, Congress is likely to want a say in the decision.
