Working Paper: NBER ID: w17810
Authors: Levent Celik; Bilgehan Karabay; John McLaren
Abstract: With fast-track authority (FTA), the US Congress delegates trade-policy authority to the President by committing not to amend a trade agreement. We suggest an interpretation in which Congress uses FTA to forestall destructive competition between its members for protectionist rents. We show that FTA is never granted if an industry is operating in the majority of districts. Second, the more equally distributed are the industries across districts and the more similar are the industries' sizes, the more likely it is that FTA is granted. This is true since competition over rents is most punishing when bargaining power is symmetrically distributed, and in that case the ex ante expected welfare of each district is lower without FTA. Third, if existing levels of protection are very different across industries, even if FTA is granted, it may not lead to free trade because a majority of industries may prefer the status quo to free trade.
Keywords: Fast Track Authority; Trade Policy; Congressional Bargaining
JEL Codes: C72; C78; D72; F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| concentration of an industry in districts (R32) | likelihood of FTA being approved (F15) |
| more equally distributed industries across districts (L59) | likelihood of FTA being granted (F53) |
| similar sizes of industries (L89) | likelihood of FTA being granted (F53) |
| disparities in existing levels of protection across industries (L59) | realization of free trade (F13) |