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A New NAFTA Can Help Reform the Administrative State

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A New NAFTA Can Help Reform the Administrative State

The road to regulatory and infrastructure reform runs through the landmark trade agreement. May 31, 2018
Politics and law
Economy, finance, and budgets

Working in tandem with the White House, federal agencies are moving swiftly to reform the administrative state that President Trump inherited from President Obama. The White House’s semiannual “Unified Agenda of Regulatory and Deregulatory Actions,” released in early May, outlines federal agencies’ efforts to reduce their own excessive regulatory burdens and to streamline their own processes for granting federal infrastructure permits. 

Unfortunately, the government’s capacity for swift policy reversals runs both ways. The next pro-regulatory presidential administration will likely move just as swiftly to undo many of the Trump administration’s reforms, through the same processes being used by Trump’s agencies today. Any innovations pioneered to accelerate regulatory rollback now will be used, someday, to accelerate progressive regulatory restoration—just as this administration’s deregulatory efforts benefitted from Obama’s innovations. And if history is any guide, this pattern of unilateral regulatory reform, followed by unilateral regulatory expansion, seems more advantageous, in the long run, to the expansionists than to the reformers.

For that reason, unilateral regulatory-reform efforts by agencies are no substitute for actual legislative reforms by Congress to restrain and reorient the agencies. The House already has passed significant reforms, including the Regulatory Accountability Act—a bill that offers the first comprehensive update to the 70-year-old statutory core of modern administrative law. It would make the regulatory rulemaking process more transparent, more participatory, and it would make federal agencies more accountable to the courts and to the public at large. It would impose on agencies a binding statutory obligation to account for the costs and benefits of their proposed rules, an analysis that in turn could be reviewed by the courts.

A bipartisan Senate coalition introduced a version of the Regulatory Accountability Act last year, but because its majority support falls short of a filibuster-proof supermajority support, it has languished.

The same can be said of much-needed reforms to the federal regulatory process for approving new infrastructure. Well-intentioned laws like the National Environmental Policy Act of 1970 have been turned into bureaucratic quagmires—which, for opponents of new highways, pipelines, nuclear power plants, or other infrastructure, is often the point: the process devolves into paralysis-by-analysis. The Trump administration recognizes this, which is why Trump signed an executive order last year directing agencies to improve the process; in March, many agencies signed a “memorandum of understanding” implementing the order. And two House committees recently held hearings to investigate problems in the infrastructure-approval process and to consider legislative reforms. But any legislation would seem doomed by the Senate filibuster.

As with the broader regulatory-reform efforts, the administration’s unilateral efforts on this issue are subject to reversal by the next Democratic regime. And, once again, Congress’s own efforts could reform infrastructure policy much more enduringly, if only the Senate’s rules didn’t subject the legislation to the filibuster supermajority requirement. At moments like this, it’s easy to sympathize with Trump’s admonitions to Senate Majority Leader Mitch McConnell to abolish the filibuster.

But in the case of regulatory and infrastructure reform, the man in the best position to remove the filibuster as an obstacle to legislation is the president himself. How? By including regulatory and infrastructure provisions in the next version of NAFTA, triggering the Trade Promotion Authority’s filibuster-free process for enacting legislation to implement the treaty’s broad requirements.

As Kimberly A. Strassel explained in the Wall Street Journal, the administration is considering the inclusion of provisions in a NAFTA chapter on “competitiveness” that would require each signatory nation to make its own regulatory environment more transparent and predictable and to streamline the country’s process for approving infrastructure. These are provisions that echo Trump’s own longstanding calls for infrastructure development and regulatory reform; if Trump were to demand the inclusion of these competitiveness provisions in NAFTA, and the Senate approved the treaty, then the Regulatory Accountability Act and the infrastructure reforms could pass the Senate without threat of filibuster, as domestic legislation implementing an updated version of NAFTA. The proposal enjoys the support of Senators Ted Cruz, Cory Gardner, and Steve Daines, who sent a joint letter to Trump in March, urging him to pursue this opportunity.

Of course, this approach is not the normal stuff of trade negotiations—namely, demanding that other countries open their doors to our exports or raising the price of imported goods. But it would commit all the signatory countries to compete on a level playing field.

Americans would welcome this opportunity to bet on American competitiveness. As well we should: in the end, the key to economic growth isn’t the building of higher walls against competition but the lowering of regulatory walls that have made America less competitive, less attractive to investment, less innovative, and less free.

Dentons’ NAFTA 2.0 Summit, Washington, October 2017 (Photo by Paul Morigi/Getty Images)

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