Events at CERGE-EI

Dr. Levent  Çelik

CERGE-EI

Authors: Levent Çelik, 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. Why would it cede such power? We suggest an interpretation in which Congress uses FTA to forestall destructive competition between its members for protectionist rents. In our model: (i) FTA is never granted if an industry operates in the majority of districts; (ii) The more symmetric the industrial pattern, the more likely is FTA, since competition for protectionist rents is most punishing when bargaining power is symmetrically distributed; (iii) Widely disparate initial tariffs prevent free trade even with FTA.

Keywords: Fast-track authority; Trade Policy; Multilateral Legislative Bargaining; Political Economy; Distributive Politics

JEL Classification: C72, C78, D72, F13

Full Text:  “When Is It Optimal to Delegate: The Theory of Fast-Track Authority”