As President Trump continues to close in on a revised NAFTA agreement, some conservative leaders are urging him to swing for the fences by including significant regulatory reform in the agreement.
In order to stem the tide of economically damaging regulations being churned out by unelected bureaucrats, Republicans in Congress have long sought to pass the Regulations from the Executive In Need of Scrutiny (REINS) Act. The REINS Act would require every “major rule,” or regulation with an economic impact of over $100 billion, to be passed by an up-or-down vote in Congress. In 2015, the Congressional Budget Office found that there had been an average of 82 such regulations per year over the previous five years.
Under a mostly party-line vote, the legislation has already passed the House. But the Democrats’ threat of a filibuster has dissuaded Republicans from bringing the REINS Act up for a vote in the Senate, as Republicans do not have nearly enough votes to break a filibuster.
Enter NAFTA. Congress handed then-President Obama authority to negotiate trade deals back in 2015, allowing Congress the authority to pass the agreement with a simple majority vote. Including a competitiveness chapter in the revised NAFTA agreement that mandates permitting reforms, workforce development, and the REINS Act would allow this sweeping regulatory overhaul to be passed without any Democratic votes in favor, should all Republicans vote “yea.” Senators Cruz (R-TX), Gardner (R-CO), and Daines (R-MT) wrote an open letter to Trump advocating this approach, which dozens of conservative leaders have endorsed. Trump has previously committed to signing the REINS Act as President. The 2015 Trade Promotion Authority legislation spelled out U.S. negotiating objectives in areas including regulatory practices.
Regulatory reform is long overdue. The administrative state has been growing at an unprecedented rate since the 1980s — a Mercatus Center study found that, if regulations had merely remained at the same level they were in 1980, the economy would be $4 trillion larger. The REINS Act would be a critical step in bringing taxpayer accountability to a federal government with a natural tendency to expand itself wherever possible.
The expansion of the government’s role in the economy has been a gold mine for well-connected corporations as well. Corporations with influence and access to rulemakers are able to use regulations to produce barriers to entry to new, smaller businesses without the resources to navigate all the red tape. A large regulatory state is too valuable a prize for large corporations not to attempt to capture it.
Yet the strategy of including the REINS Act in NAFTA has risks as well. Though 37 current Republican Senators (one was Alabama’s Luther Strange, who has since been replaced by Democrat Doug Jones) have co-sponsored the REINS Act in the Senate, 14 have yet to do so. No Democrats have signed on to the legislation in the Senate. Including such a polarizing provision in a revised NAFTA agreement would risk alienating Democrats who might otherwise be willing to vote in favor, as well as potentially moderate Republican senators. Is Congress willing to risk the fate of NAFTA, and the 300,000 jobs at stake if the United States pulls out of the agreement, for the REINS Act?
There is also the matter of setting a precedent of using trade agreements as a vehicle to enact legislation that Congress would not approve as a standalone measure using regular congressional procedures. Congressional leaders and Trump would have to balance their desire to pass regulatory reform with the risk of that strategy coming back to bite them later on, in the form of bad policy being passed through future fast-track trade legislation. Of course, an argument could be made that both sides in Congress are already hardly above such tactics to begin with.
Trump and Congressional leaders have a big decision before them. Whether or not the wise move is to include major regulatory reform in a revised NAFTA treaty may depend on what the risk is to the NAFTA treaty as a whole. It’s always great to have your cake and eat it too, but sometimes you can’t have both.