Why 'phase one' China trade deal doesn't need congressional approval, unlike USMCA

'It's an executive agreement, which the Constitution gives the president the right to enter into'

The Trump administration will be able to breathe more easily after Wednesday's signing of phase one of the China trade deal, but President Trump has said his team will be back to work almost immediately on "phase two" of the deal.

Unlike the U.S.-Mexico-Canada Agreement, Trump can sign the executive agreement and then avoid an extended congressional approval process. The administration is bypassing congressional involvement by describing the deal as a contract between the two countries, and not a trade agreement in the true sense of the phrase.

"We are not required to submit it to Congress," U.S. Trade Representative Robert Lighthizer testified last February, citing Section 301 of the Trade Act of 1974 . "The president is using his power under 301, which has been delegated, and it's an executive agreement, which the Constitution gives the president the right to enter into."

The administration has briefed the Senate Finance Committee on negotiations as they progressed, a committee spokesperson told FOX Business.

"Congress delegated aspects of its constitutional authority to regulate foreign commerce to the President" through the Trade Act of 1974 and the Trade Expansion Act of 1962, the nonpartisan Congressional Research Service wrote last September.


Lighthizer and Trump (Photo: JIM WATSON/AFP via Getty Images)

With the text still not public and without an opportunity to vote yay or nay, Senate Minority Leader Chuck Schumer said Monday that he is disappointed in the reported deal. He asked Trump to answer six questions about the agreement before the Wednesday signing.

"China pledging to make short-term purchases of American goods will not address the fundamental problems that undermine long-term U.S. economic opportunity, prosperity, and security," Schumer wrote in a letter.

Democrats unhappy with Trump's progress on the trade deal this fall seemed irked by the administration's ability to fly solo.

"Donald Trump should know that any meaningful trade deal is only legitimate because of the authority granted to him by Congress, and that authority can be taken away," Sen. Ron Wyden, D-Ore., told Bloomberg in October.

Lighthizer, who spearheaded negotiations with Chinese officials, spoke with FOX Business' Lou Dobbs on Monday about his outlook on the deal.

"We maintain $380 billion worth of tariffs on important products," Lighthizer said. "So across the board is a really, really good deal for the United States. And it will work if reformers in China want it to work. And if that happens, great. If it doesn't happen, it's fully enforceable."

The president has previously suggested that a complete trade deal could involve two or three phrases. Beijing agreed to purchase $200 billion worth of U.S. goods over the next two years, and Trump has touted the prospect of China buying $40 billion to $50 billion of American agricultural products.

The U.S. also agreed to no longer label China as a currency manipulator in conjunction with "phase one." The Treasury Department designated China as a currency manipulator on Aug. 5, after the yuan fell to a more than 10-year low against the U.S. dollar. At the time, Treasury pointed to Beijing’s “long history of facilitating an undervalued currency through protracted, large-scale intervention in the foreign exchange market” as the reason for the designation.

Treasury Secretary Steven Mnuchin has indicated that negotiators will turn their attention to cyber theft of U.S. companies' trade secrets in "phase two."

"At a later date I will be going to Beijing where talks will begin on Phase Two!" Trump wrote on Twitter when announcing the "phase one" signing.

Although Trump previously suggested the second phase could come immediately after the first, he does not have any imminent plans to visit China for further trade talks, sources told FOX Business.


The two countries will try to maintain lines of communication even when they're not focused on trade. The U.S. and China plan to hold semiannual meetings headed by Chinese Vice Premier Liu He and Treasury Secretary Steven Mnuchin to resolve disputes, The Wall Street Journal reported Saturday.

A senior administration official told The Journal the meetings would be "very different" from trade negotiation talks and would be separated from discussions regarding a phase two deal.

FOX Business' Audrey Conklin, Jonathan Garber, Edward Lawrence and R.N. White contributed to this report.