US Senate Signs Off on Trade Legislation; House Fight Up Next

28 May 2015

The US Senate approved legislation to renew Trade Promotion Authority (TPA) for President Barack Obama last Friday, after weeks of political wrangling and heated debate. The legislative fight is now expected to move to the House of Representatives, where the outcome is still less than certain.

Senators voted 62-37 in favour of the legislation last week, having cleared a key procedural vote the day before to invoke cloture and limit debate on the bill. Of the 62 votes in favour, 14 were Democrats, while 48 were Republicans. (See Bridges Weekly, 21 May 2015)

The TPA legislation sets out Washington’s principal negotiating objectives in trade deals, while allowing for completed agreements to be submitted to Congress for a straight up-or-down vote without the possibility of amendment. The previous version of TPA was enacted in 2002 and expired in 2007.

The bill also includes Trade Adjustment Assistance (TAA), a programme aimed at providing support to domestic workers displaced by trade. That scheme was seen as one of the key components that brought enough Democratic support on board to pass the bill.

“Today’s bipartisan Senate vote is an important step toward ensuring the United States can negotiate and enforce strong, high-standards trade agreements,” said Obama following news of the Senate vote. “If done right, these agreements are vital to expanding opportunities for the middle class, levelling the playing field for American workers, and establishing rules for the global economy that help our businesses grow and hire by selling goods Made in America to the rest of the world.”

Currency amendment

One of the major fights before Friday’s vote had been how currency would be treated within TPA as a negotiating objective for international trade deals.

Competing amendments had been filed by lawmakers on the subject, with one aiming to making it a principal negotiating object for the US to include in international trade deals “strong and enforceable rules against exchange rate manipulation that are subject to the same dispute settlement procedures and remedies as other enforceable obligations under the agreement.”

That amendment, filed by Republican Senator Rob Portman of Ohio and Democrat Debbie Stabenow of Michigan, had been criticised by some as being a potential “poison pill” to the Trans-Pacific Partnership (TPP) agreement under negotiation, with the White House threatening to veto any TPA legislation including that provision.

An alternative proposal had been raised that would instead maintain currency as one of the US’ principal negotiating objectives, but would work at ensuring accountability through the use of “enforceable rules, transparency, reporting, monitoring, cooperative mechanisms, or other means.”

Senators ultimately signed off on the latter amendment with 70 in favour, 29 against. The proposal had been tabled by Senators Orrin Hatch and Ron Wyden, the chair and ranking member of that chamber’s Finance Committee, respectively. The two lawmakers, who were also among the principal architects of TPA, had insisted that their version would not put TPP or other trade deals at risk.

Vote on Ex-Im bank to be treated separately

Another issue that threatened to slow down, or even derail, the TPA approval process in the Senate was a dispute over how to proceed with legislation to renew the mandate of the Export-Import Bank, which is the US’ official federal credit agency for exports.

Senators Maria Cantwell and Lindsey Graham – a Democrat and Republican, respectively – had backed an amendment to TPA that would reauthorise the bank. However, Senate Republican leaders had pushed to deal with the subject outside of the trade legislation, a suggestion that initially met with some resistance over concerns that keeping the two initiatives separate would doom efforts to renew the Ex-Im Bank before an end-June deadline.

A pledge by Senate Majority Leader Mitch McConnell to hold a vote on the Export-Import Bank in June as an amendment to another bill ultimately proved sufficient to win over enough lawmakers to approve cloture on TPA last Thursday.

However, Speaker of the House John Boehner has already said that he has made no such commitment on holding an Ex-Im vote in his chamber, telling the Reuters news agency that the bank’s reauthorisation will first need to see approval by the House Financial Services Committee.

Other amendments

Before Friday’s vote, over 150 amendments had been tabled by lawmakers to the TPA bill. Of these, only a handful were subject to a vote, along with the currency-related amendments listed above.

An amendment introduced by Senator Elizabeth Warren, a Democrat from Massachusetts, to prohibit the use of trade authorities procedures to deals that include investor-state dispute settlement (ISDS) provisions failed, with 60 against and 39 in favour. Warren has been a vocal opponent of ISDS provisions, claiming that these would put at risk environmental protections, financial regulations, and other domestic public policies.

A proposed requirement that any new entrants to the TPP trade talks be subject to congressional approval also failed, with 47 in favour and 52 against. That amendment had been introduced by Senator Sherrod Brown, a Republican from Ohio.

Another amendment that would have stripped the TAA support programme from the TPA legislation also failed. That proposal was introduced by Republican Senator Jeff Flake of Arizona, and failed in a 36-62 vote.

House fight next

What the legislation’s fate will be in the US House of Representatives remains an open question, with lawmakers from that chamber set to conclude their legislative recess in early June.

Securing the 217-vote majority to approve TPA in that chamber is widely expected to be a tall order, given the opposition by many Democrats in that chamber to the legislation. While some have raised doubts over its current form, others have questioned the broader merits of trade deals, particularly the TPP.

The chamber is currently dominated by Republicans, who hold 245 of the House’s 435 seats. However, several far-right legislators have vocally opposed granting Obama more powers, including in trade, making the push to grab more votes from the Democratic side of the aisle even more imperative.

TPP implications?

The pace of the TPA approval process has been watched closely by members of the Trans-Pacific Partnership Agreement, a 12-country trade negotiation that, if completed, would cover over 40 percent of global GDP.

Successful passage of trade legislation in both chambers of the US Congress has been deemed by both officials and analysts as a necessary pre-condition before TPP countries can secure a final deal.

A ministerial-level gathering of officials from TPP member countries had been tentatively planned for this month in Guam, only to be postponed after many ministers reportedly expressed hesitation over meeting without TPA in place. Chief negotiators did meet in Guam over the past several days to advance the talks, however.

US Trade Representative Michael Froman told reporters this past weekend that the TPP talks are “very much in the endgame,” according to comments reported by the Wall Street Journal. The US trade chief was in the Philippine island of Boracay for a meeting of trade ministers from the Asia-Pacific Economic Cooperation (APEC) regional grouping.

ICTSD reporting; “US Senate boosts Obama on trade fight,” THE FINANCIAL TIMES, 21 May 2015; “U.S. Fast-Track Vote Bolsters Talks on Pacific Trade Pact,” WALL STREET JOURNAL, 24 May 2015; “House GOP split jeopardizes trade deal,” POLITICO, 26 May 2015; “Senate Vote Is a Victory for Obama on Trade, but a Tougher Test Awaits,” THE NEW YORK TIMES, 22 May 2015; “Boehner: No pledge to hold House vote on U.S. Ex-Im Bank renewal,” REUTERS, 21 May 2015; “McConnell Promises Ex-Im Bank vote,” THE HILL, 21 May 2015.

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