US Trade Debate Kicks into High Gear as Congress Debates TPA Bill

23 April 2015

The trade debate in Washington has now moved squarely into the spotlight, following the introduction of the long-awaited Trade Promotion Authority (TPA) legislation. The proposed text already went through a “mark-up” in the Senate Finance Committee on Wednesday, passing by a 20-6 majority.

The bill, known formally as the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, was introduced late last week by Orrin Hatch and Ron Wyden in the Senate Finance Committee and Paul Ryan in the House Committee on Ways and Means, following months of protracted negotiations.

Hatch, a Republican from Utah, chairs the Senate finance panel, while Wyden, from Oregon, is that committee’s highest-ranking Democrat. Ryan chairs the House Ways and Means Committee and is a Republican from Wisconsin.

The last version of TPA expired in 2007, though it still applied to the trade deals with South Korea, Colombia, and Panama that the US Congress ratified in 2011. Past efforts at renewing it, including in 2014, have failed to gain traction. (See Bridges Weekly, 6 February 2014)

This year’s initiative, however, comes at a time when the US is racing to close a sweeping trade deal this year with 11 other Pacific Rim partners, known as the Trans-Pacific Partnership (TPP), before the American general election gets into full swing. Passing TPA is widely acknowledged to be critical in allowing that deal to cross the finish line.

TPA is also viewed as one of the few areas where US President Barack Obama, a Democrat, can find common ground with a Republican-led Congress. However, the trade legislation has also put the White House at odds with many lawmakers of its same party, who have raised questions about the merits of international trade deals and the level of transparency in negotiating them. (See Bridges Weekly, 2 April 2015)

“The bill put forward today would help us write those rules in a way that avoids the mistakes from our past, seizes opportunities for our future, and stays true to our values,” Obama said last week following news of the TPA legislation, urging lawmakers to “seize this opportunity” to make the bill into law.

“Fast track” protection

The legislation tabled last week is split into a series of sections, outlining US trade negotiating objectives; trade agreements authority; congressional oversight, consultations, and access to information; notice, consultations, and reports; trade deal implementation; how to treat ongoing trade talks; sovereignty; and small business interests.

The US’ principal negotiating objectives for trade deals, as outlined in the document, would cover areas such as goods, services, agriculture, foreign investment, intellectual property, digital trade and cross-border data flows, regulatory practices, state-owned or controlled enterprises, localisation barriers to trade, labour and environment, and currency, among various others.

Notably, the bill includes language that would strip a negotiated trade deal from so-called “fast track” protection should it be found that the President failed to meet the consultation or transparency requirements outlined in TPA, for instance if the deal is found not to make progress in meeting congressional priorities and objectives.

This “fast track” consideration allows completed trade deals to be submitted for congressional approval, without the possibility of US lawmakers adding amendments of their own.

The draft text also includes a requirement that the US Secretaries of Commerce, State, and Treasury, together with the Attorney General and US Trade Representative, submit a report by 15 December of this year “setting forth the strategy of the executive branch to address concerns of Congress regarding whether dispute settlement panels and the Appellate Body of the World Trade Organization have added to obligations or diminished rights of the United States.”

Furthermore, should this report not be submitted in time, “fast track” protection would then not apply to any deal negotiated under the WTO.

In another bid aimed at addressing public information concerns, the full text of any negotiated trade deal must also be released publicly on the website of the US Trade Representative (USTR) at least 60 days before the President signs it, the legislation says. Sixty days after signing a deal, the President must release a description of changes to existing domestic law that would be required to enact a trade agreement.

Congress itself would need to be given a copy of a trade deal’s final legal text, as well as a draft statement of the proposed administration action to implement it, at least 30 days before the deal is submitted to lawmakers for approval.

TAA, GSP, AGOA

The proposed TPA legislation was submitted as part of a larger package of trade-related bills, including the reauthorisation of an assistance programme for domestic workers displaced by trade, as well as the renewal of two US preference schemes.

The reauthorisation of Trade Adjustment Assistance (TAA), as the domestic support scheme is called, was introduced by Wyden as well as Republican Susan Collins of Maine. The legislation would renew the scheme, which expired in 2013, through 30 June 2021.

The TAA proposal, which would continue to cover trade-affected production sector workers whose jobs were moved abroad to a US FTA partner, would also allow service sector workers and those affected by offshoring or outsourcing to non-FTA partners to be eligible for the support.

The benefits outlined under TAA would include allocating US$450 million per year for long-term job training, provide wage insurance to workers 50 years of age and older, help small businesses boost their competitiveness, and provide benefits and technical assistance to both fishermen and farmers, among others.

Regarding the preference schemes, legislation has been tabled to both renew the US’ expired Generalised System of Preferences (GSP), as well as extending the African Growth and Opportunity Act (AGOA), due to expire in September, for an additional ten years.

Eyes on US-Japan talks

The release of the proposed TPA legislation last week was followed swiftly by US trade action abroad, in particular to see whether the US and Japan can reach a long-awaited bilateral deal on agricultural and automobile trade, in the broader context of the TPP talks.

US Trade Representative Michael Froman flew to Tokyo shortly after testifying on the proposed TPA legislation in Congress last week, meeting with his Japanese counterpart for additional talks which reportedly saw notable advances, though no deal was announced.

Japanese Prime Minister Shinzo Abe is due to arrive soon in the US, with meetings scheduled on 28 April with Obama, followed by an address to both chambers of Congress the day after, at lawmakers’ invitation. (See Bridges Weekly, 2 April 2015)

Abe told the Wall Street Journal earlier this week that a deal between the two sides “is close,” while indicating that more progress is hoped for. “It would be good if I could reach an agreement during my meeting with [Obama], but when you climb a mountain, the last step is always the hardest,” the Japanese PM said.

Hurdles ahead

While the introduction of a TPA bill has been welcomed by proponents as a major step forward, various steps remain in the legislative process before it can become law. Should the bill be approved at the committee level in the Senate and House, the text will then go to the full floor of both chambers. A House Ways and Means mark-up is set for today.

If both chambers do approve the TPA bill, any differences between the two versions would then need to be reconciled in conference, with the final version then needing lawmaker approval once more. Lastly, Obama will need to sign the bill into law.

In a potential early sign of the hurdles to come, the Senate Finance Committee mark-up saw its share of dramatic gestures, with the proceedings stalled for hours on Wednesday after Democratic Senator Bernie Sanders of Vermont invoked a rarely-used procedural rule to slow the process.

Various Democrats have come forward in open opposition to the bill, or at least to raise questions about its provisions. One of the key issues that could create difficulties is the ongoing debate on what kind of currency-related provisions should be featured under the US’ principal negotiating objectives.

"Seeking enforceable currency provisions would likely derail the conclusion of the TPP given the deep reservations held by our trading partners," US Treasury Secretary Jack Lew said in a letter to legislators, which was cited by the Reuters news agency.

ICTSD reporting; “Abe: U.S., Japan Close to TPP Trade Deal,” THE WALL STREET JOURNAL, 20 April 2015; “Japan, US talks seeking compromise on farm, auto trade,” THE ASSOCIATED PRESS, 20 April 2015; “U.S. Treasury warns Congress currency push could derail Pacific pact,” REUTERS, 21 April 2015; “Sanders stalls action on trade bill with arcane Senate law,” CNN, 22 April 2015.

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