After months of discussions, bi-partisan trade promotion authority (TPA) legislation has been introduced in the House and Senate. The Bipartisan Congressional Trade Priorities Act of 2014 (H.R. 3830 & S. 1900) provides Congressionally-mandated negotiating objectives, establishes consultation procedures and access to critical information and recognizes Congress’s final authority to approve trade agreements.
The bill was introduced by House Ways & Means Committee Chairman Camp (MI-R), Senate Finance Committee Chairman Baucus (MT-D) and Senate Finance Committee Ranking Minority Member Hatch (UT-R). The House Ways & Means Committee Ranking Minority Member Levin (MI-D) chose not to sign on and may introduce a separate bill. Time is a critical factor because Senator Baucus has been nominated by President Obama as Ambassador to China and will leave the Senate in a month or two. His probable successor, Senator Wyden (OR-D), has been quiet about his views on the bill.
The bill has five main sections. The first 34 pages establish overall negotiation objectives for trade agreements and 18 principal trade negotiating objectives, including agriculture. The next 13 pages provide the President with trade agreement authority. Congressional oversight, consultations and access to information is provided in the following 14 pages. After that come 21 pages requiring the President to provide notice to, consult with and prepare reports for Congress. The following 10 pages provide for implementing agreements. The remaining 15 pages deal with agreements that are already in negotiations, U.S. sovereignty, small businesses, amendments to other laws and definitions.
The negotiating objectives are the trade policy focus of TPA. Agreements are only as good as the direction given to negotiators. The objectives for agriculture are consistent with trade policy issues of recent years and gaining long-term market access. Sanitary and phytosanitary (SPS) issues receive considerable attention with science-based, international standards the goal. Regulatory practices and state-owned enterprises are addressed in separate negotiating objectives.
Currency manipulation is included as one the eighteen negotiation objectives. The entire language is: “The principal negotiating objective of the United States with respect to currency practices is that parties to a trade agreement with the United States avoid manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other parties to the agreement, such as through cooperative mechanisms, enforceable rules, reporting, monitoring, transparency, or other means, as appropriate.”
The American Automotive Policy Council (AAPC), representing the three U.S.-based automakers and a vocal supporter of including currency language in trade agreements, commended the bill’s sponsors for recognizing its importance and addressing currency manipulation as a top negotiating priority. The AAPC believes the language is too open-ended and leaves a path that could result in vague and unenforceable text. Congressman Levin will likely have language to add backed by the AAPC. Acceptable language will be developed, but it will take some time.
Digital trade in goods and services and cross-border data flows are negotiating objectives for the first time and the language is likely open to further discussion.
The section on trade agreement authority for the President has some detractors on constitutional grounds, but should not prevent the House and Senate from moving forward. The President can enter into trade agreements before July 1, 2018 or before July 1, 2021 if the President requests an extension of authority and neither House disapproves the extension before July 1, 2018.
The biggest struggle will center on the section on Congressional oversight, consultations and access to information. Those members of the House and Senate who have operated under TPA in the past claim that the U.S. Trade Representative (USTR) has not provided enough information for Congress to carry out its oversight function, has not effectively sought out Congressional consultations and has not provided easy access to information for them and their senior staff. Members are also unhappy with the limited information provided about the ongoing Trans-Pacific Partnership (TPP) trade agreement negotiations which are almost completed and will be covered by TPA. Members will need to trust the two-way information flow for themselves and for their constituents who are more interested in trade agreements than ever before.
The bill does not include continuation of Trade Adjustment Assistance (TAA) programs for trade-displaced workers, which some Democrats will undoubtedly attempt to add to build support. Republicans argue that the programs duplicate other assistance programs and many Democrats say they cannot support TPA without TAA. Customs reauthorization and the expired Generalized System of Preferences are other possible additions to the bill.
The House Republican leadership has indicated it will not bring a fast-track bill to a floor vote until Democrats can secure at least 50 votes for the bill. Educated guesses are that 30-60 Democrats may vote for a TPA bill. The 50 Democratic votes would mean that 168 of the 233 Republicans would have to vote for the bill.
Several months will likely be needed to build support for the bill. Some believe it will not pass until a lame duck session of Congress after the November elections. This would continue to slowdown the TPP agreement talks because high officials will not agree to trade-offs to seal a deal if the final agreement will languish for months.
Achieving a final TPA bill is on an uncertain path made more uncertain with Senator Baucus’ departure in a month or two. The problem areas with the negotiating objectives and the relationship between the President and Congress are well known. The other Congressional leaders should press ahead to find common ground among themselves and with President Obama. Trade agreements are too important to continue to be delayed.