While much attention is being given to negotiations under the WTO framework agreement announced on July 31 and ongoing efforts on bilateral agreements, supporters of free trade must also work with Congress on extending the President’s authority to negotiate new agreements.
The Trade Act of 2002 provides trade promotion authority (TPA) for the President to negotiate new trade agreements. It was signed by President Bush on August 6, 2002 and covers agreements that are negotiated by June 1, 2005. Once negotiations are completed and implementing legislation has been submitted to Congress, they must act within 90 days. No amendments are permitted.
Since even wild-eyed optimists do not expect a WTO agreement before June 1, 2005, TPA will need to be extended before the conclusion of the current round of WTO negotiations.
The Trade Act of 2002 provides for a process for extension of TPA. The President must make a request for an extension by March 1, 2005. Congress will have until June 30, 2005 to enact a resolution that denies¬ extension of TPA. If Congress does not pass a resolution denying the extension, TPA will continue until July 1, 2007. That should provide sufficient time to complete negotiations on a new WTO agreement.
The law also requires the President to submit reports to Congress by May 1, 2005. These reports from the International Trade Commission and the Advisory Committee for Trade Negotiations and Policy are to provide details on the economic effects of the agreements negotiated under the current TPA.
TPA is not just a blank check for the White House. The president is required to notify Congress of the specific negotiating objectives of any ongoing negotiations and the objectives of new negotiations at least 90 days before they begin. For agriculture specifically, the International Trade Commission must provide estimates of the economic effects of tariff reductions.
The act also provides principal negotiating objectives for agriculture. These include: tariff reductions and elimination, adjustment periods for import sensitive products, reduction of trade distorting subsidies of other countries, restrictions on new technology, including biotechnology, and sanitary and phytosanitary regulations.
Recent actions by the Australian Senate on the U.S.-Australian trade agreement show the wisdom of the provision of TPA for an up or down vote with no amendments. The Australian Senate made two minor amendments that put the entire agreement at risk. The U.S. government has to accept the changes or the agreement will not go into affect. A similar situation occurred in this country after the Kennedy round of GATT negotiations in the 1960s and led to what is now known as TPA.
Trade agreements that move toward a more open world trading system always require trade-offs that leave some industries less than happy. If any one group in a country can stop an agreement by making changes after negotiations have ended, the opportunities to make needed changes in trading rules would be slim. With 147 countries in the WTO, the multilateral process would become a continuing process of renegotiations with no positive outcomes.