President Obama’s trade agenda envisions an unprecedented expansion of commerce with nearly 40 countries throughout Europe and the Asia-Pacific region, but making it a reality requires cooperation from Congress. The president is therefore seeking trade promotion authority, a legislative mechanism formerly known as “fast track” that would facilitate the conclusion and implementation of new trade agreements.
What is TPA?
Constitutional authority to regulate tariffs rests with Congress. While the president can negotiate trade agreements at any time, they must generally be approved by the Senate and House of Representatives. Under normal procedures these agreements are subject to amendments and filibusters, and there is no set timeline for their consideration.
Under TPA, Congress agrees to consider legislation implementing a trade agreement under an expedited schedule and to forego the opportunity of amending or filibustering it. In return, the administration is expected to ensure that the agreement reflects negotiating objectives specified by Congress before submitting it for legislative approval.
The genesis of TPA was the Reciprocal Trade Agreement Act of 1934, which authorized pre-approved tariff cuts that did not require additional congressional approval once negotiated by the President. The Trade Act of 1974 set forth the framework of TPA as we know it today. Only two presidents–Gerald Ford and George W. Bush–have not had TPA at some point during their tenure since 1934, and only one U.S. free trade agreement (with Jordan) has ever passed Congress without TPA protections.
What is the current status of TPA?
After years of half-hearted attempts, the Obama administration is finally making a strong push to secure TPA, and with Republicans in control of both the House and Senate he has the best chance of his presidency to obtain it. The primary impetus is the desire to conclude negotiations on a Trans-Pacific Partnership (TPP) free trade agreement with nearly a dozen Asia-Pacific countries–Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam–which have been going on for a number of years and now look to be wrapped up quickly once TPA is granted. TPA is also expected to help advance the Transatlantic Trade and Investment Partnership (TTIP) negotiations with the European Union, though those are not nearly as far along.
On April 17, TPA was introduced in both the House and Senate as the Bipartisan Congressional Trade Priorities and Accountability Act of 2015. Swift action was taken in both chambers, with hearings and committee markups held the following week. On Thursday, the Senate voted on a motion to proceed on the TPA which means the bill can now proceed to the full Senate for a vote. Amendments will be allowed from the floor. A vote is expected sometime next week, likely Thursday.
The House of Representatives has not yet scheduled the bill for consideration, and current calendars indicate that it will not be addressed until June, after the Memorial Day recess.
The bill to be considered in the House (H.R. 1890) is different from the Senate version (S. 995) The basic principles in each version are the same, but some amendments were made by the Senate Finance Committee where three amendments were added.
The first inserts as a principal trade negotiating objective the discouragement of action that directly or indirectly prejudices or otherwise discourages commercial activity between the U.S. and Israel as well as politically motivated actions by foreign governments that are intended to penalize or otherwise limit commercial relations with Israel or persons doing business in Israel. The second elevates good governance, rule of law and human rights to the status of principal negotiating objective.
The third amendment would prohibit consideration under TPA procedures of any trade agreement with a country ranked as a Tier 3 country on the State Department’s Trafficking in Persons Report. A Tier 3 ranking indicates that a government does not fully comply with the Trafficking Victims Protection Act’s minimum standards and is not making significant efforts to do so. Malaysia is currently listed under Tier 3, and so if this provision stands it would strip TPA protections from the entire TPP. This is thus a controversial measure that opponents could seek to remove on the Senate floor or in a bicameral conference.
The House Ways and Means Committee approved one amendment in an effort to align the House and Senate TPA bills as much as possible. This amendment addresses boycotts, divestments and sanctions against Israel and makes capacity building, rule of law and internationally recognized human rights a principal negotiating objective. The Senate Finance amendment on human trafficking was not adopted by Ways and Means.
What’s new in TPA 2015?
The 2015 TPA bill is different in many ways from the last TPA bill of 2002. The negotiating objectives on goods, services and agriculture have all been updated, new provisions on intellectual property rights protection have been inserted, regulatory practices highlighted, digital trade in goods and services has been included for the first time, the labor and environment provisions reflect an agreement reached in May 2007 as part of a deal to pass the U.S.-Colombia FTA, provisions to address currency manipulation have been expanded, and issues such as localization barriers to trade by some foreign countries and competition from state-owned enterprises are addressed.
The 2015 TPA also goes further to address concerns about the transparency of trade negotiations. It requires specific consultations between the Office of the U.S. Trade Representative (USTR) and Congress during negotiations and prior to the entry into force of any agreement. USTR must provide Congress with access to pertinent documents, including classified materials, and consult closely and regularly with House Ways and Means and Senate Finance committees, the House and Senate advisory groups on negotiations, all committees of the House and Senate with jurisdiction over laws that could be affected, and the House Agriculture and Senate Agriculture, Nutrition and Forestry committees. A congressional advisor on trade policy and negotiations would be designated by the House and Senate to coordinate consultations with USTR.
There is increased transparency for the public as well. The bill requires USTR to quickly establish written guidelines on how consultations with the public will be conducted, to disclose information to the public in easily accessible formats, and to regularly provide for public input into the process. The bill also establishes a chief transparency officer at USTR who will be responsible for liaison with Congress and public.
The Senate insisted on a new consultation and compliance mechanism that would put the brakes on a trade agreement if either the House or Senate approves a measure to stop it or if one of the committees of jurisdiction issues an unfavorable report on any agreement-implementing bill. The 2002 TPA did not have such a mechanism, giving rise to the assumption that once a bill was sent to the Congress by the president it was on autopilot. However, then-Speaker of the House Nancy Pelosi shattered that illusion by changing the House rules to halt consideration of a bill to implement the U.S.-Colombia FTA. The Senate did not have the same ability, and so this time around inserted a provision to ensure that either chamber can bring an FTA implementing bill to a screeching halt.
Finally, the 2015 TPA builds some additional time into the process of considering an implementing bill once the president sends it to Congress. For example, USTR has to release the text of the agreement before it is signed, allowing Congress and the public time to review it. In addition, the time period for the International Trade Commission to conclude its review of the agreement has been extended to 105 days, and the final text of the agreement must be submitted by the president 30 days prior to introduction of the implementing bill.
What’s next for TPA?
After next week, the Senate should have held its vote on TPA. In June we expect to see the House vote. The good news is that those members of Congress keen to move forward on free trade may be better positioned than some of the rhetoric might lead one to believe. Fifty-eight percent of respondents to a Gallup poll recently said they see foreign trade more as an opportunity for economic growth through increased U.S. exports rather than as a threat to the economy from foreign imports, the largest that number has been since Gallup began asking the question in 1993. Only 33 percent, a record low, said they view foreign trade more as a threat.
The takeaway? TPA looks to be poised for approval for the first time in 13 years, paving the way for TPP and, further down the line, TTIP. Both supporters and opponents will be watching closely over the new few months to see what happens.
About The Author Nicole Bivens Collinson
Nicole Bivens Collinson is a well-known international trade authority in Washington, D.C. and has over 25 years of experience in government, public affairs and lobbying. She leads Sandler, Travis & Rosenberg’s international trade and government relations practice. You can reach Nicole at email@example.com.
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