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TPA Bill Slows, Could Affect Other Trade Measures as Well

Tuesday, February 11, 2014
Sandler, Travis & Rosenberg Trade Report

Trade promotion authority legislation deemed crucial to advancing trade negotiations with Asia-Pacific and European countries appears to be running into headwinds. Delays in moving TPA could also push back potential congressional action to reauthorize other measures that the trade community favors.

TPA would establish congressional priorities for trade agreement negotiations and require lawmakers to consider legislation to implement such agreements on an expedited basis, subject to a straight yes or no vote with no amendments. The most recent grant of TPA expired in 2007, but the White House is pushing for a renewal in conjunction with its efforts to conclude talks on the Trans-Pacific Partnership with 11 Pacific Rim countries and the Transatlantic Trade and Investment Partnership with the 28-member European Union. A TPA bill sponsored by outgoing Senate Finance Chairman Max Baucus, D-Mont., whom the Senate confirmed as U.S. ambassador to China Feb. 6, and Ranking Member Orrin Hatch, R-Utah, along with House Ways and Means Chairman Dave Camp, R-Mich., was introduced in the House and Senate Jan. 9 but has come under fire from both Republicans and Democrats.

Sen. Ron Wyden, D-Ore., who is expected to formally succeed Baucus atop Senate Finance this week, has indicated that he wants to move the TPA bill forward but that it will have to be revised first. “There have been so many changes in global commerce that a number of senators have simply indicated they want the time to have a chance to discuss these issues,” Wyden said, referring to topics such as congressional consultation, transparency in negotiations, currency manipulation by trading partners, etc. Wyden said he wants to “give them a chance to weigh in” but no hearings or other meetings have apparently yet been scheduled and it remains unclear how long the process Wyden envisions may take.

There is substantial opposition that will have to be overcome if TPA is to move forward. More than 150 House Democrats said in late November that they will oppose TPA without stronger provisions, Senate Majority Leader Harry Reid, D-Nev., said Jan. 29 that “everyone would be well-advised to not push [TPA] right now,” and Senate Majority Whip Dick Durbin, D-Ill., cautioned that there are many Democrats “who think it would be a mistake to call the trade promotion bill this year.” Some Republicans also oppose TPA as an abdication of Congress’ right to regulate foreign trade. In addition, a recent poll found that public support for free trade agreements in general, and granting TPA to expedite FTAs in particular, is continuing to decline.

However, there is reason for optimism as well. Obama administration officials have downplayed Reid’s opposition, with Secretary of State John Kerry noting that “all of us have learned to interpret a comment on one day in the United States Senate as not necessarily what might be the situation in a matter of months or in some period of time.” House Minority Leader Nancy Pelosi, D-Calif., and Minority Whip Steny Hoyer, D-Md., have indicated that House Democrats will have further discussions on TPA and that sufficient changes to the existing bill could garner a fair amount of Democratic support, although Sen. Hatch argued that the bill represents a bipartisan effort “worked out over a long period of time” and shouldn’t be changed. House Republican leaders are reportedly working to build support within that group as well.

The fate of TPA is likely to also impact other trade-related measures, one of which is Trade Adjustment Assistance. TAA has often been a concession demanded by Democrats in return for approving TPA, but this time the debate over TPA itself has been so intense there has been little public discussion of TAA. In the meantime, a bill to reauthorize through 2020 the expanded TAA that Congress approved in 2011 but expired at the end of 2013 is expected to be introduced soon in the House. Under this bill TAA would cover workers and firms that supply services and manufactured goods, workers whose firms shift production to any country (not just those with which the U.S. has a free trade agreement), workers at firms supplying component parts to other firms (regardless of whether the purchasing firm has TAA certification), firms that petition for TAA benefits if they supply component parts to foreign customers who switch to parts made outside the U.S., and workers laid off within one year before or after an affirmative antidumping or countervailing injury determination by the International Trade Commission.

The TPA bill is also expected to be the vehicle for advancing priorities such as a miscellaneous trade bill to lower tariffs on hundreds of imported inputs, extending the Generalized System of Preferences, and possibly a customs reauthorization. GSP,which offers duty-free treatment to about 5,000 goods imported from more than 100 developing countries, expired July 31, 2013. On Jan. 27 nearly 500 national and state organizations wrote to members of Congress urging them to immediately and retroactively renew GSP, pointing out that since the program expired U.S. companies that had been utilizing it to lower costs and remain competitive have paid nearly $2 million per day in higher tariffs. A GSP reauthorization may also get a boost from the impending retirement of Sen. Tom Coburn, R-Okla., who has delayed it over a dispute on how to pay for it.

The miscellaneous trade bill would restore through the end of 2015 most of the hundreds of tariff suspensions and reductions that expired with the last MTB as of Jan. 1, 2013, and would also expand reduced duty treatment to a number of additional goods. Some lawmakers have opposed the MTB on the grounds that it is an earmark, a form of government spending that benefits only a few and is thus increasingly untenable in the current fiscal environment. Supporters, however, emphasize that the MTB primarily benefits U.S. manufacturers. The National Association of Manufacturers said in a Feb. 4 blog post that failure to pass a new MTB “will result in a staggering $748 million tax hike on manufacturing over the next three years,” which “translates into a whopping $1.857 billion in economic losses.”

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