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President Signs TPA and Trade Preferences Bills Into Law; Conference Needed for Customs Bill

Friday, July 03, 2015
Sandler, Travis & Rosenberg Trade Report

President Obama signed into law this week legislation that would reinstate trade promotion authority, reauthorize three trade preference programs for developed countries and extend the Trade Adjustment Assistance program for domestic workers negatively affected by trade. The president’s action follows several weeks of procedural maneuvering in the House and Senate that threatened to derail the measures before supporters were able to find a way to advance them. Lawmakers are also moving toward a conference to work out a final version of a customs and trade enforcement bill that, among other things, could make certain revisions to the TPA bill.

TPA. The Bipartisan Congressional Trade Priorities and Accountability Act of 2015 outlines congressional negotiating objectives that any administration – Republican or Democratic – will have to follow when entering into and conducting trade talks with foreign countries. These objectives address issues such as market access, currency manipulation, trade remedy laws, border taxes, textiles and apparel, digital trade, state-owned enterprises, regulatory practices, global value chains, localization barriers to trade, government involvement in cyber theft, protection of trade secrets, human rights, and labor and environmental protections. The new law also includes provisions to increase transparency by requiring that Congress have access to important information surrounding pending trade deals and that the public be able to see the full details of trade agreements well before they are signed.

When a trade agreement meets the specified negotiating objectives and Congress is sufficiently consulted, it may be submitted to Congress for an up-or-down vote within strict timeframes. However, the TPA law creates a new mechanism for the removal of these expedited procedures if, in the judgment of either the House or Senate, the agreement does not meet the established requirements.

TPA will be available for trade agreements concluded prior to July 1, 2018, with the possibility of extension through July 1, 2021. It could therefore apply to the Trans-Pacific Partnership, the Transatlantic Trade and Investment Partnership, and agreements with World Trade Organization members to liberalize trade in information technology products, services and environmental goods.

AGOA. The African Growth and Opportunity Act (including its third-country fabric provisions) has been extended for ten years, through Sept. 30, 2025. The new law simplifies the AGOA rules of origin; gives the president the ability to withdraw, suspend or limit benefits (rather than just terminate eligibility) if designated AGOA countries do not comply with the eligibility criteria; adds notification and reporting requirements; and improves transparency and participation in the AGOA review process.

GSP. Effective July 29, the Generalized System of Preferences will be reauthorized through Dec. 31, 2017, with retroactive relief for eligible products imported since GSP expired on July 31, 2013. However, retroactive benefits will only be applicable to goods and countries that are GSP-eligible as of July 29, thus excluding imports from Russia and Bangladesh. Importers will have 180 days from July 29 to submit claims for duty refunds.

The bill also allows textile and leather travel goods to be designated as eligible for GSP benefits, creates a new tariff classification for recreational performance outerwear and lowers import tariffs on water-resistant performance footwear.

Haiti. The Hemispheric Opportunity through Partnership Encouragement Act and the Haiti Economic Lift Program, which provide trade benefits for apparel and other products imported from Haiti, has been extended through Sept. 30, 2025.

Customs and Trade Enforcement. Differing versions of a customs reauthorization measure aimed at strengthening trade facilitation and enforcement have been passed by both the House and Senate. Key differences between the two bills include how to combat currency manipulation and the evasion of antidumping and countervailing duties, the possible restoration of the miscellaneous trade bill process, and changes to the recently-passed TPA bill that seek to restrict executive branch power and make it easier to include Malaysia in the TPP. A bicameral conference to craft a final bill is expected to begin soon after lawmakers return from their July 4 recess and could take several weeks to conclude.

Though the conference is not anticipated to be overly controversial, Senate Finance Committee Ranking Member Ron Wyden, D-Ore., said recently that Democrats will be pushing for three priorities: helping small businesses take advantage of trade agreements, improved enforcement against trade agreement partners that violate environmental standards, and the use of up to $30 million in collected AD and CV duties to create a trust fund used to conduct trade enforcement actions.

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