Q1: What is trade promotion authority (TPA)?
A1: TPA establishes the principal objectives that the United States seeks to accomplish in international trade negotiations and establishes a framework for joint action between the executive branch and Congress in pursuing trade agreements. TPA also provides legislative procedures to be used for bills to implement trade agreements that achieve the objectives set, including provisions for a straight up-or-down vote without amendment. A version of TPA has been in use by Congress and the president since the Trade Act of 1974; the last grant of TPA, enacted in 2002, expired in 2007.
Practically, trade officials find it difficult to close a deal without the direct guidance from Congress that TPA provides. As important, our trading partners are reluctant to close on politically sensitive issues without the assurance that the Congress won’t take their concessions and demand more by amending the deal after it’s signed. While this is always a risk, and happened in 2009–2010 with the South Korea FTA (KORUS), TPA increases the likelihood that a final deal will “stick.”
The politics of TPA bills can be challenging—in 2001, TPA passed the House by one vote. “Process” bills are difficult to defend in terms of concrete constituent benefits but relatively easy to demagogue. TPA promises to be a unique challenge for the Obama administration, since trade bills typically secure majority support from Republicans but not from Democrats. The 2011 bills that implemented FTAs with Colombia, Panama, and South Korea gained “yes” votes from over 200 House Republicans and 30–60 House Democrats.
Q2: Why does TPA matter?
A2: The current U.S. trade agenda is highly ambitious. Negotiators are in the late stages of the Trans-Pacific Partnership with 11 other economies in the Asia-Pacific region, which would add important markets like Japan and Vietnam to the list of U.S. FTA partners. Last year, the United States and European Union launched the Transatlantic Trade and Investment Partnership, which would establish modern rules and deepen integration between the world’s two largest economies. At the multilateral level, the United States is working on an agreement on trade in services with 48 other economies.
In short, the president needs TPA to manage his trade and foreign policy agenda, and Congress needs TPA to effectively partner with the administration.
Q3: What does the new legislation hope to accomplish?
A3: Last week, House Ways and Means Committee chairman Dave Camp (R-MI) introduced a bill to reauthorize trade promotion authority. Senate Finance Committee chairman Max Baucus (D-MT) and ranking member Orrin Hatch (R-UT) introduced an identical measure in the Senate.
The new bill incorporates many of the key provisions of previous TPA grants, with updated policy priorities and improved procedures. Policy changes include objectives on regulatory cooperation, the role of state-owned enterprises, and digital trade including cross-border data flows. Procedurally, the bill improves transparency and consultation mechanisms. Objectives for labor and the environment reflect the “May 10 Agreement” of 2007 between congressional Democrats and the Bush administration. Authority granted by the bill continues until 2018, with the possibility of extension until 2021.
Q4: What is the likely path forward for TPA?
A4: The process is off to a good start, yielding a sensible, bipartisan, bicameral bill. While much excellent legislative work has led to this point, it now turns to committee leadership and the White House to build broad support for the bill. Indications are that Congress wants to move on the bills: Chairman Baucus will hold a hearing this week and intends to mark up the bill in committee soon after. The White House made positive comments on the bill, and U.S. Trade Representative Michael Froman’s team continues to build support in Congress and among trade advocates.
There should be no illusions that passage will be easy given the upcoming midterm elections and the difficulty of getting members to vote on an issue that their constituents often view with skepticism. To get the legislation passed, President Obama will need to cooperate actively with Republicans in the face of criticism from his own party and the trade-skeptical portion of his base. More important, the hard work of legislation will require a measure of goodwill on the part of all those involved. With perseverance, TPA could become the evidence that Washington can still make progress on complicated issues.
Scott Miller holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.
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