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Putting Trade Back on the Fast Track

 Trade Promotion Authority (TPA), also known as fast-track authority, creates a compact between the president and Congress. Congress grants trade agreements negotiated by the president an expedited legislative process in return for significant input into the negotiations.  TPA expired in 2007. Every president since Franklin D. Roosevelt, except for President Obama, has had a version of TPA.  The Senate Finance Committee and House Ways and Means Committee have concluded a bipartisan bill on TPA likely to be introduced in early 2014. of the world’s global gross domestic product (GDP), compared to NAFTA signatories’ 30-percent share.

(TPA), also known as fast-track authority, needs to be concluded. TPA is the ability Congress extends to the president to negotiate and conclude free-trade agreements (FTAs) with Congressional While TTIP negotiations are still in their input. TPA creates mechanisms for “honeymoon” phase, TPP talks continue, though negotiators anticipated they would Congress to oversee negotiations, expedites the legislative process for a be wrapped up in 2013. As TPP’s provisional agreement, and establishes conclusion nears, many NAFTA critics are trust between negotiating partners that voicing their opposition to the deal. But that agreement will be implemented. TPA before either agreement can be finalized expired in 2007 and has not been renewed and implemented, the debate over the by Congress. renewal of trade promotion authority

JANUARY 2014

New Year’s Day 2014 marked the 20th anniversary of the North American Free Trade Agreement (NAFTA), one of most ambitious and controversial trade agreements in modern US history. As proponents and critics reflect upon NAFTA’s impact, President Obama is pursuing his own ambitious trade agenda featuring the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). The countries involved in those potential agreements produce more than 80 percent


The Senate Committee on Finance and the House Committee on Ways and Means, both with jurisdiction over trade, have cooperated throughout the year to produce a bipartisan TPA bill. Reports indicate that a bill is forthcoming, supported by Senate Finance Committee Chairman Max Baucus (D-Montana), House

Committee on Ways and Means Chairman David Camp (R-Michigan) and Senate Finance Committee Ranking Member Orrin Hatch (R-Utah). Senator Baucus had hoped to introduce the bill in his committee by the end 2013.

This edition of CapitolWire highlights the basics of TPA, current Congressional viewpoints on the issue and the importance of TPA for successful trade policy.

The Basics The separation of powers between the legislative and executive branches, as created by the American Constitution, requires TPA for implementing US trade agreements. The Constitution gives the president the power to negotiate agreements with international partners, but Congress has ultimate authority over trade. Article I, Section 8 of the Constitution authorizes Congress to “lay and collect taxes, duties, imposts, and excises… [and] regulate commerce with foreign nations…” Article II grants the president authority to conduct foreign relations, including negotiating international agreements. Congress must therefore approve any trade agreement negotiated by the president. TPA is not essential for negotiations to begin or end. However, it is necessary for an agreement to enter into force without undergoing the traditional legislative amendment process. It is a procedural mechanism that creates a partnership between the legislative and executive branches to enable a swift conclusion of trade agreements. Trade legislation under TPA is unique. It is a congressionalexecutive agreement, an act implemented by the joint constitutional authority of Congress and the president. TPA allows the president to credibly negotiate trade agreements without obstructing Congress’ constitutional responsibilities.

acknowledged a need for new procedures for quick approval of trade agreements. Following the GATT Kennedy Round in the 1960s, trade agreements started to go beyond tariff agreements and increasingly included sections on non-tariff barriers (NTBs). The inclusion of NTBs often necessitates changes in domestic laws that require Congressional action. Fasttrack authority legislation continues to evolve as FTAs become increasingly complex. Many members working on the Trade Act of 1974 worried that subjecting trade deals to Congressional approval would disincline partners from negotiating with the US because Congress could amend an agreement. The act consequently established an expedited process for trade agreements, freeing them from ordinary legislative procedures. The expedited process remained in updated versions of TPA and served to reassure trading partners that Congress would not dismantle an agreement.

Chart based on: Hornbeck, J.F., and Cooper, William H. Trade Promotion Authority (TPA) and the Role of Congress

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Congress’ first modern version of TPA, known as fast-track authority, was enacted A renewed TPA would lay out a set period legislation, prescribe mandatory votes through the Trade Act of 1974. The law of time in which Congress must take up the through the committees of jurisdiction and

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amendments, and allow for a simple majority vote. This process would enable a finalized agreement to be voted on in the House and Senate quickly once the president introduced it. TPA would also assist the US negotiating position. Partners would be more likely to give trade concessions knowing that Congress could not rewrite an agreed text. TPA would also reinforce US commitment to an agreement.

negotiations. These objectives are similar to the negotiating mandate created by the European Council. The principal negotiating objectives— US priorities on horizontal and sector specific issues— are the most influential to the negotiation process. They are also the most difficult for reaching a consensus.

agreements because it creates early “buyin” from Congress and helps maintain majority Congressional approval throughout negotiations.

Each version of fast track has established a limited time period for presidential authority. The Trade Act of 2002, for example, granted the president TPA until TPA would create mechanisms for 2007. Such provisional authority enables consultations between the administration Congress to re-assess and update trade and Congress before, during and after objectives when a president requests In return for a faster legislative process, negotiations. The 2002 version of TPA renewed authority. Though the expedited Congress would receive significant input created the Congressional Oversight Group Congressional procedures in past TPAs into the negotiation process. Through TPA, (COG), which comprised members of the have essentially been the same since the the president would agree to adhere to House Ways and Means Committee, the Trade Act of 1974, the objectives and negotiating objectives and consultation Senate Finance Committee, and the consultation mechanisms to which the mechanisms during negotiations. In TPA chairman and ranking members of other administration adhere during the Congress would identify the overall, committees with jurisdiction over areas negotiation process have changed principal and other objectives to which the affected by the negotiations. significantly. administration must adhere during Congressional oversight can be vital to

A History of Controversy Since the first modern TPA passed 40 years ago, TPA has never been an easy undertaking. After fast-track authority expired for President Clinton in 1994, he thrice failed to gain approval for renewing it. Despite the three requests, Congress brought only one fast-track bill to the floor, and it was quickly defeated. President George W. Bush pushed for the passage of fast track for the first two years of his presidency, even re-branding it to become what we now know as TPA. He eventually obtained authority in 2002. There was a feeble push for TPA by Republicans in 2011 following the passage of the Colombia, Panama and South Korea FTAs, but Democrats ardently opposed it. TPA legislation has not been brought to the floor since it expired in 2007.

is concluded. House Ways and Means Committee Chairman Dave Camp has expressed optimism that a TPA bill will be introduced and passed in early 2014.

JANUARY 2014

A Democratic letter with 151 signees and a Republican letter with six signees express opposition to TPA based on the lack of transparency and Congressional consultation during TPP negotiations. These members believe that trade Despite Congressman Camp’s rosy agreements are too complex since they outlook, more than 170 Congressional include issues such as regulatory barriers members recently expressed opposition and intellectual property. The members to renewing TPA. Much of the resistance emanates from what Congressman Darrell also argue that agreements should adhere to standard debate and Congressional Issa (R-California) has called the procedures to ensure input from all administration’s “secretive, closed-door members. The two letters correspond with negotiating process”, particularly in the a call from many groups to find a more TPP talks. Presidents have traditionally democratic process than TPA for allowed members of Congress to attend negotiating trade agreements. negotiations and review drafts, but the Obama White House has denied attendance requests from members of Republicans are generally pro-free trade both parties. Access to drafts has only and support TPA renewal and FTA recently been granted. Opponents worry legislation. Twenty-two House Hope for TPA passage in 2013 sprung from that the president is already exercising too Republicans though, most identifying with Senator Baucus’ call for the introduction much authority over trade and believe the Tea Party, signed yet another letter on of bipartisan TPA legislation by June. that granting him an expedited legislative November 12 opposing TPA on a strictly Although his committee and the House process would further damage Congress’ constitutional basis. This letter, drafted by Ways and Means Committee have yet to role. Congressman Walter Jones (R-North introduce such legislation, a bipartisan bill Carolina) and Congresswoman Michele

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Bachmann (R-Minnesota), argues that TPA TPP, TTIP and Trade in Investment grants the executive branch too much Services Agreement (TISA)—or remained power over trade—at Congress’ expense. open-ended, allowing any negotiations that begin within a given timeframe to As all three letters demonstrate, TPA will come under TPA. Eleven FTAs were negotiated under the open-ended Trade be tough pass, particularly in the House. Members are less likely, particularly in an Act of 2002. election year, to push for major trade initiatives that their constituents may The structure of consultation procedures believe outsource US jobs or reduce is also key to TPA’s passage. Members health and safety standards. Many such as Sander Levin (D-Michigan) have consumer and labor groups that have called for the COG to include a more supported these members also oppose diverse set of representatives that goes TPA. beyond members of committees with relevant jurisdiction. Demands for greater TPA’s passage ultimately depends on the transparency are already proving an obstacle to Congressional support for TPA, composition of the bipartisan Senate so authority is likely to be granted only Finance and House Ways and Means after more inclusive consultation Committees bill. The proposed scope of mechanisms are implemented. TPA, consultation mechanisms and negotiating objectives will make or break the bill. Past fast-track legislation has Other major sticking points for TPA are either limited TPA to current the principal negotiating objectives, which negotiations—in this case that would be must continue to evolve with the

complexity of trade agreements. Issues not discussed in past FTAs, such as stateowned enterprises (SOEs), are components of TPP and TTIP. The principal negotiating objectives must reflect this to signal Congress’ priorities in any agreement. TPA legislation that passed in 2002 did not address many Democrats’ concerns for environmental, labor and investment standards. When the Democrats took control of Congress in 2007, these concerns complicated the passage of the pending trade agreements with Colombia, Panama, Peru and South Korea and required the May 10th agreement. Critics of the 2002 TPA legislation argue that it did not create sufficient principal negotiating objectives or consultation mechanisms to maintain broad-based consensus in Congress for the trade agreements. Congress will need to consider this in any future TPA bill.

A 2014 Priority? Senate Finance Committee Chairman Baucus and House Committee on Ways and Means Subcommittee on Trade Chairman Devin Nunes (R-California) have also called on the president to promote TPA more. Congressman Nunes sees a particular need to educate his colleagues on TPA’s importance to the FTA negotiation process. Most sitting congressmen have never voted on TPA or on trade agreements, leading to misperceptions of the issues at stake.

With Senator Baucus’ nomination to serve as US ambassador to China, Congress will lose one of TPA’s biggest champions. Senator Ron Wyden (D-Oregon) will likely take Baucus’ place as chairman. Wyden has a more liberal voting record than Baucus and has advocated creating a more inclusive negotiation process for trade agreements. Wyden has also pushed more forcefully for intellectual property protections and for including currencymanipulation language in TPA legislation.

Many key lawmakers consequently argue that President Obama should make a stronger push in Congress and with the public for TPA. Congressman Camp released a statement in November claiming that the president is not sufficiently highlighting TPA in his tradepolicy speeches, thereby missing key opportunities to demonstrate that it is a priority.

Furthermore, the TPA agreement struck lacks support from House Ways and Means Ranking Member Sander Levin. He is a proponent of TPA but has called for it to include a more comprehensive approach, including legislation such as Trade Adjustment Assistance (TAA) that assists workers displaced by foreign trade.

Many of the tough issues confronted in the TPP and TTIP negotiations will be difficult to conclude if negotiating partners believe Congress can alter agreements. TPA can solve that problem if there is greater recognition in Congress and among the public for granting the president the needed authority.

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To gain Congressional passage of NAFTA, even in a time of robust economic growth and business expansion, President Bill Clinton spent much political capital. The agreement still squeaked through the House of Representatives by only 34 votes. In 2013, TPA was not a priority for either branch, both of which were occupied by other issues such as Syria, Iran and the federal budget. The fight for TPA could be even harder than in Clinton’s day.

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Key Members to Watch on TPA

Senate Finance Committee Chairman and nominated US ambassador to China: Senator Max Baucus (D-Montana)

Senate Finance Committee Ranking Member: Senator Orrin Hatch (R-Utah)

House Ways and Means Committee Chairman: Congressman Dave Camp (R-Michigan)

House Ways and Means Committee Ranking Member: Congressman Sander Levin (D-Michigan)

In line to become chairman of the Senate Finance Committee following Baucus’ confirmation as ambassador to China: Senator Ron Wyden (D-Oregon)

House Ways and Means Committee Subcommittee on Trade Chairman: Congressman Devin Nunes (R-California)

Co-author of Tea Party-led letter against TPA: Congresswoman Michele Bachmann (R-Minnesota)

Co-author of Tea Party -led letter against TPA: Congressman Walter Jones (R- North Carolina)

Co-author of the Democratic letter against TPA: Congresswoman Rosa DeLauro (DConnecticut)

Co-author of the Democratic letter against TPA: Congressman George Miller (D-California)

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CapitolWire January 2014  

This issue of CapitolWire explores the status of presidential Trade Promotion Authority (TPA) in the United States, the political obstacles...

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