Trade Promotion Authority
April 22, 2015
On April 22, the Senate Finance Committee will begin marking up legislation sponsored by Senators Hatch (R-UT) and Wyden (D-OR) that would grant trade promotion authority (TPA) to the president, giving him the capacity to negotiate free trade agreements on Congress’s behalf. TPA is seen by many, including U.S. trading partners, as indispensable to the successful conclusion of the Trans-Pacific Partnership (TPP), the Obama administration’s most significant trade initiative. The bill’s introduction is a significant step forward in President Obama’s trade agenda, but the next few weeks will remain a challenge as Congress and the administration work to get the legislation ratified.
Q1: What is TPA?
A1: TPA establishes the negotiating parameters that Congress sets for the executive branch when it enters into talks on a trade agreement. In return, Congress will consider the submitted trade agreement within a given length of time, in an “up or down” (simple majority) vote, and without amendment. It essentially tells trade negotiators what Congress is willing to accept in a trade agreement without the risk that Congress will “reopen” the agreement through amendments when it is presented for a vote.
Strictly speaking, TPA isn’t necessary to ratify trade deals. It does, however, streamline the process in a way that makes ratification more predictable while ensuring that the executive and legislative branches have an effective role in the process. TPA enables Congress to exercise its constitutional authority over trade policy (the power to regulate commerce with foreign nations and “collect Taxes, Duties, and Exports”) while giving trade negotiators in the executive branch the flexibility to negotiate with trading partners with the assurance that any agreement will be ratified in a timely manner and without amendment (the power to enter into international agreements).
Q2: Why is it important?
A2: Because trade agreements are related to tariffs, which raise revenue, they are treated by Congress as revenue bills and are therefore open to unlimited non-germane amendments. In other words, in the absence of TPA any trade agreement brought before Congress would be open to amendments on anything from immigration reform to Obamacare, which would represent a likely insurmountable hurdle to its passage. This is why many analysts and the TPP negotiating partners themselves have cited the passage of TPA as a prerequisite for negotiators to put their best offers forward in ongoing discussions over rules and sensitive market access issues.
Both on and off the record, many negotiating partners have said that it is difficult to imagine that TPP will close without TPA. In practice, it is difficult to know the full impact on negotiations. Negotiating partners may have been waiting for TPA to pass before putting their best offers on the table in order to ensure that sensitive concessions made in a TPP agreement would not face amendment by Congress. On the other hand, it is possible that TPA is being used as an excuse to withhold difficult concessions the TPP negotiating partners are hoping to avoid making.
Q3: How is this TPA bill different to previous TPA legislation?
A3: Many specific provisions are modulations from the Trade Act of 2002 (the most recent grant of TPA). Concerns over the secrecy of the TPP negotiations as conducted thus far have also prompted the inclusion of additional provisions on transparency, such as a 60-day public comment period before the United States signs the agreement and the creation of a “chief transparency officer” post at the Office of the U.S. Trade Representative (USTR). The new bill also establishes objectives for U.S. negotiators on the contentious issue of currency, stopping short of creating a requirement that USTR pursue enforceable rules on currency, but making it a virtual certainty that some language will be included in the final TPP deal.
However, TPA is an example of legislation where the details of what’s contained is less important than the fact that it exists in the first place. Because of the political sensitivities surrounding trade, TPA was always going to be a difficult political balancing act. The current TPA bill represents the legislative give-and-take between the parties (and the executive) that was necessary to get to this point. The path to completion will have to continue to be both bipartisan and involve the legislative and executive branches. While the debate over TPA is just beginning, its introduction is a clear sign that Congress is looking to find common ground on trade.
Q4: What are its prospects?
A4: Generally speaking, trade is an issue that divides Democrats and unites Republicans. Following the 2014 elections, President Obama and Republican leaders in Congress have consistently identified trade as an area with potential for cooperation. That said, the fundamental political calculus is still unchanged: though there may be more potential affirmative votes now than before the midterms, neither side has the votes to fully impose their will on the other. Getting TPA to this point is an encouraging sign for the U.S. trade agenda, but the cooperation that got the bill this far will need to be continued through final ratification.
Scott Miller is a senior adviser and holds the William M. Scholl Chair in International Business at CSIS. Amy Studdart is deputy director and fellow on the William E. Simon Chair in Political Economy. Paul Nadeau is a research associate on the Scholl Chair. David Parker provided additional editorial assistance.
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