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Eight years after the expiration of Trade Promotion Authority (TPA), congressional leaders finally tabled a new bill that could expedite the conclusion of the Trans-Pacific Partnership (TPP) trade agreement between the United States and 11 other countries.1 The new legislation, introduced by the chairman and ranking minority member of the Senate Finance Committee (SFC), along with the chairman of the House Ways and Means Committee, augments the “fast track” authority that has guided US trade policy for most of the past four decades.
In a previous blog post, I summarized the importance of TPA in formulating and implementing US trade policy. Those views were widely endorsed by SFC Chairman Orrin Hatch, ranking SFC minority member Ron Wyden, Ways and Means Chairman Paul Ryan, and the three witnesses at today’s SFC hearing: Treasury Secretary Jacob Lew, US Trade Representative Michael Froman, and Agriculture Secretary Tom Vilsack.
What was striking about the announcement today was that Senator Hatch seems to be on the same page as the top Obama administration officials who testified at the Senate Finance Committee hearing this morning, while those officials largely disputed the broad criticisms of the TPA bill by Senator Charles Schumer, the New York Democrat who is the presumptive future leader of the Senate Democrats. Several points from today’s hearing, which was held this morning and then reconvened this afternoon after the tabling of the TPA-2015 bill, bear mention.
First, the new TPA bill significantly updates the previous authority passed by Congress in 2002 in terms of the priority negotiating objectives for US trade initiatives and the procedural requirements to ensure close and effective cooperation between members of Congress and the Executive Branch in the development, conduct, and implementation of US trade negotiations. Senator Wyden extolled the emphasis put on the issues of high-tech trade, labor, and the environment and their enforcement as “priority negotiating objectives” in new US trade pacts.
Second, Hatch announced that the SFC would mark up the TPA bill next week. Contrary to the complaint by Senator Schumer, members have had a long time to read and debate key provisions of the new bill. TPA-2015 is substantially similar to the one tabled in early 2014 by then SFC Chairman Max Baucus, Hatch, and former Ways and Means Chairman Dave Camp. The new wrinkles to the 2014 draft cover areas such as transparency and procedures for congressional review; these provisions have been debated extensively by committee members for the past two months. Senator Charles Schumer was dead wrong today to charge that the markup next week is a rush to judgment—he and his colleagues have had 14 months to digest the vast majority of the text.
Third, Secretary Lew elaborated his position on adding provisions to counter currency manipulation. To be sure, he still strongly objected to such provisions in trade agreements or in TPA-2015; it’s the Treasury’s responsibility, and he argued that his financial diplomacy strategy had borne fruit, especially with China. In fact, the currency provisions of TPA-2015 echo those of TPA-2014 and are open to a wide range of interpretation. My view is that they essentially support existing policy and practice. But Lew suggested that Treasury could draw on objective criteria that could help guide its investigations on countries allegedly manipulating their currencies for commercial advantage. This was a bow to congressional critics from both parties who want more aggressive action to deter future bouts of currency manipulation and seems to draw on indicators that my colleague Fred Bergsten has discussed with administration and congressional leaders in recent months.
Fourth, Lew strongly opposed new bills tabled in the House and Senate that would define currency manipulation as a subsidy subject to countervailing duties under US unfair trade laws. He argued the bills could violate US obligations under the World Trade Organization (WTO). As one of the early authors of the global subsidy rules, I strongly agree. Lew also noted that those bills could invite foreign retaliation if there is an adverse WTO finding against the new US practice. It also could encourage other WTO countries to emulate the unilateral rulemaking on currencies in a way that targets US policies. Thus it is all the more important that these bills not be attached to the TPA legislation itself or made part of the requirement of what the Obama administration must include in the TPP in its final form.
Fifth, Hatch and Wyden seem to have agreed on how to proceed with parallel trade legislation of priority concern to Democratic members, particularly the reauthorization and funding of Trade Adjustment Assistance (TAA). In practice, TPA and TAA will advance independently of each other; as a practical matter, however, both will likely advance in lockstep to ensure the requisite bipartisan support for both pieces of legislation.
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1. Importantly, the legislation also covers other negotiations including the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union, as well as plurilateral negotiations on services, information technology, and environmental goods between the United States and other WTO members.
