As we reported last month, quick-strike action by the Senate on May 22 to pass Trade Promotion Authority (TPA) included within the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (theTrade Act of 2015) gave way to an old-fashioned brawl in the House of Representatives that cast serious doubt on this central objective of President Obama's second-term trade agenda. President Obama had urged quick passage to "give our workers and businesses even more wind at their backs to do what they do best: imagine, invent, build, and sell goods Made in America to the rest of the world." Thirty-four days later, three trade measures including TPA had been passed by both chambers. The President signed most of the provisions into law on June 29, including TPA, with the remainder expected to be enacted later in the summer. This article provides a high-level summary of the comprehensive package of trade measures that will affect U.S. manufacturers for years to come.
The Trade Act of 2015, which passed Congress on June 24, provides the President with TPA (often referred to as "fast-track" authority). Under TPA, Congress has agreed to a "fast track" procedure for Congressional consideration of free trade agreements (FTAs) negotiated by the President through the United States Trade Representative (USTR). The concept is known as "fast track," because under TPA Congress has agreed in advance to a streamlined process under which both the House of Representatives and the Senate will hold up-or-down votes on any FTA negotiated by USTR, without an opportunity for Congress to amend the final text of that FTA. The TPA mechanism also precludes Senate filibuster or other procedural tools that could modify or delay a vote on the FTA at issue. As a trade-off for relinquishing what many members of Congress defend as their inherent Constitutional authority to regulate commerce with foreign nations, the Trade Act of 2015instructs the President and USTR to follow a number of negotiating objectives in pursuing such agreements. Congress retains the ability to rescind fast track procedures if the Executive Branch fails to meet its TPA obligations.
The new TPA procedures will apply to several ongoing negotiations, including the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP), the Trade in Services Agreement (TiSA), and the Environmental Goods Agreement, as well as any other new trade initiatives over the next six years if certain conditions are met. In recent comments, House Minority Leader Nancy Pelosi (D-CA) explained that TPA means that "our negotiators have been equipped with carte blanche. They have no excuse. I trust their values." She also expressed "hope that our trading partners will hear the concerns of many members of Congress because a vote for TPA is not necessarily a vote for TPP. And vice versa, a vote against TPA is not necessarily a vote against the final package." Thus, even though TPA legislation is a significant achievement for the Obama Administration, this will not foreclose what Leader Pelosi describes as future "debate about how we see a better prospect for trade as we go forward."
A second measure known as the Trade Preferences Extension Act of 2015 passed Congress on June 25. This law extends certain U.S. trade preference programs designed to provide duty free treatment to certain products that originate in many of the world's poorest economies. A central provision of this law is the extension of the Generalized System of Preferences (GSP), which had expired on July 31, 2013. The Trade Preferences Extension Act of 2015 will also extend the African Growth and Opportunity Act (AGOA) for an additional 10 years (AGOA was set to expire on September 30, 2015), and also extends certain preferences for apparel exports from Haiti for another 10 years.
The law authorizes the GSP program through December 31, 2017, and it will apply retroactively to otherwise eligible articles that were imported during the time when GSP had lapsed (articles imported on or after July 31, 2013). It sets out a series of requirements that must be followed in order for importers to obtain GSP benefits retroactively.
Specifically, requests for liquidation or reliquidation must be filed with U.S. Customs and Border Protection (CBP) within 180 days after the date of enactment. The request must contain "sufficient information to enable [CBP] (i) to locate the entry; or (ii) to reconstruct the entry if it cannot be located." This mechanism will likely require coordinated effort between importers and their customs brokers. Furthermore, "any amounts owed by the United States pursuant to the liquidation or reliquidation of an entry of a covered article" must "be paid, without interest, not later than 90 days after the date of the liquidation or reliquidation (as the case may be)."
The Trade Preferences Extension Act of 2015 also became the legislative vehicle for what amounted to some of the most contentious debate in the House over the past few weeks—renewal of Trade Adjustment Assistance (TAA) benefits. TAA provides benefits for workers and firms that have been negatively affected by international trade competition. TAA renewal was attached to the Trade Preferences Extension Act of 2015after a stand-alone bill was defeated in the House by a unique mix of labor-friendly Democrats that support TAA, but who viewed it in this case as a way to defeat TPA, and many conservative Republicans who criticize TAA as wasteful and ineffectual government spending that unfairly blames international trade for job losses that might have occurred anyway. The Leveling the Playing Field Act, a set of measures designed to strengthen U.S. trade remedy law, was also included in the Trade Preferences Extension Act of 2015. These provisions constitute the first meaningful revisions to the U.S. antidumping and countervailing duty laws in over 20 years and should help U.S. manufacturers that are facing unfairly traded import competition.
The third measure is known as the Trade Facilitation and Trade Enforcement Act of 2015, which has been colloquially referred to as the "Customs Bill." The House of Representatives and Senate passed different versions of this bill that must be addressed in a Congressional conference before a final version can be approved by Congress and sent to the President for signature. The Customs Bill is a combination of some measures that facilitate legitimate trade and other measures that strengthen the effectiveness of enforcement tools against unfair trade. The final text of the bill will not be decided until after the conference, which will begin after the Fourth of July holiday. We will provide additional information as developments warrant, but some topics that may be most relevant to U.S. manufacturers include tools to address evasion of antidumping and countervailing duty orders and intellectual property enforcement by CBP.
In sum, TPA and companion trade bills passed Congress in late June after more than four weeks of intense debate. At Monday's signing ceremony for the first batch of trade bills ready for his signature, President Obama stated that "I thought we'd start the week with something we should do more often—a truly bipartisan bill signing." As a prelude to his signature, the President said "I think it's fair to say that getting these bills through Congress has not been easy. They've been declared dead more than once. They have inspired long and passionate debates, and that's entirely appropriate for our democracy. That's how this country is supposed to work."