On June 24, the US Senate passed the Bipartisan Congressional Trade Priorities and Accountability Act, which will empower the Obama Administration to negotiate new trade agreements with its Pacific Rim and European Union trading partners based on strong congressional parameters. The Senate approved the legislation by a 60-38 margin, following extremely close votes and an initial reversal in the US House of Representatives.

Former Congressman Phil English, an ex-Member of the House Ways and Means Committee and key advocate of prior authorizations of Trade Promotion Authority (TPA), hailed the passage of the legislation as a major boost for free trade that would improve the United States' position in future trade negotiations. English predicated that the talks leading to a Trans Pacific Partnership (TPP) and a Transatlantic Trade and Investment Partnership (TTIP) would receive a needed infusion of American engagement.

“This vote is one of the critical trade votes of the decade and lays the groundwork for stronger US leadership in international trade and a more competitive domestic economy,” said Mr. English. “This trade legislation will empower our USTR negotiators to leverage the best possible terms for future trade deals and jump start existing talks to expand export opportunities in Europe and the Pacific.”

Matt Nolan, head of the International Trade practice at Arent Fox, commented that TPA authority is a great move forward for US trade policy and that a new trade deal is critical to US  leadership and economic growth for the next decade. “While many appear to be concerned about possible economic dislocation from a new trade deal,” said Mr. Nolan, “the reality is that we as a trading country have far more to lose if we do not keep opening markets for US goods and services.”

Mr. English noted that the legislation reforms the process for negotiating trade agreements with unprecedented guarantees of public accountability, transparency, and close congressional oversight. He predicted that US trade negotiators would be better positioned to pursue the favorable resolution of new and more complicated trade issues, such as regulatory compatibility and transparency, the forced localization of facilities, competition from state-owned enterprises, and the protection of intellectual property.

“Trade promotion authority permits the creation of complex and integrated trade agreements that preserve the competitive position of the US economy in the face of globalization,” said Mr. English. “The enhanced authority in this legislation improves the prospect for 21st century trade agreements to be concluded and brought to Congress."

Mr. English added that the passage of TPA would accelerate the conclusion of TPP and TTIP negotiations, but also observed that the close vote would limit the willingness of negotiators to engage on some potentially controversial issues. “Congress may have to put off a vote on the next big trade agreement because of the deep divisions on trade policy that recent floor votes revealed,” Mr. English suggested. “This Congress may not be ready to move quickly to break ground on new initiatives to open the digital economy, protect investors’ rights, and coordinate regulatory regimes beyond the parameters of traditional free-trade agreements.”

The Legislation

The Bipartisan Congressional Trade Priorities and Accountability Act reauthorizes trade promotion authority for the first time since 2007 and permits the Executive Branch to negotiate international trade agreements and present them to Congress for approval through a fully transparent fast-track process, facilitating their unified consideration on a specific time line on an up or down vote. Separate language to reauthorize programs for Trade Adjustment Assistance (TAA) for workers, firms, and farmers adversely affected by foreign trade previously approved by the Senate as part of this legislation is now positioned to be attached to trade preferences legislation and forwarded to the House for final approval.

In exchange for a clearly defined process for an Administration to submit a trade agreement for approval under the Act, the legislation requires the negotiators to adhere to nearly 150 trade negotiating objectives, submit to congressional oversight and regular consultations, and provide public access to information. It also introduces a procedural disapproval process by which Congress may withdraw fast track authority if the executive branch fails to adhere to negotiation parameters or consultation requirements. The grant of authority would extend for four years, with an option to renew for an additional three years.

The Fast Track Process

The President must, prior to initiating trade negotiations, provide Congress with 90 days’ written notice and provide a summary of negotiating objectives. Regular consultations with Congress are required. At least 180 days prior to entering into an agreement, the President must publicly report on the effect of the treat on US trade remedy laws. Within 90 days of an agreement, the International Trade Commission must be provided with the details of the agreement, and is tasked with issuing a report assessing the likely impact of the agreement on the US economy. The President must submit a final text of the agreement to congressional committees, together with an environmental report, a capacity building report, an impact assessment on US employment, a labor rights report, and a labor law assessment. The President must also submit implementation and enforcement plans.

Implementation of a trade agreement requires notice of intent (90 days before entry into an agreement), publication of the text (60 days before entry), a description of required changes in domestic law required (60 days after entry), and a submission of final legal text and draft statement of proposed administrative action (at least 30 days before formal submission). The legislation also provides for the submission of the final text to Congress, along with accompanying documents, and for these to be made public.

The legislation provides for Congressional review and consideration of the trade agreement, with an up-or-down vote on final implementing bills without amendment. A new procedural disapproval resolution process is created to suspend the preferred treatment of any trade agreement negotiated under the act.

Trade Negotiating Objectives

The legislation mandates overall trade negotiating objectives, enumerates principal trade negotiating objectives, and outlines trade capacity building priorities. Among the former are market access and economic growth, labor and environmental standards, improved transparency, human rights, and consumer interests. Specific objectives include: liberalization of trade in goods and services; market access for US agricultural exports; fair treatment for domestic investment; protection for intellectual property rights, including on the Internet; protection for digital trade and cross-border data flows; improved regulatory practices and compatibility, and reduction on non-tariff trade barriers; eliminate trade distortions by state-owned enterprises; dismantle localization barriers to trade; implementation of core labor standards and environmental laws; deter currency manipulation; deter corruption; promote domestic trade remedies; and revise global standards reopening regarding border adjustable taxes.

These objectives are more comprehensive than those included in prior fast track authorizing language, and have been updated to address new trade issues.

Congressional Oversight and Congressional Transparency

The United States Trade Representative (USTR) is required consult with Congressional Committees of jurisdiction, and requires consultation with individual members of Congress. Public access to information is guaranteed and a Chief Transparency Officer is created at USTR. Guidelines are also established for existing Trade Advisory Committees. Consultations and reports are also specified prior to and at the conclusion of individual trade negotiations.

Sovereignty

Any trade agreement negotiated under this act must be consistent with US laws, and the United States may not be restricted from amending and modifying its laws. Strong protections for domestic laws were included in the legislation in response to concerns that the fast track process could be used to promote unsolicited policy changes relating to domestic trade remedies, immigration law, climate change or other controversies.