White & Case LLP
701 Thirteenth Street, NW
+ 1 202 626 3600
The November 4, 2014 mid-term elections in the United States increased Congressional
support for trade liberalization at a critical time for US trade policy. A new Republican
majority in the Senate and an enlarged Republican majority in the House of Representatives
likely will offer a more straightforward legislative path to the enactment of Trade Promotion
Authority (TPA) in 2015, which in turn could spur the conclusion and Congressional approval
of the Trans-Pacific Partnership1 (TPP) agreement. Significant obstacles to completing TPP
exist, but enactment of TPA would ease Congressional consideration of the agreement
and might aid in securing key concessions from negotiating partners. On the other hand,
passage of TPA likely would not have a substantial, direct impact on the Transatlantic Trade
and Investment Partnership2 (TTIP) because TTIP negotiations remain in their early stages
and are encumbered by multiple contentious issues.
Republican gains in Congress do not, however, guarantee TPA’s ratification. President
Obama’s recently announced plan to pursue Executive action on immigration has the
potential to create partisan gridlock, diminishing prospects for TPA legislation for the
immediate future. In addition, President Obama still must court Congressional Democrats to
secure bipartisan support for the legislation and to temper Democrats’ TPA-related demands.
An absence of Democratic support for TPA or a final TPA bill that contains currency or other
divisive issues could jeopardize TPA’s passage, potentially delaying the completion and
Congressional consideration of a TPP agreement. Even if the partisan gridlock ensuing from
the President’s Executive action is short-lived, these issues still present major obstacles to
ratifying TPA. As a result, although advancement of the US trade agenda remains likely in
2015, Congressional passage of TPA early in the year appears increasingly unlikely.
Less prominent trade issues, such as renewal of the Generalized System of Preferences
(GSP) and the Miscellaneous Tariff Bill (MTB), also might be affected by Republican gains
in Congress, TPA’s passage, and the overall comity between the Executive and Legislative
branches in 2015.
Implications of the
2014 Congressional Elections
for US Trade Policy
Scott S. Lincicome
Counsel, Washington, DC
+ 1 202 626 3592
Associate, Washington, DC
+ 1 202 729 2356
International Trade Analyst, Washington, DC
+ 1 202 729 2427
1 The Trans-Pacific Partnership is a proposed regional free trade agreement between the United States, Australia,
Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
2 The Transatlantic Trade and Investment Partnership is a proposed regional free trade agreement between the
United States and the European Union.
White & Case 2
TPA commits Congress to use expedited (i.e., “fast track”)
procedures to consider legislation to implement certain trade
agreements that the President negotiates during a specified period
of time. In so doing, TPA enables the President and foreign
governments to negotiate trade agreements with the assurance
that Congress, rather than amending any negotiated agreement,
will wholly accept or wholly reject any such agreement via a timely
“up or down” vote. Absent this assurance, foreign governments
might have reduced incentives to negotiate trade agreements with
the United States due to concerns that Congress might reject or
revise individual clauses of such agreements. In exchange for this
assurance, and as outlined in legislation to implement TPA, the
President must adhere to certain negotiating objectives and certain
procedures to notify and consult with Congress regarding the
progress of any negotiations.
TPA was first enacted in 1975 and renewed in 1979, 1984,
1988 and 2002. Congress has used TPA to enact the Tokyo Round
Agreements Act of 1979, the Uruguay Round Agreements Act
of 1994, and 14 bilateral or regional trade agreements. The most
recent iteration of TPA was enacted in December 2002 and expired
in July 2007. With the exception of President Obama, every
president since Franklin D. Roosevelt in the 1930s has possessed
TPA or a special trade negotiating authority similar to TPA.
EFFECTS OF THE 2014 ELECTIONS ON THE COMPOSITION
The 2014 Congressional elections transferred majority control of
the US Senate to the Republican Party, which will hold at least
53 Senate seats in the 114th Congress (beginning January 3, 2015).
Sen. Mitch McConnell (R-KY), formerly the Senate Minority
Leader, will become Senate Majority Leader. Sen. Harry Reid
(D-NV), who has served as Senate Majority Leader since 2007,
will become the Senate Minority leader.
Chairmanship of the Senate Finance Committee likely will
transition to its current Ranking Member, Sen. Orrin Hatch (R-UT).
Current Finance Chairman Ron Wyden (D-OR) will likely become
Ranking Member. The new Finance roster is expected to contain
13 Republicans and 11 Democrats, a reversal of the current ratio.
One subtraction from the Democratic membership will be
Sen. John D. Rockefeller IV (D-WV), who will retire at the end
of 2014. Assuming that another subtraction is required,
Sen. Mark Warner (D-VA), the most junior Finance Democrat,
likely will be removed.
House of Representatives
The Republican Party will extend its majority control in the US
House of Representatives to hold 244 seats in the 114th Congress.
Rep. John Boehner (R-OH) won re-election and will continue as
Speaker of the House, while Rep. Nancy Pelosi (D-CA) will
continue in her role as House Minority Leader.
Leadership of the House Ways and Means Committee will change
due to the retirement of Chairman David Camp (R-MI) at the end
of 2014. Rep. Paul Ryan (R-WI) will become Chairman, while
Rep. Sander Levin (D-MI) will remain Ranking Member.
Republicans currently hold 23 seats on the Ways and Means
Committee, compared to the Democrats’ 16. How this ratio will
change to reflect the larger Republican majority remains uncertain.
CONGRESSIONAL ATTITUDES TOWARD TRADE
The 114th Congress likely will be more supportive of major trade
legislation than the present Congress. The change will be most
pronounced in the Senate, where Republicans will gain control of
the chamber and will replace several Democrats who opposed
TPA, trade agreements and other trade initiatives. In the House,
the effect of the enlarged Republican majority on support for trade
legislation will be less pronounced.
A majority-Republican Senate in the 114th Congress likely will be
more amenable to advancing trade legislation than the existing
majority-Democratic Senate in the 113th Congress. Regarding
leadership, Sen. McConnell is a strong proponent of TPA, TPP and
TTIP. For example, in 2011, he sponsored an amendment to the
Trade Adjustment Assistance Extension Act (H.R. 2832) that would
have granted TPA to President Obama, and in 2014 he supported
the Bipartisan Congressional Trade Priorities Act (BCTPA) (S. 1900),
TPA legislation introduced by Sens. Max Baucus (D-MT) and
Hatch. In contrast, Majority Leader Reid, in apparent response to
trade skeptics and labor groups in the Democratic Party’s base,
opposed both initiatives. Reid also refused to permit the BCTPA,
supported by the White House and Republican leadership, to
receive a floor vote in the Senate. The change in Senate leadership
to Republican control thus increases the probability that TPA
legislation and other trade initiatives will receive a floor vote during
the 114th Congress.
The change in Finance Committee leadership also improves
prospects for passage of major trade legislation in the Senate.
Likely Finance Chairman Hatch co-sponsored the BCTPA in
2014 and TPA legislation in 2011 and has described TPA as a top
priority for the 114th Congress. In contrast, Chairman Wyden, who
White & Case 3
will likely become the Committee’s Ranking Member in 2015,
voted against TPA in 2011 and delayed action on the BCTPA in
2014. All 11 of the Democratic senators expected to remain on the
Finance Committee in 2015 voted against TPA in 2011. However,
several Senate aides speculate that, of those 11 senators, only
Sens. Sherrod Brown (D-OH) and Robert Casey (D-PA) would
oppose TPA legislation in the 114th Congress. Sens. Benjamin
Cardin (D-MD) and Debbie Stabenow (D-MI) also might oppose
TPA, however, depending on the details of the legislation.
In the full Senate, the replacement of at least eight incumbent
Democrats with Republicans very likely will shift the Senate
towards greater support for TPA legislation and any future free
trade agreements (FTAs) considered under TPA. The most recent
Senate vote to grant TPA to the President, held in 2011, was split
along party lines, with 43 out of 47 Republicans supporting and
50 out of 51 Democrats opposing. As the table above shows,
multiple Democrats being replaced by Republicans voted against
the 2011 TPA amendment, whereas no retiring Republican voted
against the amendment.
The table also indicates that the replacement of incumbent
Democrats with Republicans bodes well for potential passage of
TPP and TTIP, as several outgoing Democratic senators opposed
one or more FTAs in 2011 that robust Republican majorities
supported. Senators-elect Cory Gardner (R-CO), James Lankford
(R-OK) and Shelley Moore-Capito (R-WV) voted for all three FTAs in
question—the US-Korea FTA, the US-Panama FTA and the
US-Colombia FTA—while serving in the House of Representatives
in 2011. So too did Rep. Bill Cassidy (R-LA), who is predicted to
defeat Sen. Mary Landrieu (D-LA) in a Dec. 6 runoff election.
Moreover, nearly all year 2011 Senate votes against those
trade agreements were cast by Democrats, as shown in the
Incumbent 2011 TPA Vote
FTA Vote New Member
AK Mark Begich (D) Nay Yea Nay Nay Dan Sullivan (R)
AR Mark Pryor (D) Yea Yea Yea Yea Tom Cotton (R)
CO Mark Udall (D) Nay Yea Yea Yea Cory Gardner (R)
GA Saxby Chambliss (R) Yea Yea Yea Yea David Perdue (R)
IA Tom Harkin (D) Nay Nay Nay Nay Jodi Ernst (R)
LA Mary Landrieu (D)3 Nay Yea Yea Yea Bill Cassidy (R)
MI Carl Levin (D) Nay Yea Yea Nay Gary Peters (D)
MT Max Baucus (D)4 Nay Yea Yea Yea Steve Daines (R)
NC Kay Hagan (D) Nay Nay Nay Nay Thom Tillis (R)
NE Mike Johanns (R) Yea Yea Yea Yea Ben Sasse (R)
OK Tom Coburn (R) Yea Did not vote Did not vote Did not vote James Lankford (R)
SD Tim Johnson (D) Nay Yea Yea Yea Mike Rounds (R)
WV Jay Rockefeller (D) Nay Nay Nay Nay Shelley Moore-Capito (R)
United States–Korea Free Trade Agreement Implementation Act (H.R. 3080) 15 14
United States–Panama Trade Promotion Agreement Implementation Act (H.R. 3079) 22 21
United States–Colombia Trade Promotion Implementation Act (H.R. 3078) 33 30
3 Sen. Landrieu faces a Dec. 6 runoff election with polls indicating a likely Republican victory.
4 Sen. Baucus retired on Feb. 6, 2014. The remainder of his term was served by Sen. John Walsh (D-MT).
White & Case 4
House of Representatives
The extension of the Republican majority likely will have
only a minor positive impact on the already strong probability
that the House would support major trade legislation in
the 114th Congress, including TPA and, should agreements
be completed, legislation to implement TPP and TTIP.
House Speaker Boehner expressed support for TPA in early
2014, calling on President Obama to help generate Democratic
support for TPA legislation. In addition, incoming Ways and Means
Chairman Paul Ryan has consistently supported trade initiatives
and advocated for the BCTPA. As a whole, the House remains
amenable to passage of major trade initiatives, with the US trade
agreements with Korea, Panama and Colombia passing the
Republican-majority House in 2012 by margins of 95 votes
PROSPECTS FOR COMPLETION AND PASSAGE OF
Republican control of the Senate increases the likelihood, but does
not guarantee, that Congress will pass TPA. The existing Senate
Democratic leadership opposes granting TPA to President Obama.
Majority Leader Reid, a longstanding critic of trade agreements,
has stated that his Senate colleagues would be “well-advised”
not to “push” for TPA. Majority Whip Richard Durbin (D-IL), who
describes himself as “critical and skeptical” of TPA, has claimed
that a consensus exists among Senate Democrats that the
Senate should not consider TPA legislation during 2014. In
contrast, the existing Senate Republican leadership supports
granting TPA to President Obama. Shortly after the conclusion of
the November 4 elections, Sen. McConnell made clear that the
114th Congress’s Republican-majority Senate would work with
President Obama to pass TPA as a means to advance TPP and TTIP.
It is expected, therefore, that the existing Democratic-majority
Senate will not vote on TPA, and that the pending Republicanmajority
Senate likely will approve TPA legislation sometime
in 2015. Sen. Hatch, presumed Finance Chairman in the
114th Congress, previously co-sponsored the BCTPA, TPA
legislation intended to apply to TPP and TTIP. Introduced on
January 9, 2014 in the Senate (S.1900) by former Finance
Chairman Baucus and Ranking Member Hatch, and in the House
of Representatives (H.R.3830) by Ways and Means Chairman
Camp, the BCTPA would apply to trade agreements entered into
before July 1, 2018 (or July 1, 2021 if the President requests an
extension and Congress does not vote against such an extension).
While the Republican-majority Senate is supportive of TPA
legislation, the substance of that legislation remains uncertain.
Aides for Sen. Hatch reportedly have stated that he prefers to pass
TPA legislation with as few changes as possible to the BCTPA.
However, Congressional trade leaders disagree regarding the
contents and details of that legislation, and Sen. Hatch will remain
the only BCTPA author in the 114th Congress. Ways and Means
Ranking Member Levin, a longtime critic of trade agreements,
declined to co-sponsor the legislation and likely will oppose TPA
legislation in the 114th Congress. Sen. Wyden, who replaced Sen.
Baucus as Finance Chairman in February 2014, intends to seek
“smart track” changes to the BCTPA. While the specific content
and parameters of such changes remain uncertain, they likely
would relate to consultation and transparency requirements. Sen.
Wyden has emphasized that (i) the Obama Administration should
provide Congress and the public with increased information
regarding ongoing negotiations, perhaps through the appointment
of a transparency officer within the Office of the United States
Trade Representative (USTR); and (ii) Congress should be granted
more time to deliberate, as well as access to “procedures” to
“right the ship if trade negotiators get off course.”
Because the Finance Chairmanship will transfer from Sen. Wyden
to Sen. Hatch in 2015, the degree to which Sen. Wyden’s proposals
will be incorporated into any final TPA legislation is uncertain.
However, Sen. Wyden, as well as several other Finance
Democrats, likely will condition support for TPA legislation on the
inclusion of at least some of the proposals crafted during his
Chairmanship. Furthermore, other Democratic members of the
Finance or Ways and Means Committees might demand the
inclusion of controversial provisions, beyond those already
included in the BCTPA, regarding labor, the environment and
currency manipulation. In particular, several Democrats have
demanded that TPA legislation include a provision requiring
that covered trade agreements include enforceable currency
rules. Exclusion of such a provision could result in inadequate
Democratic support for TPA and TPP, while inclusion of such a
provision could weaken Republican support for TPA and potentially
impede the successful conclusion of TPP negotiations. Sen. Hatch
likely will wish to advance TPA legislation that, similar to the
BCTPA, enjoys bipartisan support among the Finance Committee
leadership and lacks the most controversial provisions. However,
Sen. Hatch might need to modify the BCTPA or similar legislation
to secure Democratic support. If final TPA legislation contains
controversial labor, environment, currency or transparency
provisions demanded by several Senate Democrats, the bill’s
passage could be jeopardized.
White & Case 5
TPA also might face problems without bipartisan support. With
public skepticism regarding the benefits of trade well-documented
by public opinion polls, Republicans might be hesitant to take
sole responsibility for the passage of trade initiatives prior to the
2016 elections. Doing so could expose Republican candidates to
potential criticisms during the 2016 Congressional and Presidential
campaigns; thus, some degree of Democratic support for TPA is
likely necessary to advance the legislation next year.
Republican leadership thus must craft a TPA bill that gains some
Democratic support but avoids the most controversial provisions
demanded by many Congressional Democrats. As such, TPA
legislation likely will include a balance of labor, environment and
currency provisions that is sufficient to acquire bipartisan support
but insufficient to discourage free trade Republicans or US trading
partners. Achieving this balance will require significant work by the
Obama administration to secure Democratic votes for TPA and
ensure that no provisions in the law will jeopardize TPP, TTIP or
other future FTAs.
Non-trade factors also might weigh heavily on TPA in 2015. Most
notably, President Obama’s recently announced plan to legalize
certain undocumented immigrants without Congressional approval
may diminish Congressional Republicans’ willingness to work with
him on trade or grant him the appearance of new powers under
TPA, at least in the short term. Congressional Republicans
generally opposed the President’s plan, and stated prior to its
official announcement that any unilateral efforts by President
Obama would cause them to reconsider their willingness to
cooperate with the President on TPA, TPP, or TTIP.
The extent to which President Obama’s Executive action will
diminish prospects for TPA in the new Congress is uncertain.
Incoming Ways and Means Chairman Ryan has described
the Executive action as a “stunning act of polarization” that
would result in “gridlock” and “an even more adversarial
relationship” between President Obama and the new Congress.
Sen. McConnell has suggested that Congress will act to curtail the
immigration plan but has not stated how potential cooperation in
other areas, such as trade policy, might be affected. US Trade
Representative Michael Froman has discounted the notion that the
immigration dispute will imperil Congressional passage of trade
initiatives in 2015.
Although Congress is now controlled by the more trade-friendly
Republican Party, potential partisan gridlock resulting from the
President’s Executive action on immigration throws the immediate
future of US trade policy, and TPA in particular, into doubt. Early
2015 action on TPA now appears unlikely, unless tempers on
Capitol Hill—and among the conservative grassroots—cool
dramatically over the Christmas and New Year’s holidays.
Moreover, even if this gridlock is broken or short-lived,
irreconcilable differences over the substance of TPA legislation or
an inability to attract significant bipartisan support present major
obstacles to ratifying TPA. Passage of TPA and advancement of
the US trade agenda remains likely in 2015 but will be affected as
much by the administration’s intentions and actions as by the new
makeup of Congress.
The Republican takeover of the Senate increases prospects
for completion and passage of TPP and TTIP. These improved
prospects stem from the likelihood that the soon-to-be Republicanmajority
Senate, in contrast with the existing Democrat-majority
Senate, will vote to reauthorize TPA sometime in 2015.
Passage of TPA appears to be critical to TPP’s success for several
reasons. First, Congressional Republicans have insisted repeatedly
that TPA must precede the finalization of ongoing TPP negotiations.
In a July 2014 letter to USTR Michael Froman signed by all
23 Republican members of the House Ways and Means
Committee, the Representatives stated that they would not
support a TPP agreement if it were completed before the
enactment of TPA. Failure to adhere to Republican demands on
this issue would inject new, and needless, uncertainty into the
process. Second, several TPP members have used the United
States’ lack of TPA as a reason to withhold their most ambitious
market access concessions and agree to some of TPP’s more
politically sensitive elements. Without TPA’s procedural limits on
Congressional consideration, they argue, the United States cannot
offer concrete assurances the agreement they sign will be the one
actually approved and implemented. Thus, the conclusion of an
ambitious, high-standard TPP likely requires TPA. Finally, and likely
because of the first two reasons, the Obama administration also
wishes to secure TPA before finalizing the TPP agreement.
Passage of TPA is less significant to the outcome of TTIP.
TTIP negotiators are far from achieving consensus on issues
considered central to the agreement, including regulatory
harmonization and market access for goods and services. The
proposed inclusion of an investor-state dispute settlement
mechanism also has engendered strong opposition from EU
member states. Moreover, European negotiators have not
expressed concerns about undertaking TTIP negotiations without
TPA’s assurances—likely due to the talks’ early stages and their
familiarity with the US political process. Thus, passage of TPA likely
would not affect the TTIP, at least in the short term.
White & Case 6
Other Trade Initiatives
Prospects for passage of additional trade initiatives, most notably
GSP, also will be improved in the 114th Congress. In 2013,
attempts to advance GSP legislation in the Senate failed when
Sen. Tom Coburn (R-OK) placed a hold on the bill (S.1331), citing
disapproval of the funding mechanism used to offset the
program’s tariff reductions. However, Sen. Coburn retired at the
end of 2014. The most likely path to renewal of GSP is to attach
renewal legislation to a Continuing Resolution expected to pass in
December 2014. Nonetheless, improved prospects for TPA in the
114th Congress also bode well for GSP’s potential renewal as part
of a larger package of trade legislation. In particular, GSP might be
attached to a TPA proposal to gain bipartisan support. Such a
package also might include customs reauthorization legislation and
a new MTB. Whether such a package will be proposed remains
uncertain, but, regardless, the increased likelihood of a TPA
proposal in the 114th Congress improves prospects for GSP,
MTB and customs legislation.
While the Republican takeover of the Senate increases the
likelihood that Congress will pass major trade legislation, any
effects that the Republican takeover might have on ongoing TPP
and TTIP negotiations should not be overstated. First, each trade
agreement— and TTIP in particular—remains incomplete. TPP
parties have failed to make progress in several key sectors, and
TTIP parties have refrained from advancing negotiations regarding
multiple politically contentious issues. Some analysts argue that it
will be months, if not years, before TPP or TTIP parties reach an
agreement. Most recently, the Prime Minister of New Zealand
stated that failure to conclude TPP by summer 2015 could lead to
the agreement being put “on ice” until 2016 or later.
Second, whether the President’s Executive actions on immigration
will result in diminished prospects for bi-partisan Congressional-
Executive initiatives in 2015 is uncertain. The US business
community likely will pressure Republicans to cooperate with the
President on trade initiatives, despite his actions on immigration.
However, certain Republican constituencies likely will oppose such
cooperation. As a result, some Republican Senators and House
Members—in particular those who might be considering running
in the 2016 Presidential election—might be reluctant to grant
President Obama the appearance of new powers under TPA.
Third, even if TPA legislation does materialize in 2015, leadership
from President Obama will be required to pass the bill into law, as
well as to complete TPP and TTIP. The Obama Administration has
not publicly promoted TPA, TPP and TTIP to Congressional
Democrats, whose constituents largely oppose the agreements.
While a Republican Senate and House offer a more straightforward
legislative path to granting TPA, Presidential leadership is essential
to secure the bipartisan consensus required by Republicans. The
President must court at least some Democratic votes in Congress,
and these can be won only through active involvement. Similarly,
President Obama must attempt to persuade the public of the
benefits and importance of the pending trade agreements and
stand firm against opposition from labor and industry groups that
have inhibited progress in the negotiations. Such Presidential
actions and positions are far from certain.
Fourth, ideological divisions within the Republican Party might
impact a potential vote on trade initiatives. However, these
disagreements should not be oversold. Some critics suggest that
certain conservative Republicans might oppose granting additional
authority, including TPA, to President Obama. However, such
alleged ideological divisions do not appear to have impeded
previous trade initiatives during President Obama’s term. For
example, Sen. Susan Collins (R-ME) and then-Sen. Olympia Snowe
(R-ME), considered two of the most moderate Senate Republicans
in recent years, were the only Senate Republicans to oppose
2011 trade agreements with Korea and Colombia and two of only
four Senate Republicans to oppose TPA in 2011. In the House, less
than 4 percent of voting Republicans opposed implementation of
the Panama or Colombia agreements, while less than 10 percent
opposed a 2011 trade agreement with Korea. Thus, trade policy
divisions within the Republican Party alone should not derail TPA or
the US trade agenda.
Despite the House and Senate coming under Republican control,
potential partisan gridlock ensuing from the President’s Executive
action on immigration makes passage of TPA in early 2015 unlikely.
Furthermore, resolution of this gridlock would not guarantee swift
passage of TPA, due to differences over the substance of TPA
legislation and minimal bipartisan support. If such problems can be
avoided and if Congress can move beyond immigration, then
implementation of TPA would reinvigorate TPP, while TTIP would
remain largely unaffected due to the negotiations being in their
early stages. A potential best-case scenario would include TPA
passage in early 2015, followed by conclusion of TPP negotiations
in summer 2015 and Congressional consideration of TPP
implementing legislation in autumn 2015. However, the
President’s actions on immigration now make this optimistic
scenario increasingly unlikely. A potential worst-case scenario
would include failure by Congress to enact TPA in 2015,
possibly preventing TPP’s conclusion or implementation during
President Obama’s second term.
This Client Alert is provided for your
convenience and does not constitute
legal advice. It is prepared for the general
information of our clients and other
interested persons. This Client Alert
should not be acted upon in any specific
situation without appropriate legal advice
and it may include links to websites other
than the White & Case website.
White & Case has no responsibility for
any websites other than its own and
does not endorse the information,
content, presentation or accuracy, or
make any warranty, express or implied,
regarding any other website.
This Client Alert is protected by
copyright. Material appearing herein
may be reproduced or translated
with appropriate credit.
In this publication, White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP,
a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.