After months of behind-the-scenes negotiations, on April 16, 2015, Senate Finance Committee Chairman Orrin Hatch (R-Utah), Finance Committee Ranking Member Ron Wyden (D-Ore.), and House Ways and Means Committee Chairman Paul Ryan (R-Wis.) introduced legislation, S. 995 and H.R. 1890, to restore trade promotion authority (TPA). The TPA bill provides the administration with negotiating objectives for future trade agreements and allows it to submit implementing legislation for the final agreement to Congress for an up-or-down vote without amendments. The Senate Finance Committee has now announced it will hold a mark-up of the bill on April 22. The House Ways and Means Committee has announced a hearing on the bill for the same day.

TPA is important for any company involved in international trade and investment. TPA is widely seen as a necessary first step to advance significant trade negotiations involving the Pacific region and Europe, the Trans-Pacific Partnership (TPP), and the Transatlantic Trade and Investment Partnership (TTIP) trade agreements. TPP, a foreign policy legacy item for the president, involves negotiations among 12 Pacific Rim countries representing nearly 40% of world GDP. TTIP involves comprehensive negotiations between the United States and the European Union on trade and regulatory barriers. In both cases, TPA would strengthen the Obama administration’s ability to complete negotiations by reducing other countries’ concerns that Congress could amend negotiated agreements. The administration still would have to follow Congress’s negotiating objectives, and Congress retains the ultimate authority to approve or disapprove any final agreement.

Key Provisions of the Legislation

TPA enabled previous presidents to successfully negotiate several trade agreements and receive congressional approval. The most recent TPA law expired in 2007, but the Office of the United States Trade Representative (USTR) has been following its mandates as the TPP and TTIP negotiations have progressed. Agreements passed with TPA include NAFTA, CAFTA-DR, and the three most recent trade agreements, Colombia, Panama, and South Korea, each signed by President Bush before TPA expired but passed in Congress under President Obama. Since then, several members of Congress unsuccessfully attempted to pass an extension of TPA, most recently a 2014 bill introduced by then-Finance Committee Chairman Max Baucus (D-Mont.), Ranking Member Hatch, and then-Ways and Means Committee Chairman Dave Camp (R-Mich.).

The 2015 Hatch-Wyden-Ryan bill directs the president to consider a number of objectives in negotiations with trading partners and requires consultations with Congress in exchange for applying “fast-track” procedures to implementing legislation. Key provisions include:

  • New Congressional Consultation and Compliance Powers: The Hatch bill gives new powers to the Senate Finance and House Ways and Means Committees to revoke TPA’s “fast-track,” no-amendment procedures through a “Consultation and Compliance Resolution.” If the president fails to meet requirements for consulting with Congress and complying with trade priorities provided in the bill, any committee can introduce a resolution preventing “fast-track” procedures for that agreement. The new procedure goes beyond the Disapproval Resolution Procedure in past versions of TPA.
  • New Human Rights Objectives: The bill includes for the first time a negotiating objective on good governance and transparency to “promote respect for internationally recognized human rights."
  • Labor and Environment Objectives: Like the earlier Baucus-Camp-Hatch bill, the bill includes fully enforceable labor and environment provisions as part of the bill’s trade priorities. These provisions arise from the “May 10 Agreement,” a 2007 agreement between President Bush and congressional leaders to include labor, environment, intellectual property, and foreign investment principles in trade agreements. For example, maintaining “internationally recognized core labor standards” and “obligations under common multilateral environmental agreements” appear as principal negotiating objectives.
  • Agriculture Objectives: The bill remains forward-leaning on foreign market access for U.S. exports, directing the president to gain access for U.S. agricultural exports in foreign markets “substantially equivalent” to foreign exports’ opportunities in U.S. markets. Tariffs should be reduced to the same or lower levels than in the United States. Negotiators should consider whether trading partners adhere to existing commitments for trade in agriculture, and trading partners should not use laws requiring geographic indications to the detriment of U.S. exports.
  • Currency Objectives: The bill upgrades currency into a “Principal Negotiating Objective” from its status in the Trade Promotion Authority Act of 2002, where it was listed under “Promotion of Certain Priorities.” The U.S. negotiating objective, which is identical to Baucus-Camp-Hatch, requires the administration to seek to ensure that parties to an agreement “avoid manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other parties to the agreement.” House Ways and Means Committee Ranking Member Sander Levin (D-Mich.), Senator Sherrod Brown (D-Ohio), Senator Chuck Schumer (D-N.Y.), Senator Debbie Stabenow (D-Mich.), and others have criticized this approach as inadequate and have introduced legislation to enable the Commerce Department to find that currency manipulation is a countervailable export subsidy. Senator Schumer has criticized the administration’s proposals thus far on currency as “weak tea,” and so intends to offer the Brown-Schumer bill as an amendment to the TPA bill, despite the administration’s opposition.
  • Trade Adjustment Assistance: Hatch, Wyden, and Ryan have not yet released any details related to Trade Adjustment Assistance (TAA), a program designed to retrain workers displaced by trade. In announcing the 2015 bill, however, Ranking Member Wyden suggested that TAA should move in parallel with TPA. Chairman Hatch has agreed to move TAA legislation as a separate bill, which would be voted on the same day as the TPA bill in Committee and on the floor. This suggests TAA could be added to TPA in committee or on the floor.

The Hatch-Wyden-Ryan bill grants TPA through July 1, 2021, so long as the president requests a three-year extension and neither house disapproves the request after July 1, 2018.

What’s Next

Chairman Hatch would like to move the TPA bill through the Senate quickly, but the bill faces strong opposition over currency, labor and environment protections, and investor-state dispute settlement, among other sensitive issues, from Ranking Member Levin, Senator Elizabeth Warren (D-Mass.), and others. Chairman Hatch announced a mark-up of four bills—TPA, TAA, a bill to reauthorize the Generalized System of Preferences, the African Growth and Opportunity Act, and Haiti trade preferences, and a customs and enforcement bill—on April 22. Chairman Ryan announced a hearing on the same day.

Timothy J. Ford