Trade Promotion Authority (TPA) in Trans-Pacific Partnership (TPP):

Trade Policy and Trade PoliticsI32031 Hang Nguyen

Agenda

1. Introduction

2. Literature Review

2.1: Trans-Pacific Partnership (TPP)

2.2: Trade Promotion Authority (TPA)

3. Role of TPA in Free Trade Agreements

4. TPA as Bipartisan Trade Policy

5. Discussion

6. Conclusions

1. Introduction

U.S. goals with TPP:

establish a platform for the dissemination of high quality rules on trade and investment

avoid marginalization from a process of Asian regional integration led by China

tap into the economic dynamism of Asia as part of a larger effort to find off-budget sources of growth through an export promotion strategy.

The TPP has not been under the auspices of formal trade promotion authority (TPA).

2. Literature review

Trade Promotion Authority (TPA—previously known as fast track) is the ability Congress extends to the president to negotiate and conclude FTAs with Congressional input.

the Reciprocal Trade Agreements Act of 1934 authorized the President to negotiate trade deals that would reduce tariffs within levels pre-approved by Congress.

was renewed 11 times until 1962.

No FTA from 1994-2001. In 2001, President George W. Bush requested a renewal of fast track authority, although the name was changed to trade promotion authority. Congress granted TPA with the Trade Act of 2002.

Congress has not granted a TPA since the expiration of the last authority on July 1, 2007.

3. Role of TPA in FTAs

In the past 12 years, the United States has signed more than 10 free trade agreements under the TPA.

Republican Senator Orin Hatch: “History tells us very clearly that without TPA, your trade agenda will almost certainly fail.”

1789-1933: the president submitted 27 tariff reduction treaties to the Senate for ratification, and only five of those were approved.

3. Role of TPA in FTAs

If TPA is to be useful in facilitating the TPP negotiations, it must subtract rather than add negotiating objectives.

2002: laid out extensive and detailed negotiating objectives, included investment protection, intellectual property laws, administrative law, labor law, and environmental protection.

achieving these negotiating goals will not liberalize trade

While the TPA is not a necessary step towards TPP ratification, it eases the passage of trade agreements through Congress and strengthens the country’s negotiating hand as trading partners will only take the White House seriously if it has congressional support.

4. TPA as Bipartisan Trade Policy

The last time there was a Democrat in the White House and Republicans in charge of Congress, controversy over labor and environment issues prevented Congress from approving fast-track legislation for President Clinton in 1998 despite support from Republican leadership.

In 1998 the House voted 243–180 against granting fast-track authority to President Clinton. One third of the Republican majority joined the bulk of the Democratic members to defeat the bill.

Democrats: anti-trade sentiment has become quite powerful

Republicans: strongly committed to reciprocal liberalization through trade agreements

4. TPA as Bipartisan Trade Policy

The Democrats:

November 2013, 151 Democrats in Congress wrote a letter to President Obama opposing the TPA

does not provide high enough standards for environmental protection

contain strong enough rules on currency manipulation

1988-2002: Democratic support for TPA in the House dropped from 95 to 12 percent, and from 93 to 40 percent in the Senate.

4. TPA as Bipartisan Trade Policy

The Republicans:

while they were strong supporters of the TPP, they were surprised that the President had set the ambitious goal of concluding the TPP negotiations before November 2014, without mentioning how he would first enact the TPA.

criticized President Obama for doing too little to rally Democratic support for the TPA.

4. TPA as Bipartisan Trade Policy

The President:

Without the support of the most powerful Democrats in the Senate and the House

‘lame-duck’ session

President Obama sees the trade policy debate and ongoing international negotiations as a tool for managing political constituencies, not as part of a genuine agenda to liberalize trade.

5. Discussion

The House and Senate and the President usually work out the legislative language for TPA before any negotiations begin with other countries.

Trade agreements were not a high priority item for President Obama in his first years in office.

The world expect the U.S. to operate like the rest of the world and vote on an agreement without amendments. How the U.S. arrives at that conclusion is not their concern.

The U.S. pursuit of the TPP and the possible outcome of the negotiations raise other questions regarding its possible impact on the status and shape of current and future U.S. trade policy.

6. Conclusions

If the United States wants to maintain its position in global trade, a timely conclusion of the TPP is a necessity.

Some hope that Congress might TPA in the lame duck session; unfortunately, most lame duck sessions do not turn out to be exceptionally fruitful as these sessions often focus on last-minute nominations and appropriations bills.

TPA will require bipartisan cooperation, not confrontation.

Bipartisan TPA bill would send a strong domestic and international signal about the United States’ commitment to global trade.