Sen. Orrin Hatch, ranking member on the U.S. Senate Finance Committee, recently urged Congress to pass Trade Promotion Authority legislation and the Obama administration to ensure that strong language supporting trade facilitation is a central part of any new free trade agreements. But time is of the essence, he said.
In January, Hatch, R-Utah, and then-Finance Chairman Max Baucus, along with House Ways and Means Committee Chairman Dave Camp rolled out the Bipartisan Congressional Trade Priorities Act, which would allow the administration to send a negotiated trade deal to Congress for an up-or-down vote. Preventing lawmakers from tinkering with the agreement – no amendments – is designed to give U.S. trade negotiators more leverage because their foreign counterparts can be sure that the deal they reach is the one that will enter into force if ratified by their respective legislatures.
TPA, which expired in 2007, is considered critical to completing the Trans-Pacific Partnership (TPP) agreement with 11 other Pacific Rim nations and the Trans-Atlantic Trade and Investment Partnership (TTIP) that would deepen trade with the 28-member European Union.
Critics say TPA excludes Congress from playing any meaningful role in trade negotiations and could allow the administration to water down labor, environmental, safety, security, consumer protection and financial standards aimed at creating a level playing field. Those standards might then override U.S. regulations, they say.
Quite the contrary, TPA supporters counter. TPA would give Congress the chance to let the administration know what it wants in a trade deal and the bill ensures congressional involvement up front. The Office of the U.S. Trade Representative would meet ahead of time with lawmakers to hash out the U.S. negotiating objectives and minimum standards.
The TPA bill also strengthens standards for protecting U.S. intellectual property rights by calling for an end to the theft of U.S. intellectual property by foreign governments, including piracy and cyber theft of trade secrets. And it calls for the elimination of measures that require U.S. companies to locate their intellectual property abroad as a market access or investment condition.
“TPA is a very powerful tool that our country needs in order to open new markets for our goods and services… Since [2007], our nation has not concluded a single new trade agreement outside of the World Trade Organization. Meanwhile, other nations are entering into agreements that establish rules to benefit their workers and exporters.
“We simply can’t afford to continue sitting on the sidelines,” Hatch said in an opening address May 8 at the U.S. Chamber of Commerce’s Global Supply Chain Summit.
The bill also includes new language directing the administration to make trade capacity building available for developing countries to enhance their trade facilitation efforts. And it directs the administration to take into account the extent to which a country has implemented its World Trade Organization commitments in determining whether to enter into further trade negotiations with that country.
Hatch said those two provisions are especially important in the wake of the December WTO agreement on trade facilitation, which makes supply chains more efficient and contributes to economic growth. Signatories are expected to take steps to reduce red tape at the border, such as the adoption of risk management systems for customs controls.
Hatch urged the administration to “appropriately reward those countries who are early adopters of the agreement. This will help incentivize nations to quickly and fully implement their commitments.”
And trade facilitation should be a key component of TPP and TTIP.
“It is critically important that both these agreements reflect the highest standards of trade facilitation. Anything less would be unacceptable,” he said.
But Hatch warned that the window for passing TPA is closing. The Finance Committee, chaired now by Ron Wyden, D-Ore., needs to begin work on renewing TPA and report a bill by June before election-year politics complicate matters.
Many Americans blame open trade for shipping jobs overseas and lowering wages at home.
This article was published in the June 2014 issue of American Shipper.