Say what you will about our dysfunctional government, but sometimes, when pressed to act on an important matter, our leaders and legislators can overcome often bitter partisan divides. That’s just what happened when, before recessing for the month of August, Congress passed critical Trade Promotion Authority legislation. TPA will enable the Obama administration to conclude the Trans-Pacific Partnership talks and hopefully deliver on other elements of an ambitious trade agenda. It was a big victory for the trade community.
But in the rush to pass TPA and other legislation, Congress left behind some unfinished business, including finalizing urgently needed Customs reauthorization. Both the House of Representatives and Senate approved the Trade Facilitation and Trade Enforcement Act before the August recess. But the bills vary significantly, and a conference of the two chambers is urgently needed to hammer out the differences, which include controversial provisions on currency manipulation, duty evasion and reform of the long-stalled Miscellaneous Tariff Bill (MTB).
Continued lack of progress on Customs reauthorization is worrisome. Full reauthorization has not taken place since 2002, when U.S. Customs and Border Protection became part of the Department of Homeland Security. Important CBP initiatives, such as Centers of Excellence and Expertise, are still pilot programs and cannot be codified into law without a reauthorization. In addition, the private sector has long advocated for an increase in the de minimis value, which cannot be achieved without congressional approval.
House-Senate conferees will need to bridge significant gaps on currency, where both the Obama administration and key congressional leaders, such as Sen. Orrin Hatch and Rep. Paul Ryan, oppose efforts to use trade remedies to punish countries that are deemed to manipulate their exchange rates in order to gain an export advantage. This is made all the more difficult by recent devaluation of the Chinese yuan.
Customs reauthorization stands to benefit everybody—importers, exporters, workers, consumers. And by passing the Customs bill, we can serve as an example to other countries, at a time when reducing supply chain barriers could increase global GDP by 5 percent annually and global trade by 15 percent, according to the Organization for Economic Cooperation and Development. And the world is watching.
World Trade Organization members are looking forward to this December’s WTO ministerial in Nairobi, Kenya to advance the landmark Trade Facilitation Agreement (TFA) nailed down in Bali two years ago. The TFA commits WTO members to expedite movement, release and clearance of goods, and to cooperate on customs issues. It is expected to significantly decrease transaction costs for small and midsized companies by solidifying more transparent, harmonized and simplified cross-border trade. The Peterson Institute for International Economics estimates the agreement will deliver global job gains of 21 million, and boost world GDP by nearly $1 trillion annually.
As I write, 12 WTO members, including the United States, have ratified the TFA. But two-thirds of the WTO’s 161 members must submit their instruments of acceptance before it can enter into force. The European Union’s director general for trade, Jean-Luc Demarty, has said the European Parliament will take up the TFA in September, with the goal of ratifying it before December. Ratification by the European Union’s 28 member states would mark a big step forward in the WTO’s efforts to have the TFA enter into force this year.
The business community is throwing its weight behind efforts to make this happen. Both the International Chamber of Commerce and its U.S. affiliate, the United States Council for International Business, are pushing leading governments to make the urgent need for TFA ratification a key deliverable at the G20 summit in Turkey this November.
Cook is vice president of government and trade relations with Hanesbrands. He chairs the Customs and Trade Facilitation Committee of the U.S. Council for International Business and can be reached by email.
This column was published in the October 2015 issue of American Shipper.