Filed under: Trade Fact Of The Week


The U.S. Congress has passed 18 “negotiating authority” bills since 1934.

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THE NUMBERS: Count of “negotiating objectives” in trade authority bills –

Reciprocal Trade Agreements Act of 1934 1
Trade Expansion Act of 1962 4
Trade Act of 1974 30
Omnibus Trade and Competitiveness Act of 1988 78
Bipartisan Trade Promotion Act of 2002 99
Congressional Trade Priorities Act of 2014 147

WHAT THEY MEAN:

The “Congressional Trade Priorities Act of 2014,” launched last Thursday by Sens. Max Baucus & Orrin Hatch, and Rep. David Camp, aims to guide trade policy as Obama administration negotiators work through the Trans-Pacific Partnership, the Trans-Atlantic Trade and Investment Partnership, the Trade in Services Agreement, and unspecified possible WTO accords. Reserving a few important topics – procedures, consultation rules, timetables, adjustment – for future trade facts, some observations on its policy heart:

(1) Similarities: The proposal has a long line of ancestors.  If passed, it would be the 18th such bill since the first New Deal Congress and Franklin Roosevelt invented the concept with the Reciprocal Trade Agreements Act of 1934. The 2014 proposal resembles each of these in the fundamentals: Congress sets policy through “negotiating objectives” for administrations to fulfill in agreements, and establishes procedures for putting the agreements into effect.

(2) Innovations: Over time and along the series of bills, policy has grown more ambitious and Congresses have given administrations more detailed guidance. The 2014 proposal is no exception. To chart an illustrative measure along the big trade-bill milestones, Roosevelt’s Reciprocal Trade Agreements Act of 1934 was a simple directive to negotiate tariff reductions; Kennedy’s Trade Expansion Act of 1962 had additional objectives covering fishery conservation, farm exceptions, and tropical forestry and agriculture. The Trade Act of 1974 (which then-President Ford actually signed in January 1975) included 30 objectives in manufacturing, services, investment, high technology, and intellectual property rights. The Reagan-era Omnibus Trade and Competitiveness Act of 1988 had 84, and the Bipartisan Trade Promotion Authority Act of 2002 99.

The 2014 bill follows in this pattern, with 147 goals including 13 “overall objectives” and 18 “principal negotiating objectives” divided into 134 sub-objectives, infra-sub-objectives, and sub-infra-sub-objectives, specific goals. Many are continued from previous bills – open access to WTO dispute panels in the transparency section, reduced use of state trading companies in agriculture – while some take new approaches to older questions and at least one opens up a genuinely new field of trade policy.

(a) New Issues: The 2014 bill adds three new “principal objectives” to the 2002 list, while dropping a couple of older ones. One of the new features, currency policy, is in fact covered by an old WTO agreement but hasn’t been a feature of recent FTAs. Two others – competition with state-owned enterprises and “forced localization” of investment, production, and research – reflect rising concern over nationalistic policies common in large emerging economies. And also new is a reference to utilization of global value chains in manufacturing and services trade, in addition to the end-of-the-chain tariff, customs and regulatory issues common to previous bills.

(b) Labor, Environment, & Development: Measured against its predecessors, the 2014 bill marks a success for (i) liberals hoping to join trade liberalization with attention to labor and environmental policies, and also (ii) for people with a developmental interest hoping to help poor countries manage big complex agreements. In particular, this version is the first negotiating authority bill to use multilateral environmental agreements and International Labor Organization core standards as points of reference for these issues, codifying the “May 10th” agreement between House Democrats and the Bush administration in 2007.  The 2002 bill, by contrast, used enforcement of existing national laws along the lines of the North American Free Trade Agreement’s ‘side agreements’ and the FTAs negotiated between 2000 and 2006. It also adds a complementary section on ‘capacity-building’ meant to encourage technical support, advice, and assistance to low-income countries as they put new agreements into effect.

(c) The Internet: Finally, the 2014 proposal is the first to address flows of data across the Internet. The 2002 law, passed nine years after the World Wide Web went live, recalls the Reciprocal Trade Agreements Act by aiming simply (and so far successfully) to avert imposition of tariffs on electronic transmissions. The 2014 version has a much larger agenda: free flows of data, public-interest regulation, discouragement of ‘forced localization’ of data servers and of the bits and bytes themselves, and equal treatment of goods arriving in digital form.

FURTHER READING:

The bill –

From the Senate Finance Committee, a bill summary and text: http://www.finance.senate.gov/newsroom/chairman/release/?id=7CD1C188-87F1-4A0B-8856-3FC139121CA9

Perspective –

What’s the point? Writing for the GE/Atlantic Media project IdeasLab, P.E. Director Ed Gresser looks at the relevance of the arcane and jargon-ridden trade policy concepts flooding TPA bills – tariff lines, binding agreements, localization, phytosanitary standards, ILO Declarations – to shoppers, workers, arts, living standards, and American daily life:
http://www.ideaslaboratory.com/2013/10/01/ed-gresser-nine-windows-on-trade-policy/

Compare & contrast –

The Bipartisan Trade Promotion Authority Act of 2002, with labor and environmental linkages at page 68, and electronic commerce at pg. 65: http://www.gpo.gov/fdsys/pkg/PLAW-107publ210/content-detail.html

Kennedy’s Trade Expansion Act of 1962 (P.E. note – big document and slow load): www.gpo.gov/fdsys/pkg/STATUTE-76/pdf/STATUTE-76-Pg872.pdf

And the House of Representatives looks back on FDR’s Reciprocal Trade Agreements Act of 1934: http://history.house.gov/HistoricalHighlight/Detail/36918

And some background -

What is a ‘TPA’ bill actually like? The bill’s negotiating objectives cover 30 pages of legal text, its implementation procedures 12 pages, and its consultation requirements 14 more. Three actual objectives, plus one of the oversight and consultation rules:

From Principal Objective #13, on trade institution transparency, sub-objective (B):

“Ensuring public access to appropriate meetings, proceedings, and submissions, including with respect to trade and investment dispute settlement.”

From Principal Objective #6, on digital trade, sub-objective (C):

“Ensure that governments refrain from implementing trade related measures that impede digital trade in goods and services, restrict cross-border data flows, or require local storage or processing of data.”

From Principal Objective #10, on labor and environmental policy, sub-objective (A), clause (i):

“Ensure that a party to a trade agreement with the United States maintains measures implementing international core labor standards (as defined in Section 11(17)), and its obligations under common multilateral environmental agreements (as defined in Section 11(6)).”

[P.E. note: Section 11, which defines the bill’s many terms of art, uses the International Labor Organization’s definition of ‘core labor standards’ to refer to rights of association and collective bargaining, and bans on child labor, forced labor, and workplace discrimination; and lists the environmental agreements as the Convention on International Trade in Endangered Species, the Montreal Protocol banning ozone-depleting chemicals, the 1978 protocol on high-seas pollution caused by ships, the 1971 Wetlands Convention, and conventions on Antarctic marine conservation, whaling, and tropical timber.]

And from the Congressional Consultation provisions:

“The U.S. Trade Representative shall (A) meet upon request with any Member of Congress regarding negotiating objectives, the status of negotiations in progress, and the nature of any changes in the laws of the United States or the administration of those laws that may be recommended to Congress to carry out any trade agreement or any requirement of amendment to, or recommendation under, that agreement; and (B) upon request of any Member of Congress, provide access to pertinent documents relating to the negotiations, including classified materials;”

And a note on the end-goals –

The 17 earlier bills from 1934 to 2002 led to 62 real-world agreements. They include 29 tariff-cutting bilateral agreements by the Roosevelt and Truman administrations between 1934 and 1947; 13 multilateral trade agreements from Truman’s 1947 GATT agreement to the WTO’s Agreement on Trade Facilitation in December 2013; and 20 Free Trade Agreements, the first one with Israel in 1985 and the most recent with Colombia, Korea, and Panama, signed in 2006 and approved in 2011.

The main likely outcomes of the 2014 bill are (a) the “Trans-Pacific Partnership” with 12 Asia-Pacific-Latin American countries including Canada, Mexico, and Japan, respectively the U.S.’ 1st-, 2nd-, and 4th-largest trading partners, and covers about 40 percent of U.S. trade; (b) the “Trans-Atlantic Economic Partnership” with the 28-member European Union, which is covers 18 percent of America’s goods trade and 30 percent of services trade; (c) the “Trade in Services Agreement,” a 23-member Geneva negotiation (counting the EU as a single participant); and (d) unspecified WTO possibilities.


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