For most people, June means the end of school and the beginning of family vacations, barbecues and lazy days by the pool. But for those who follow international trade, June took on a special meaning: at the end of the month Presidential Trade Promotion Authority (TPA) was set to expire.
As Capitol Comments readers likely recall, TPA is a procedural device that gives the White House power to negotiate trade deals and then present the final product to Congress for an up-or-down vote with no amendments on an expedited time frame. It is considered a critical ingredient in any U.S. free trade agenda because trading partners are understandably loathe to engage in trade talks when they know that the U.S. Congress could potentially alter the terms of the completed deal afterwards.
Because of this, groups like INDA, Association of the Nonwoven Fabrics Industry, the National Association of Manufacturers and many others have come out in support of TPA. President Bush has also identified TPA reauthorization as one of his key priorities in working with the new Democratically-led Congress.
But if the recent failure to move immigration reform legislation suggests anything, it is that lawmakers on both sides of the aisle are not particularly interested in placating a lame duck President who recently witnessed his public approval ratings slip below 30%. Others note that Capitol Hill lawmakers are leery of endorsing any kind of broad pro-trade measure in the face of the rapidly approaching elections in 2008. With this in mind, we will use this article to review the status of several pending U.S. free trade initiatives and consider what life without TPA might look like if it were not renewed.
Although it used to be referred to as "fast track" authority, the existing framework for TPA has actually been in place since 1974. Moreover, Presidential negotiating authority was routinely reauthorized by Congress with only a few minor lapses until it was allowed to expire during the early years of the Clinton Administration. President Bush managed to convince Congress to restore the authority in 2002, although the measure passed by an extremely narrow two-vote margin, even with the Republicans in charge of both the U.S. House of Representatives and the Senate.
Regardless, the Bush Administration has used TPA to pursue a historically ambitious free trade agenda that has included completing a regional agreement with six Central American countries; bilateral pacts with countries like Australia, Singapore and Chile, to name just a few, and active participation in the ongoing "Doha Round" of World Trade Organization (WTO) talks.
More recently, the Bush Administration used TPA to complete separate bilateral pacts with Colombia, Peru, Panama and—the most economically significant deal—South Korea. But securing Congressional approval for these agreements is anything but a done deal. While a deal was struck between the White House and Congressional Democrats in May on labor, environmental, and intellectual property provisions for pending and future agreements, which makes it likely that the Panama and Peru FTAs will be passed later this summer, deals with Colombia and Korea have come under sharp criticism from Congressional Democrats and Republicans. This means the Administration will likely have to go back to the negotiating table before trying to move either pact on Capitol Hill.
Meanwhile, the centerpiece of the Bush Administration's trade agenda, the Doha Round, is still on life-support after talks stalled last year due to broad differences between industrialized and developing nations. Since that time, the White House has been working feverishly behind the scenes with other key players to come up with a compromise on agricultural and industrial market access to jumpstart the negotiations. And while WTO director general Pascal Lamy told reporters on June 12 that he believed an interim deal could be reached to clear the way for an overall agreement, he acknowledged that lack of TPA renewal would make the already tricky negotiations all the more difficult.
"Lack of [trade promotion authority] certainly does not prevent the administration from negotiating with its WTO partners," Mr. Lamy said. "But many U.S. [trading] partners will consider that no movement to renew [TPA] means that the U.S. might have lost faith in the round, and this would certainly have an impact on the dynamics of the negotiations."
Life Without TPA
Beyond the challenges facing the initiatives described above, the U.S. is currently engaged in talks with more than a half dozen countries including Thailand and Malaysia, all of which could be threatened by the President's lack of trade promotion authority.
Perhaps more importantly, however, some wonder if the recent debate over TPA signals the beginning of a larger turn inward for U.S. trade policy as a whole, given the shift in party control on Capitol Hill and the public's seeming discomfort about the impacts of trade on U.S. workers.
While the Administration has repeatedly stressed the importance of renewing TPA, it has at the same time insisted that allowing it to lapse would not mean a death knell for the U.S. free trade agenda. Office of the United States Trade Representative (USTR) spokesman Sean Spicer was recently quoted as saying that TPA expiration does not preclude further progress in the Doha negotiations, according to the Wall Street Journal. "We still go to work and do everything we've done before."
And many agree that the White House can still pursue a free trade agenda, albeit a scaled back one, even without TPA, and point to the fact that the Clinton Administration negotiated China's accession to the WTO; led multilateral talks on promoting telecommunications trade and negotiated some 20 bilateral investment treaties without the benefit of TPA at the ready. As former USTR during the Clinton Administration Charlene Barshefsky recently told the Wall Street Journal, "A little creativity goes a long way."
Indeed. It seems there are few answers about what lies ahead for U.S. trade policy. The one thing that can be said with certainty is that INDA recognizes the opportunities created by free trade initiatives and will continue to work both with this Administration and Congress and their successors to push for future opportunities for liberalization.