Republican gains in U.S. mid-term elections on November 4, including Republican control of the Senate, boosted prospects for Trade Promotion Authority (TPA), although it will not happen in the “lame duck” session and remains far from a “sure thing.”
TPA, formerly known as the “fast-track,” gives the president authority to submit trade agreements to the Congress for an up-or-down vote on approval within specific time limits as long as the president consults closely with the Congress during the negotiations and achieves certain negotiating objectives. Originally enacted in the Trade Act of 1974, TPA strikes a balance between (1) Congress’ ultimate authority to regulate trade under Article I, Section 8 of the U.S. Constitution, (2) the need for a mechanism to assure U.S. trading partners that the president has authority from the Congress to negotiate trade agreements that necessarily will include a mix of both gains for U.S. exports as well as U.S. concessions that may generate political opposition. TPA ensures that the agreement will be voted on and treated as a package. While Congress has given TPA to the President for various trade negotiations, the last grant of such authority lapsed in June 2007 and has not been renewed. This has been an impediment in TPP, since it is not clear whether the president can deliver the Congress on any deal that is struck.
{mosads}After the Republicans took control of the Senate on November 4, President Obama, House Speaker John Boehner (R-Ohio), and the incoming Senate Majority Leader, Senator Mitch McConnell (R-Ky.), all cited international trade as one of the issues where bipartisan cooperation is feasible. However, while the outlook for trade policy and Congressional approval of TPA improved somewhat, TPA remains far from a certainty, and could easily fall victim to the bitter partisanship that has consumed Washington, DC in recent years or President Obama’s weakened influence over Congressional Democrats.
As the new Majority Leader, McConnell will control the Senate calendar. This removes one important obstacle to a TPA vote, since Senate Majority Leader Harry Reid (D-Nev.) made it clear he would not allow a vote before the mid-term elections. However, talk about bringing up TPA in the lame duck session next week has evaporated. Congressional staffers admit that TPA won’t happen in the lame duck, and now say TPA is for next year.
In his post-election remarks, Obama also cited international trade as an area where bipartisan cooperation is possible. Importantly, there are increasing indications that Ambassador Froman has come around to the view that Congressional approval of TPA is needed to complete TPP. While Froman has stuck publicly to his longstanding view that a good TPP deal would “sell itself,” it has become increasingly clear that USTR is having difficulty inducing the other TPP countries to put their best and final offers on the table without stronger assurances (in the form of TPA) that the U.S. will not come back for a second bite at the apple. While it is not a total guarantee, TPA greatly reduces the risk for foreign countries that Congress or the administration will make additional demands after an agreement has been reached. Many TPP countries, and particularly those with previous experience negotiating with the U.S., are worried USTR will come back with additional demands, putting them in a difficult position with their stakeholders.
The window for TPA and TPP is closing rapidly. If TPP is going to enter into force while Obama is in office, it must be completed early in 2015, so that the various procedures needed to prepare for a vote under the TPA procedures (legal “scrub,” U.S. International Trade Commission probable economic effects study, Congressional hearings, “mock” mark-ups in the Ways and Means and Senate Finance Committees, notifications to Congress, etc.) can be completed in time to allow a vote in late 2015 or early 2016. If a TPP vote slips deeper into 2016, it is at risk of again falling victim to the political calendar.
In addition, TPA still remains far from a sure thing. Republican and Democratic staffers continue to discuss potential changes to the Baucus-Camp-Hatch draft TPA bill. Staffers for the current Senate Finance Committee Chairman, Senator Wyden (D-Ore.), have begun sharing the results of his consultations with other Committee Democrats. Wyden’s priorities reportedly include greater transparency and Congressional consultations in the FTA negotiating process and digital trade negotiating objectives; both are longstanding personal priorities which have broad bipartisan support and are not particularly controversial. However, Republican staffers reportedly have raised concerns with some of Wyden’s other proposals and are likely to stick closely to Baucus-Camp-Hatch.
In short, despite TPA’s improved prospects, the bill remains a work in progress and could easily unravel. To pass TPA in the House and Senate, and get over the 60-vote threshold to avoid a Senate filibuster, a bipartisan coalition of Republicans and Democrats will be required. While Republicans are likely to provide the majority of the votes, particularly in the House, at least some Democrats will be necessary in both chambers. As a result, both sides likely will have to make accommodations. However, both sides remain wary of each other’s potential demands. The Republicans are concerned that Wyden will seek far-reaching changes to Baucus-Camp-Hatch that would generate opposition within the Republican Caucus. For their part, Democratic staffers are worried that House and Senate Republicans will try to jam a partisan trade bill through the Committee and floor processes, as occurred with the House-passed version of the Trade Promotion Authority Act of 2002, or weaken the so-called “May 10” agreement between the Bush administration and Congressional Democrats on the treatment of labor and environmental obligations in U.S. FTAs. If either scenario happens, the process could go off the rails again. Obama’s immigration announcement represents a new complication, which could delay or upset talk of bipartisan cooperation. Finally, TPA will require leadership and support from the President. While Cabinet members have begun meeting at the White House to discuss TPA strategy, a bill as complex and politically controversial as TPA will require a major public effort by the president, and a well-organized and coordinated campaign by the US business community and the White House. In sum, while there is an opening for TPA (and TPP), the process could easily stall, in which case the responsibility for getting them done could slip to the next president.
Maruyama and Kyle are partners at the global law firm of Hogan Lovells.