WASHINGTON — The U.S. is driving its domestic and global trade agenda this year with a single engine — the expiration of Trade Promotion Authority.
The specter of losing TPA, which allows the President to negotiate trade deals that Congress cannot amend, has by default become the catalyst behind the timetable for the global round of trade talks, as well as several bilateral trade deals the U.S. is negotiating.
Retailers and apparel importers are generally supportive of presidential negotiating power because it allows the President to negotiate a trade deal that cannot be changed by Congress and sets a rigid timetable for consideration. The U.S. textile industry is largely opposed to such authority because it diminishes Congressional power and takes away lawmakers’ ability to change aspects of trade deals that could harm domestic industries.
On Capitol Hill, Republicans and Democrats both acknowledge that the expiration of TPA on July 1, 2007, has given a sense of urgency to all trade matters because it appears unlikely Congress will extend the controversial authority next year as the 2008 presidential race begins and Bush takes on lame duck status.
In addition, the midterm elections in November could change the balance of power in one or both chambers, which, in turn, will impact the vote on TPA.
Congress narrowly approved TPA in 2002 as part of a broader trade package known as the Trade Act of 2002. The authority gives foreign countries assurance that Congress won’t amend trade pacts negotiated by the administration, since it only allows for an up or down vote. But it also greatly diminishes the role of Congress in altering a trade deal, which is why renewal of the authority is far from certain.
TPA, formerly known as fast track, expired in 1994 and wasn’t renewed until 2002. During that eight-year period, the only free-trade agreement that cleared Congress was one with Jordan.
Congress has passed every other bilateral and multilateral trade deal under fast track or TPA, including pacts with Australia, Bahrain, Chile, Israel, Morocco and Singapore; two regional agreements — the North American Free Trade Agreement with Mexico and Canada, and the Central American Free Trade Agreement with Costa Rica, Honduras, Guatemala, El Salvador, Nicaragua and the Dominican Republic — as well and the GATT, the multilateral pact that led to the creation of the WTO. GATT also resulted in most countries dropping import quotas this year after a 10-year phaseout.
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“There is an obvious urgency with the Doha agenda,” said Phillip Swagel, resident scholar at the American Enterprise Institute, referring to the current WTO-sponsored global trade talks meant to reduce or eliminate quotas. “Right now it is pushing people to get a far-reaching agreement, but at some point it will have the opposite effect and force people to focus on a limited agreement.”
Swagel said TPA renewal is “extremely unlikely” given the current mood in Congress on trade.
“The fact that it is hard to imagine TPA passing is a real comment on how Congress and the public view trade and trade policy,” said Cass Johnson, president of the National Council of Textile Organizations. “The amazing thing is [the U.S.] can’t do any substantial trade agreements after June 2007 because it knows it won’t get TPA and that shows you are in a very tenuous environment.”
Johnson, whose group supported CAFTA, said the general mood on the Hill regarding trade is “trepidation.”
“They view it as politically costly and they don’t see the payback except in the philosophical sense,” said Johnson.
He also noted that the European Union might not be able, politically, to move the Doha round forward, adding the round could collapse because there is a deadline for TPA.
Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, said, “Every agreement ever submitted to Congress under fast track has been approved, but when you look at the [overall] legislative process, probably less than 5 percent of all bills introduced are ever passed and signed into law…so you have a 95 percent failure rate.
“With fast track, you have a 100 percent success rate with all agreements and something is wrong there. It was an enormous concession by Congress to the executive branch and we have a $700 billion annual trade deficit to show for it.”
Tantillo also said the climate on the Hill does not favor renewal of TPA.
“Congress will have an opportunity to look at the concessions the U.S. has made up to a point early next year and they will have a much more clear view of what fast track extension gave them,” said Tantillo. “Right now, it looks like Doha will provide significant one-way concessions from the U.S., with nonreciprocal access from numerous WTO countries, and that will be a difficult product to sell.”
Importers and retailers are supportive of TPA, but they acknowledge the prospect of renewal is not promising.
“TPA expires one-and-a-half years from now and that means there is less than a year to get an agreement on Doha and free-trade agreements,” said Stephen Lamar, senior vice president at the American Apparel & Footwear Association. “Everyone knows that, so people are responding and not just sitting on proposals. The deadline in the expiration of TPA certainly creates a dynamic that makes folks more likely to come to the table with serious proposals.”
Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel, said the trade agenda would be in great jeopardy without TPA.
“Clinton lost it and that made it difficult to have momentum on trade issues,” said Hughes. “Realistically, without it, you can’t bring home the negotiations because it is a pretty rare deal that gets consensus in either house.”