April Legislative Update
April 30, 2014

U.S. Trade Representative Testifies Before House Ways and Means Committee

U.S. Trade Representative Michael Froman appeared in his annual meeting before the House Committee on Ways and Means on April 3, to answer questions related to the President’s Trade Policy Agenda. 

Froman testified that his team was “working around the clock” to ensure that the Trans-Pacific Partnership (TPP) concluded by the end of the year.  A number of the Members, however, emphasized that much work still needed to be done with the agreement.  Congressman John Lewis (D-GA) raised concerns regarding the progress of labor unions and human rights in the Communist regime of Vietnam.  Chairman Dave Camp (R-MI) and Ranking Member Sander Levin (D-MI), who both represent districts in Michigan, discussed the absence of consensus on market access to autos and agriculture in Japan.  Chairman Camp, who expressed concerns that Japan was “holding the progress on TPP,” went as far as to say, “{i}f Japan does not cooperate, then it is my view that we should complete TPP without that country.”  While there was mention of whether currency terms would appear in the agreement, Amb. Froman deferred the issue to the Treasury Department, who he said “has the lead on this issue.”

Members also inquired as to the status of the talks to expand the World Trade Organization’s Information Technology Agreement (ITA), which broke down last year when the United States and China clashed over China’s request to exclude over a hundred products from the new ITA.  The agreement, which currently has 74 participants, provides tariff-free treatment to information technology products covering computers, telecommunications equipment, semiconductors, semiconductor manufacturing equipment, software, and scientific equipment.  It has not been updated thoroughly since it was first established in 1996.  While Froman stated that the United States was still in pursuit of this agreement, he also expressed that China would need to “return to the table with a more appropriate offer,” and they have “yet to respond positively.”

The development of intellectual property right protections in the ongoing trade negotiations was also high on the Members’ list of concerns.  Congressman Todd Young (D-IN), who recently helped form a caucus on the Transatlantic Trade and Investment Partnership (TTIP), asked about the possibility and convergence in IP rules with Europe.  While Ambassador Froman did not reference which specific IP areas were being worked on, he stressed that the T-TIP, in the area of IP, was “not about deregulation, but taking markets that are regulated in slightly different ways” and finding areas where there may be cooperation.    

Members of the Committee, Democrats and Republican alike, complimented Amb. Froman for his work thus far as U.S. Trade Representative, especially noting his willingness to engage and meet with the Members.  He was also scheduled to testify before the Senate Committee on Finance, but the hearing has been postponed until April 30.  For the Ambassador’s statement before the House Committee on Ways and Means, click here [http://waysandmeans.house.gov/uploadedfiles/att59846.pdf].  For more information about the rescheduled Senate Finance hearing, click here.

Ways and Means Chairman Dave Camp Set to Retire at End of Term

Congressman Dave Camp (R-MI), Chairman of the House Committee on Ways and Means, has announced that he will retire after his current term. 

In the wake this news, both Republicans and Democrats have lauded Camp’s tenure as Congressman and leader in the House of Representatives.  Sen. Orrin Hatch (R-UT) stated, “It’s hard to find someone who works harder and cares more about the issues than Dave Camp.”  Rep. Sander Levin (D-MI), Camp’s Democrat counterpart on the Ways and Means Committee praised him for his “dedication to public service” which Levin called “unswerving for the district, the State, and for this country.”  As leader of the historical House Committee overseeing tax and trade, Camp shepherded though the signing of free trade agreements with Korea, Colombia, and Peru.  The Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership also both commenced under his tenure.  But his attempts to overhaul the tax code fell short when his draft bill earlier this year met opposition from House Republican leadership.   

Camp’s office did not announce a reason for him not seeking reelection.  The Congressman from Michigan’s Fourth District has won his past four reelections with over 61 percent of the vote.  However, Camp battled cancer in 2012 and House Republican rules on term limits dictate that he will have to step down from the Ways and Means chairmanship after this Congress.  In a statement he released to the press, he wrote, “This decision was reached after much consideration and discussion with my family.” 

Prior to entering the House in 1990, Congressman Camp served on the staff of U.S. Congressman Bill Schuette (R-MI) and later ran for Schuette’s seat with the endorsement of his former boss.  A graduate of Albion College and the University of San Diego School of Law, he resides with his wife and three children in Midland, MI, where he was born and raised. 

The Administration Releases Reports on Foreign Trade Barriers and Currency

The Office of the U.S. Trade Representative released the National Trade Estimate Report on Foreign Trade Barriers on March 31.  The annual report contains a country-by-country analysis of barriers to U.S. exports of goods and services, and usually accompanies the Administration’s announcement of the President’s Trade Policy Agenda.  This year, USTR classified the number of foreign trade barriers into nine categories: import policies; government procurement; export subsidies; lack of intellectual property protection; services barriers; investment barriers; government-tolerated anticompetitive conduct of state-owned or private firms; trade restrictions affecting e-commerce; and cross-category or single-sector barriers.  For a full version of the NTE Report on Foreign Trade Barriers, click here

The Department of the Treasury also released its Semiannual Report on International Economic and Exchange Rate Policies on April 15, covering the second half of 2013 through March 2014.  As part of the study, the Secretary of the Treasury considers “whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of  payments adjustment or gaining unfair competitive advantage in international trade.”   Notably, while the Report emphasized the need for “greater exchange rate flexibility” in China, it did not label the country as a currency manipulator.  Indeed, the Treasury’s analysis found that “no major trading partner of the United States met the standard of manipulating the rate of exchange between their currency and the United States dollar…”  The full version of the report can be found here

Energized Prospects for Generalized System of Preferences (GSP) Program Renewal?

In the course of his appearance before the Ways and Means hearing on the President’s trade policy agenda (see above, related article), U.S. Trade Representative Michael Froman said that renewal of the Generalized System of Preferences program “would benefit Ukraine immediately.”  These remarks referred to actions the United States could take to support the country in light of recent hostilities in the region – including Russia’s annexation of Crimea – and generated renewed congressional interest in extending the program.   GSP, which expired on July 31, 2013, promotes economic growth in developing countries by providing duty-free entry for up to 5,000 products from 123 countries.  Legislation  that would have extended the program before its expiration failed to clear the Senate Finance Committee last July when Sen. Tom Coburn (R-OK) objected to the pay-for provision of the bill.  Congress is working on an additional aid package for Ukraine, and there has been talk of renewing GSP benefits – for Ukraine and other eligible countries – in connection with that effort.  Other Members of Congress, including Sen. Sherrod Brown (D-OH), have suggested in public comments that benefits should not be extended for Russia, which also is a GSP beneficiary country.  

Three of the “Big Four” Leading Members on Trade Deliver Key Speeches

Three prominent Members on trade delivered key speeches earlier this month before a trade association and Washington think tanks to discuss the legislative agenda and congressional priorities on this issue in the coming months.  With little to no activity on trade legislation in Congress, there was much attention to what these members had to say.  Topics included Trade Promotion Authority (TPA) and ongoing trade negotiations, such as the Trans Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).

In his first public remarks on trade since taking the lead post at the Senate Finance Committee, Chairman Ron Wyden (D-OR) set forth his vision for trade policy in the 21st century in a speech delivered at an American Apparel & Footwear Association conference on April 9.  Chairman Wyden outlined several elements that he believed should be in free trade agreements including enforcement, promotion of digital trade, addressing predatory practices such as currency manipulation and indigenous innovation policies, and strong labor and environment provisions.  With respect to TPA, or “Fast Track” as it is commonly called, Wyden called for a “smart-track” that would hold negotiators accountable to Congress and the American people.  He also called for a more open negotiation process saying, “to get better trade agreements, there must be more transparency in negotiations.  The Congress cannot fulfill its constitutional duty on trade if the public doesn’t know what’s at stake or how to weigh it.”   He also noted that he plans to work on a bipartisan proposal that would accomplish these objectives.  Wyden also made clear that “substance is going to drive the timeline.”  For a copy of Chairman Wyden’s speech, click here

Senate Finance Committee Ranking Member Orrin Hatch (R-UT) also presented a speech entitled “Making Trade Work for America”  before the Center for Strategic and International Studies on April 8.  Ranking Member Hatch talked about his strong belief in open markets and international trade as a means to grow economies and expressed support for the TPP and TTIP. He also spoke of the need for the Administration to have Trade Promotion Authority and expressed disappointment that there was no active effort to consider the Bipartisan Congressional Trade Priorities Act, legislation that would extend this authority, which he introduced earlier this year with former Senate Finance Committee Chairman Max Baucus (D-MT) and Ways and Means Chairman Dave Camp (R-MI).  With regard to the legislation,  Hatch expressed the belief that “the bill would gain strong bipartisan support in the Senate as a whole, if it were allowed to come to a fair vote.”  A video and audio recording of Ranking Member Hatch’s speech is available here.

Similarly, Ways and Means Committee Ranking Member Sander Levin (D-MI) appeared at the Center for American Progress on April 9 and delivered prepared remarks on trade.  Ranking Member Levin discussed the opportunities and challenges presented in the TPP negotiations and what in his view was needed for their success.  In his speech, Levin outlined an unacceptable status quo of the global economy, characterized  by low U.S. tariffs, unfairly traded imports and closed overseas markets to U.S. goods and services.  He also noted that many U.S. trading partners are negotiating agreements with one another that do not benefit the U.S.  Levin said that “more Members of  Congress must play a key role,” in TPP discussions and that “stakeholders and the public also need to be better informed and more involved.”  To that end, he said he hoped to work with his colleagues to establish a “bicameral TPP working group that is regularly involved with USTR” that includes congressional trade committees, other committees with jurisdiction over issues related to trade and outside stakeholders.  Finally, he discussed in detail major outstanding TPP issues, including Japan market access, labor standards, access to medicines in developing countries and currency, among others.  For a copy of Ranking Member Levin’ speech, click here.