I. Trade Legislation Year-In-Review
2013 began with an ambitious legislative trade agenda, but Congress’ “to-do” list remains much the same as this year draws to a close.
Among the unfinished legislative items include the expired Miscellaneous Tariff Bill (MTB), the Generalized System of Preferences (GSP), and the Andean Trade Preferences Act (ATPA). In addition, Trade Adjustment Assistance (TAA) is set to expire at the end of the year. As discussed further, the path forward for most of these items remains unclear.
Congress also made little progress on moving forward key trade legislative objectives, such as bi-partisan Customs Reauthorization legislation, and a bill granting Trade Promotion Authority (TPA), or “Fast Track,” for congressional consideration of free trade agreements. Details on the status of each follow below:
MTB Remains In Limbo
Approximately 600 temporary duty suspensions on products, including manufacturing inputs and some finished products not made or available in the United States, expired on January 1, 2013. During the Fiscal Cliff debate of 2012, Congress attempted to enact legislation that would both extend expiring provisions and include new provisions, but failed to overcome Senate opposition that the duty suspensions in the bill were earmarks. In July of this year, the House reintroduced the U.S. Job Creation and Manufacturing Act of 2013 (H.R. 2708), a bill nearly identical to the MTB introduced in the 112th Congress. The Senate has taken no further legislative action, as it attempts to resolve the earmark issue.
One proposal to move the MTB forward, supported by Senators Claire McCaskill (D-MO) and Rob Portman (R-OH), would modify the current MTB process, which begins with companies petitioning individual Members of Congress to introduce bills, which are subject to an inter-agency and public comment process. A final bill is combined by congressional staff and submitted to Congress for a vote. The proposal, set forth in the Duty Suspension Process Act (S. 790), would transfer the petitioning process and compilation of the bill to the International Trade Commission, an independent agency, which would then submit the bill to Congress for approval. Senate Finance Committee Chairman Baucus, as well as other Senate Finance Democrats disagree with this approach and maintain the current process is fair and transparent.
Business groups have called for the passage of the MTB. Congressional staff also continue to vet and fix technical issues with the bill so it will be ready when the time is right, but a clear path forward has yet to be identified. It also remains unclear whether the bill, if enacted, would be retroactive to cover expired provisions.
The current version of the MTB includes provisions from more than 2,000 bills introduced in the House and Senate during the MTB process initiated in early 2012. For more information see the House Ways & Means Committee’s website here and the Senate Finance Committee’s website here.
GSP and ATPA Programs Lapse
Congress failed to renew GSP and ATPA before both programs expired on July 31, 2013. GSP, first instituted in 1976, provides duty-free entry to certain products imported from designated beneficiary countries and territories. ATPA was enacted in 1991 to assist the Andean countries of Bolivia, Colombia, Ecuador, and Peru with duty-free treatment.
Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch introduced S. 1331, which would have extended the GSP program through September 30, 2015. However, the Senate’s attempt to pass the bill by unanimous consent failed when Sen. Tom Coburn (R-KY) objected to the funding provision of the bill.
Members of Congress made no moves in legislation to extend ATPA prior to its expiration. Colombia and Peru both receive duty-free preferences under their respective trade agreements with the United States. In 2008, President George W. Bush suspended ATPA benefits for Bolivia after finding that the country failed to cooperate on anti-narcotic efforts. Ecuador renounced its benefits earlier this year when Sen. Robert Menendez (D-NJ) opposed Quito’s granting asylum to the fugitive and former NSA contractor Edward Snowden, and Congress subsequently threatened to remove benefits. Congress is not expected to renew this program.
TAA’s Path Forward Unclear
TAA, which authorizes funding for worker programs including worker training, employment and case management services, job search allowances, and relocation allowances expires on December 31, 2013. Though previously passed with bipartisanship, extension of the program is currently opposed by House and Senate Republicans on grounds of cost. The Democrats and the Administration have also insisted that TAA renewal move along with legislation granting Trade Promotion Authority. In late July, the Senate introduced the Trade Adjustment Assistance Extension Act of 2013 (S. 1357) to extend TAA through 2020, but no further action has been taken on the bill.
Customs Reauthorization – Problems with Trade Enforcement
Prospects for legislation to reauthorize U.S. Customs and Border Protection (CBP), as well as to enact changes to various aspects of customs laws including major reform of duty drawback and imposing new liabilities on importers, continues to look grim.
The Senate introduced the bipartisan Trade Facilitation and Trade Enforcement Act of 2013 (S. 662) early in the year, held a hearing on that legislation in May, and then the bill saw no further action. The House introduced two competing reauthorization bills along party lines towards the end of the 112th Congress when an attempt to craft a bipartisan bill failed over disagreements related to trade enforcement. Democrats favored the inclusion of a provision known as Enforcing Orders and Reducing Customs Evasion (ENFORCE), reintroduced in the 113th Congress as H.R. 1440 by Rep. Linda Sanchez (D-CA), that enabled domestic companies to petition CBP to investigate allegations of antidumping duty evasion by fraud. Republicans, however, preferred the enforcement provisions set forth in a bill called the Preventing Recurring Trade Evasion and Circumvention (PROTECT) Act, reintroduced in the 113th Congress as H.R. 166 by Rep. Charles Boustany (R-LA).
The stalemate over the enforcement title has prevented the Customs Reauthorization bill from advancing in the House. Various business groups and trade associations have requested that Congress drop this part of the bill so that the rest of the package may proceed. The Ways & Means Committee has yet to indicate that it will take action along that course. Moreover, the Senate bill includes an enforcement section based on the ENFORCE bill, which passed out of the Senate Finance Committee. As such, any attempt to jettison the enforcement title in the House bill will need to be revisited in a future conference of the two bills. Chances of that happening this year, however, are zero to none.
TPA – The Hope of Every Languishing Trade Bill?
More than any other bill this year, Trade Promotion Authority was talked about with both welcomed anticipation and consternation. Though staff have been hard at work on TPA since the summer, neither the bill nor the discussion draft have been released. TPA, also known as Fast Track, would subject trade bills to special procedural rules, including a specific time-table for consideration and an up-or -down vote without opportunity for amendment. It also would require Congress to set forth priority negotiating objectives, or instructions, to the Administration.
Despite attempts to agree on a bipartisan bill, differences remain, mostly with respect to provisions dealing with negotiating objectives, such as the inclusion of measures to address transparency in negotiations and currency manipulation. Business groups have stepped up efforts in support of TPA, but strong opposition exists – and on a bipartisan basis. Both Democrats on the left and Republicans on the right have expressed concerns ranging from perceived constitutional issues (ceding Congressional authority to the Administration) to lack of transparency and input from public sector and private interest groups. Notwithstanding opposition, there is a solid group of Members in the middle who would support TPA, depending on the details.
TPA is widely viewed as a bill that could generate strong support and act as a legislative trade vehicle for remaining languishing bills. There have been calls to link TAA extension with TPA, and there also has been talk of also adding the expired MTB and GSP bills. Senate Finance Committee Chairman Max Baucus has publicly stated his intent to proceed with TPA legislation this year, but with little time left before the scheduled adjournment, the chance of this happening continues to dwindle.
Another opportunity for movement on TPA would be the conclusion of an agreement of the Trans-Pacific Partnership (TPP) negotiations. Some have speculated that the conclusion of an ambitious agreement would create an incentive for Congress to swiftly pass TPA so that it can be used for consideration of TPP. High level trade officials have publically stated a goal of concluding TPP negotiations by the end of the year, but other observers think it is more likely that a deal will be reached in early 2014.
II. Other Congressional Business
Nominations and Confirmations
There were several changes in key posts related to international trade this past year.
The Senate still has yet to vote on Gil Kerlikowske’s nomination as Commissioner of U.S. Customs and Border Protection. Kerlikowske currently serves as Director of the Office of National Drug Control Policy.
F. Scott Kieff, a former professor at the George Washington University Law School specializing in intellectual property and business law, was confirmed by a unanimous vote to the U.S. International Trade Commission (ITC). President Obama also nominated Rhonda K. Schmidtlein as ITC Commissioner; the Senate Finance Committee approved her nomination by a voice vote, but she still awaits confirmation by the Senate.
Penny Pritzker, businesswoman and board member of her family’s corporation, Hyatt Hotels, was confirmed as the Secretary of Commerce.
The Senate also confirmed Michael Froman as United States Trade Representative. Froman served as deputy national security adviser for international economic affairs in the Obama White House and was the lead adviser on free trade deals with South Korea, Colombia and Panama.
Senate Finance Committee Holds Hearing on EU and U.S. Trade Agreement – the Transatlantic Trade and Investment Partnership (T-TIP)
The Senate Committee on Finance held a hearing entitled The Transatlantic Trade and Investment Partnership: Achieving the Potential, on October 30. Witnesses invited to testify included Michael L. Ducker, Executive Vice President and Chief Operating Officer of FedEx; Ryan McCormick, President of the Montana Grain Growers Association; Dave Ricks, Senior Vice President of Eli Lilly and Company and President of Lilly Bio-Medicines; and William Roenigk, Senior Vice President of the National Chicken Council.
During the hearing, Sen. Benjamin Cardin (D-MD) called for an agreement with the EU that was “on a level field” and did not consist of “unilateral concessions” by the United States. In his opening statement, Ranking Member Orrin Hatch (R-UT) stated it was crucial that the agreement address barriers in digital trade as well as regulatory convergence. Chairman Max Baucus emphasized the importance of using “leverage” in T-TIP negotiations as a means to lower trade barriers. For more information on the hearing, click here.
The hearing was followed by the second round of T-TIP negotiations in Brussels, which were pushed back to mid-November after a delay due to the U.S. government shutdown. Topics discussed included the investment rules, trade in services, energy and raw materials, as well as a range of regulatory issues. Notably, prior to the second round, the EU approved the removal of subsidies on their agricultural and dairy products, given the same commitment on the issue from the United States. The third round of T-TIP talks is scheduled for December 16-20 in Washington, D.C.