March Legislative Update
March 25, 2014

President Obama Releases 2014 Trade Policy Agenda; Fiscal Year 2015 Proposed Budget

As required by law, President Obama submitted his 2014 Trade Policy Agenda and 2013 Annual Report to Congress on March 3.  The Office of the United States Trade Representative (USTR) is responsible for the preparation of the report, and is also the lead agency responsible for the implementation of the President’s trade agenda.  According to a USTR press release, this year’s report underscores the Administration’s commitment to bolstering the middle class through trade by “focusing on opening markets, levelling the playing field for American workers and producers, and fully enforcing our trading rights around the word.” 

Separately, the White House also released President Obama’s budget proposal earlier this month, which included allocations for key trade agencies, including a boost in funding for USTR, the Department of Commerce (DOC) and U.S. Customs and Border Protection (CBP).     

The President’s budget allocates an additional $56 million for USTR, which is an increase of about 6.8 percent in funding over what the agency received last year under sequestration.  This increase would enable the agency to increase the number of full time employees from 240 to 252.  According to USTR’s FY 2015 Congressional Budget submission, the funding cuts sustained by the agency in 2013 resulted in reduced travel and hiring delays of key vacancies, which in turn hindered enforcement efforts and trade negotiations.  

The DOC would receive $612 million for work related to international trade.  Of that amount, the budget provides the International Trade Administration, the Commerce branch that works with the U.S. International Trade Commission (ITC) to investigate and remedy allegations of unfair trade practices, with $497 million – an approximate 8 percent increase in funding.  The Bureau of Industry and Security, which focuses on export control enforcement, would receive a proposed amount of $111 million, an increase of almost 9 percent.  The ITC, which is an independent agency and as such was not covered under the President’s budget, submitted its own request to Congress asking for an additional $3.2 million for FY 2015 to fill critical staffing shortages and invest in human capital, information technology and security resources. 

Similarly, CBP would receive an increased level of funding by 2.2 percent to $8.3 billion.  This would include the addition of 4,000 new CBP officers, half of which would be paid for through appropriated funds, and the other half through proposed increased user-fees.  These increases in staff would help CBP process the flow of travel and trade that moves through U.S. ports of entry. 

Click here for a copy of the President’s Trade Policy Agenda and Annual Report.

Secretary Lew Testifies Before Congressional Trade Committees on the President’s Budget – Members Use Opportunity to Highlight  Trade Issues and Ukraine

Secretary of the Treasury Jack Lew testified on the Hill before the House Committee on Ways and Means and the Senate Committee on Finance the week the President’s proposed budget for fiscal year 2015 was released.  Ukraine was not far from the Members’ minds, as many discussed the possibility of sanctions on Russia that appeared later in the bills proposed by the House and Senate.  In his hearing before the Senate, Secretary Lew announced President Obama’s intention to suspend the United States’ participation from the G-8 prepatory meetings, which were to take place in Russia, as well as the withdrawal of U.S. athletes from the Paralympics in Sochi. 

In addition, Members also used the debate on the budget as an opportunity to discuss other ongoing trade matters.  In his first hearing as Senate Finance Committee Chairman, Sen. Ron Wyden (D-OR) announced that he planned to re-open discussion on misaligned currencies.  His opening statement called currency manipulation a “major challenge confronting American workers and manufacturers.”  At the House hearing, Rep. Boustany (R-LA) criticized President Obama for not putting his efforts behind H.R. 3830, a bill proposed by House Ways and Means Chairman Dave Camp (R-MI) that establishes trade negotiating objectives for the pending agreements, also known as Trade Promotion Authority (TPA).  Secretary Lew, in response, reaffirmed the Administration’s commitment to TPA as well as his commitment to move the trade agreements “across the finish line.”

For more information, including witness testimony and archived webcasts, click here for the Ways and Means hearing; and here for the Senate Finance hearing.

Congress and the President Respond to Ukraine Situation with Sanctions Legislation and Suspension of Trade Talks with Russia

The Senate Committee on Foreign Relations held a mark-up on March 12 to consider S. 2124, Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014, which would authorize increased aid for Ukraine as well as additional sanctions on Russia.  The bill, drafted by Committee Chairman Robert Menendez (D-NJ) and Ranking Member Bob Corker (R-TN) secures $1 billion in loan guarantees for the Ukrainian government and orders visa bans and asset freezes for any Russian officials involved in the occupation in Crimea.  Both Senators emphasized that the bill would be completely paid for using funds from cancelled Department of Defense programs.   

The biggest point of contention in the legislation consists of an International Monetary Fund (IMF) provision that would enable the global institution to access millions of dollars in its accounts that were previously available for certain crisis situations.  The Republican-controlled House passed H.R. 4152, a similar version of the Ukraine aid legislation that did not include the IMF reforms.     

S. 2124 was agreed to 14-3 by the Committee and has been reported to the full Senate for additional consideration and votes.  Click here for a copy of the bill. 

In separate, Ukraine-related developments, the Administration suspended a previously scheduled bilateral trade talk with Russia, and ostracized it from another multilateral trade discussion.  The United States was scheduled to meet with Russian officials earlier this month to further advance ongoing technical and exploratory discussions aimed at concluding a bilateral investment treaty (BIT).  In addition, USTR was slated to meet with delegations from the European Union, Russia and Kazakhstan to discuss the accession of Kazakhstan into the World Trade Organization (WTO).  As a result of Russia’s aggression toward Ukraine, the Administration has postponed the BIT talks indefinitely and excluded the Russian delegation from the WTO meeting. 

New Confirmations and Nominations of Key Trade-Related Political Posts

Earlier this month, the Senate confirmed, by voice votes, R. Gil Kerlikowske to be Commissioner of U.S. Customs and Border Protection, Department of Homeland Security, and Rhonda K. Schmidtlein to be a member of the United States International Trade Commission (USITC).  Schmidtlein will replace Shara L. Aranoff, whose term had expired. 

President Barack Obama also nominated former longtime software trade association head Robert W. Holleyman II for deputy U.S. trade representative.  Miriam Sapiro plans to leave this position at the end of this month. 

Holleyman is the founder and CEO of Cloud4Growth, a cloud technology consulting firm. He formerly led the Business Software Alliance as the trade association’s president and CEO for 23 years.  Holleyman currently serves on the White House’s Advisory Committee for Trade Policy and Negotiations, the principal advisory committee for the U.S. government on trade matters.  He earned his bachelor’s degree from Trinity University and his J.D. from Louisiana State University Law Center.