President Obama signed Trade Promotion Authority (TPA) into law this week.  TPA permits the Obama administration to submit free trade agreements (FTAs) to Congress for a simple yes-or-no vote, without amendment.  In addition, the president signed Trade Adjustment Assistance (TAA), designed to help workers who have lost jobs as a result of foreign competition, and the African Growth and Opportunity Act (AGOA), which allows certain goods from Africa to be imported into the United States duty free. 

These several actions on trade may result in increased market access and investment opportunities in non-U.S. markets.  In addition, companies facing unfavorable regulatory regimes in non-U.S. markets may achieve gains through ongoing negotiations.  Finally, the changes likely to be made to U.S. customs laws may strengthen the hand of U.S. manufacturers seeking to protect the U.S. market, but will also make certain U.S. importers’ supply chains more vulnerable to disruptions through antidumping and countervailing duty proceedings. 

Trade Promotion Authority

Congress bitterly contested TPA or fast-track authority.  TPA facilitates passage of trade deals by limiting Congressional consideration to a yes-or-no vote, eliminating the possibility of amendments or filibusters.  The Trade Act of 1974, which provided this authority until 1994, eased the passage of NAFTA and the WTO Uruguay Round Agreements.  The Trade Act of 2002 granted the same power through July 1, 2007, and was used to secure passage of several FTAs. 

The new TPA will last until July 1, 2018.  It significantly improves the president’s chances of winning passage of two significant trade agreement priorities: the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP).  Indeed, absent TPA, these agreements almost certainly would not be concluded.

Trans-Pacific Partnership

TPP is in final negotiations, which very well may conclude before the end of the year.  It would affect a significant amount of world trade by lowering or eliminating trade barriers among the United States and eleven countries: Canada, Mexico, Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and Japan.  The eleven countries represent 44% (2013) and 27% (2012) of U.S. exports in goods and private services, respectively. 

In response to criticism that TPP would hurt American workers, the Obama administration has stated that TPP will create common trade, labor and environmental standards, describing it as “the best chance we have to level that playing field and engrain American values in a trade agreement that will put American workers first.”  As with all trade agreements, the truth is that TPP would negatively impact some U.S. companies and workers while at the same time improving the competitiveness of other U.S. companies and their workers.  TAA, which President Obama signed at the same time as TPA, is designed to assist workers affected by job losses caused by FTAs.  Supporters of the agreement also are pushing the idea that it will check China’s rising influence in the region since China is not a party to the TPP.

Transatlantic Trade and Investment Partnership

T-TIP is aimed at achieving greater trans-Atlantic economic integration by eliminating or reducing tariffs and non-tariff barriers between the United States and the European Union.  The latter goal includes enhancing regulatory compatibility in key sectors, such as automobiles, chemicals, cosmetics, information technology, medical devices, pesticides and pharmaceuticals.  The negotiators are also trying to harmonize EU and U.S. trade and investment laws and regulations and increase regulatory transparency to make trans-Atlantic trade more efficient and predictable.  The Obama administration states that the agreement will increase access to European markets for U.S.-made goods and services.  

Related Trade Legislation

As part of the agreement to enact TPA, TAA and AGOA, Congress also began conference negotiations to reconcile differences between House and Senate bills relating to U.S. customs laws and duties.  Perhaps most importantly, these bills would create new mechanisms for the investigation of so-called duty evasion, which they define as (i) filing incorrect information with U.S. Customs and Border Protection that (ii) results in underpayment or non-payment of antidumping or countervailing duties.  These bills would also strengthen aspects of U.S. antidumping and countervailing duty laws to allow U.S. producers to more easily succeed in obtaining higher duties on unfairly traded imports.

© 2015 Perkins Coie LLP