WASHINGTON — The Senate on Wednesday approved presidential Trade Promotion Authority, a key component of President Obama’s trade agenda that could help advance negotiations on a significant Asia-Pacific trade deal.
By a vote of 60 to 38, the Senate passed the key measure, seen as a linchpin to completing negotiations on the Trans-Pacific Partnership talks between the U.S. and 11 countries and a catalyst to advancing the Transatlantic Trade and Investment Partnership negotiations between the U.S. and European Union.
The TPA bill now goes to the president.
The Senate also passed a bill on a voice vote that pairs Trade Adjustment Assistance, a program that helps workers displaced by trade and imports, with preferences package that will help African countries, Haiti and other developing nations. That bill will now go to the House for a final vote.
Proponents cast TPA as a critical mechanism important to America’s standing in the world, arguing it put the U.S. in the “driver’s seat” in writing global trade rules and passing trade deals that boost the economy, exports and U.S. wages.
But opponents, led by the AFL-CIO, railed against it, claiming TPA would lead to more job losses in industries ranging from textiles to steel and hurt the middle class.
The bruising political battle over TPA in Congress over the past month was riddled with acrimony and setback, but House Republican leaders working closely with the White House were able to find enough support to get the legislation across the finish line. Once enacted, it will set the stage for what is expected to be a contemptuous battle over the Trans-Pacific Partnership.
TPA allows Congress to set negotiating objectives and consultation requirements for the executive branch, but also limits lawmakers to an up-or-down vote on trade deals. This is seen as vital to completing negotiations on the Pacific trade deal because it allows foreign governments to make their best offers knowing Congress cannot tear apart a final deal.
“The key victory for American workers and products stamped ‘Made in the USA’ comes today,” said Senate Majority Leader Mitch McConnell (R., Ky.) “The bill we’re about to pass will assert Congress’ authority throughout the trade negotiation process. It will ensure we have the tools we need to properly scrutinize whatever trade agreements are ultimately negotiated and it will make clear that the final say rests with us. We had plenty of bumps along the road. Frankly, a few big potholes too. But we worked across the aisle to get through all of them…Now let’s vote again to support the American worker and American middle class by approving the bipartisan TPA bill.”
The Obama administration has said it needs TPA to conclude the Trans-Pacific Partnership negotiations, which are in the final stages of negotiation, although several major outstanding issues remain unresolved. The Trans-Pacific Partnership talks involve 12 countries — the U.S., Japan, Vietnam, Mexico, Canada, Australia, New Zealand, Malaysia, Peru, Chile, Singapore and Brunei. The trading zone would bring together nearly 40 percent of the world’s gross domestic product.
The authority is also considered crucial for advancing the Transatlantic Trade and Investment Partnership negotiations between the U.S. and European Union.
“TPA will mean that other parties have confidence that any final deal they do with the U.S. is not going to be picked apart by Congress,” said Joshua Meltzer a fellow in Global Economy and Development at the Brookings Institution. “It will create space for everyone now to put their best offers on the table and finalize a deal.”
Despite several thorny issues in the negotiations, including the rules of origin for textile and apparel production, tariff phaseout schedules and other market access issues, Meltzer was optimistic that the deal could be closed fairly quickly.
“TPP is very important. It represents 40 percent of global GDP and a third of world trade and it is increasingly important as more countries join later, which we expect to happen,” Meltzer said. “It really sets the bar globally.”
The Trans-Pacific agreement could have a major impact on the fashion and retail industries by tearing down barriers to billions of dollars in global trade. The fashion industry has a big stake in the talks. Vietnam is the second-largest apparel supplier to the U.S. and could gain significantly if a deal is finalized.
For the year ending February, imports of apparel, textiles and footwear to the U.S. from all countries party to the Trans-Pacific Partnership grew 24.6 percent to $22.1 billion, according to a table compiled by International Development Systems. Combined U.S. exports to the countries were $14.25 billion.
“Getting TPA signed by the president I think really facilitates the conclusion of TPP,” said Stephen Lamar, executive vice president at the American Apparel & Footwear Association. “TPP is going to cover a lot of the world’s economy. It is going to include a lot of the world’s consumers and we are very excited about the opportunities TPP will present for our members who sell U.S. branded clothing and footwear.”
Jonathan Gold, vice president at the National Retail Federation, said, “Now we can finally move on and get to the conclusion of TPP, move T-TIP forward and continue to work through these trade negotiations,”
In the absence of TPA, the negotiations on the Trans-Pacific Partnership, which have been ongoing for more than five years, have continued, but the countries involved have “not put their best offers forward because they do not want to go back and have a final agreement amended by Congress,” Gold said.
“With TPA in place, I think there is a [desire] by the administration to quickly conclude TPP and that means chief negotiators and administrators all getting together to finalize the outstanding issues,” Gold said. “Everything is going to pick up steam now. After five years of negotiations, everybody wants to see this come to a good conclusion. With TPA, this will put an impetus behind making sure they quickly ramp up and try to conclude.”
Julia Hughes, president at the U.S. Fashion Industry Association, said: “In our recent benchmarking survey of 30 companies, respondents said they currently source from five TPP members, and 72 percent expect to source more textiles and apparel from TPP partners after the agreement is implemented.”
“Obviously, companies doing business in the TPP countries could benefit immensely from reduced or eliminated barriers to trade and greater market access,” Hughes said. “TPA is critical to developing 21st-century trade policy for brands and retailers to innovate and create jobs for years to come.”
David Spooner, a partner at Barnes & Thornburg LLP, who was the chief textile and apparel negotiator at the Office of the U.S. Trade Representative from 2002 to 2006., said TPA is “key to getting TPP done.”
“In order to get countries like Japan to compromise on politically sensitive things such as autos and rice, you obviously need a guarantee that the deal will get an up-or-down vote in Congress and won’t get amended,” Spooner said. “TPA is absolutely essential to getting that done.”
Spooner said it won’t be easy for Trans-Pacific Partnership negotiators to close a deal even with TPA in hand.
“I count something like 12 outstanding major issues remaining in TPP,” he said. “Just from experience, a negotiation is ripe for closing when two or four issues are outstanding that ministers can hammer out. But when you have 12 countries and close to 12 outstanding controversial issues, it is not so easy to conclude negotiations in a couple of meetings. It will be fascinating to see whether TPA gives the negotiations a shot in the arm and they can close quickly.”