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Looming deadline will force Trump to take definitive stance on trade

Looming deadline will force Trump to take definitive stance on trade
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The New Year has brought many prognostications about what will happen in trade policy during 2018.

The renegotiation of the North American Free Trade Agreement (NAFTA) may be completed, if it even survives, or the president could initiate enforcement actions against certain imports or against China’s intellectual property policies.

While any of these noteworthy events could take place in the upcoming year, there is one upcoming trade development that will define U.S. trade policy through at least 2021 — whether the president requests the extension of Trade Promotion Authority (TPA).

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TPA, previously known as “fast track,” enables Congress to consider legislation for implementing trade agreements under expedited procedures and without amendment. This is done in return for ensuring that Congress is adequately notified and consulted during trade agreement negotiations and that negotiations reflect Congress’s trade policy objectives.

 

Thus, TPA plays two important roles: It safeguards Congress’s constitutional authority to regulate foreign trade and formalizes its role in trade negotiations; and it also ensures that trade agreements are not amended by Congress, which could significantly inhibit the United States’ ability to negotiate trade agreements.

TPA is currently in place as a result of the Bipartisan Congressional Trade Priorities and Accountability Act of 2015. However, like past TPA legislation, this act is time-limited and expires on July 1, unless it is extended through July 1, 2021.

This means that the United States’ ability to enter into trade agreements — including a renegotiated NAFTA — after July 1 could be nearly impossible unless TPA is extended. Trading partners would be wary to commit to a trade agreement knowing that Congress could later add amendments or perpetually delay implementing the agreement.

Extending TPA depends on the president. If the president wants TPA extended, he must submit a report to Congress by April 1 requesting an extension of TPA.

This report must contain:

  • a description of the trade agreements that have been negotiated so far under the current TPA and the schedule for submitting those agreements to Congress;
  • a description of the progress in achieving Congress’s negotiating objectives described in TPA and a statement that such progress justifies continuing negotiations; and
  • a statement of the reasons why extension is needed to complete negotiations.

Two other reports to Congress are then also subsequently required by June 1. The Advisory Committee for Trade Policy and Negotiations (an advisory committee to the president on trade issues) must submit a report giving its views on the progress in achieving Congress’s negotiating objectives described in TPA and on whether TPA should be extended.

In addition, the U.S. International Trade Commission must submit a report reviewing and analyzing the economic impact of the agreements implemented so far under the current TPA. 

If the president makes the above extension request by April 1 and the subsequent reports are provided by June 1, then TPA will be extended through July 1, 2021, unless either house of Congress passes an extension disapproval resolution before July 1 of this year.

Any Member of Congress may introduce such a disapproval resolution, and the length of time that the resolution can be considered on the House or Senate floor is limited. Thus, while Congress is not required to affirmatively approve extending TPA, either the House or the Senate can prevent TPA from being extended. 

Given the above, the fast-approaching April 1 deadline could be one of the most significant dates this year for U.S. trade policy.

Failure by the president to request an extension of TPA by then would effectively put on hold the United States’ ability to enter into any new trade agreements until Congress passes a new authorization for TPA — a politically challenging task.

This would likely shelve a renegotiation of NAFTA, as well as potential trade agreements with Japan and the United Kingdom. 

The president could try entering into a renegotiated NAFTA before July 1 to get TPA consideration, but TPA’s notification requirements make the timing difficult. Before the U.S. can enter into such an agreement, TPA requires the president to give Congress at least 90 days' advance notification and to publicly release the text of the renegotiated agreement 60 days beforehand.

This means that notification of a renegotiated NAFTA would have to be sent to Congress by the beginning of April, and the text of the agreement would have to be released by the beginning of May. The current NAFTA renegotiation challenges make these deadlines difficult to meet.

The April 1 deadline will also be an action-forcing event requiring the president to take a definitive public position on trade policy. Requesting an extension of TPA would be a clear signal that the president sees value in pursuing trade agreements.

If the NAFTA renegotiations are still ongoing, extending TPA would similarly be a positive vote for continuing NAFTA. Conversely, not extending TPA would be a convincing indication that the president is not interested in trade agreements, and potentially end the renegotiation of NAFTA.

With April 1 not that far off, it will not be long before we know.

Stephen J. Claeys focuses on issues relating to international trade as a partner at Wiley Rein LLP, which represents clients in regulatory, litigation and transactional matters. Claeys previously handled international trade issues in the White House, the House of Representatives Committee on Ways & Means and the Department of Commerce.