Trade Promotion Authority
Background
Trade promotion authority (formerly called fast track trade negotiating authority) is the process by which Congress gives authority to the President and/or U.S. Trade Representative to enter into trade negotiations in order to lower U.S. export barriers. Traditionally, following the conclusion of negotiations for a trade agreement, enabling legislation is submitted to Congress for approval. Once legislation is submitted, under trade promotion authority, both houses of Congress will vote "yes" or "no" on the agreement with no amendments, and do so within 90 session days (not to be confused with a treaty, which is "ratified" by the U.S. Senate). During negotiations, however, there is a process for sufficient consultation with Congress.
Current
On August 6, 2002, President George W. Bush signed the landmark Trade Act of 2002, H.R. 3009, which has helped put U.S. businesses, workers and consumers back in the game of international trade by granting the president trade promotion authority. In August 2005, TPA was extended for two years. This legislation cleared the way for free trade negotiations to get underway with other countries. Trade promotion authority expired in June 2007 and must be extended by Congress once again.
Impact
Since the Trade Act of 2002, granting the President trade promotion authority, the United States has completed the following free trade agreements (FTA):
- U.S.-Australia FTA
- U.S.-Bahrain FTA
- U.S.-Chile FTA
- U.S.-Central American/Dominican Republic FTA
- U.S.-Morocco FTA
- U.S.-Oman FTA
- U.S.-Singapore FTA
- U.S.-Peru FTA
The Congress is considering already negotiated agreements which fall under the current trade promotion authority. These are the U.S.-Colombia FTA; the U.S. -Panama FTA: and the U.S.-South Korea FTA.
Financially, this translates to the removal of billions of dollars in tariffs for U.S. exports.
Free Trade Agreements
There are more than 130 free trade agreements in force worldwide, with the United States party to 16 of them.
Both Canada and Mexico have free trade agreements with Chile.
Mexico has over 45 free trade agreements with countries and blocs including Japan, Israel and the European Union.
Chile has 52 free trade agreements with countries world wide.
Members of the Association of Southeast Asian Nations (ASEAN) are in the process of implementing a free trade area that will account for 96 percent of all trade in the region.
Japan and the European Union are working toward trade agreements with countries in Latin America and Asia.
Multilateral Agreements
In a speech delivered in October 2006, the director-general of the World Trade Organization (WTO), (Pascal Lamy), commented on the WTO's commitment to multilateral agreements: "A strong and modern multilateral trading system coupled with regional trade agreements which amplify rather than undermine its benefits is the mature answer to this generation of new regional trade agreements." Trade promotion authority is necessary to ensure that the United States plays an active role in the negotiation of multilateral agreements.
Sectoral/Regional Agreements
The United States' major trading partners are participating in sectoral and regional agreements, and trade promotion authority is a prerequisite to meaningful U.S. participation.
Without TPA, the U.S. will be compelled to sit on the sidelines while other countries negotiate numerous preferential trade agreements that put American companies at a competitive disadvantage. TPA not only opens markets and broadens opportunities for American goods and firms, it will make America the leader in global trade.
Increased market access achieved through trade agreements has played a major role in the nation's success as the world's leading exporter. Trade promotion authority is vital for the President of the United States to negotiate new multilateral, bilateral and sectoral agreements that will continue to tear down barriers to trade and investment, expand markets for U.S. farmers and businesses, and create higher-skilled, higher paying jobs for American workers.
Anticipated Action
The Trade Promotion Authority Act of 2002, which was extended in 2005, expired in June 2007. The President may put forward the trade promotion authority extension and Congress may bring this issue up for a vote in 2008.
CalChamber Position
The California Chamber of Commerce, in keeping with long standing policy, enthusiastically supports free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad and elimination of disincentives that impede the international competitiveness of California business.
The CalChamber therefore supports the extension of trade promotion authority so that the President of the United States may negotiate new multilateral, sectoral and regional trade agreements ensuring that the United States may continue to gain access to world markets, resulting in an improved economy and additional employment of Americans. Such authority involves trade-related issues only and encourages industry consultation during future trade negotiations.
Reasons for Position
U.S. trading partners in Canada, Europe, Latin America and Asia are actively negotiating with other countries to achieve preferential market access.
America's standing as a world leader depends directly upon its competitive success in the global economy. For the past half century, the United States has led the world in breaking down barriers to trade and in creating a fairer and freer international trading system based on market economics and the rule of law. Increased market access achieved through trade agreements has played a major role in our nation's success as the world's leading exporter.
The CalChamber invites other companies and associations to join with us as members of "Trade for America," a new coalition of businesses and trade associations representing every sector of the U.S. economy - with the goal of advocating for continued growth through trade.