It was not easily accomplished, but on June 29, 2015, President Obama signed into law a series of trade measures, including Trade Promotion Authority (TPA), providing the administration with rules governing the negotiation of international trade agreements. With the passage of TPA or “fast-track” trade authority, the administration has authority to negotiate trade agreements subject only to approval by Congress on a straight up-or-down vote, without amendment or Senate filibuster.
The trade package signed by President Obama consisted of TPA and the Trade Preferences Extension Act of 2015, which includes the Trade Adjustment Assistance (TAA) Reauthorization Act of 2015, as well as extensions of the African Growth and Opportunity Act, and the Generalized System of Preferences.
TPA was the key legislation that the administration needed to convince the United States’ global trading partners that trade agreements negotiated with the U.S. government would not be subject to fly-specking by 535 members of Congress. TPA, which last expired in 2007, was the sine qua non for past administrations in negotiating and gaining passage of trade agreements.
The 2015 passage of TPA was essential in enabling the administration to complete negotiations on the 12-country Trans-Pacific Partnership (TPP), which will set the standards for trade in the Asian-Pacific region. Without the TPP, observers feared that China would control the trading process throughout the region. Final negotiations are set to resume on July 23, 2015. When completed, the TPP trade agreement will be sent to Congress for an up-or-down vote.
How the Passage of the Trade Measures Came About
Passage of TPA did not come easily. It was bitterly opposed by national trade unions and environmental groups, which protested that previous trade agreements, such as the North American Free Trade Agreement, had cost Americans jobs and lowered labor and environmental standards. Consideration of TPA and the TPP trade negotiations resulted in a series of divisive debates and highly contested votes in both the U.S. Senate and House of Representatives, which divided the Democratic Party.
The first effort to gain fast-track authority failed in the House when the Democratic Caucus and House Democratic Leadership, including Democratic Leader Nancy Pelosi, opposed the president by defeating a bill extending trade adjustment assistance – the Trade Adjustment Assistance (TAA) Reauthorization Act of 2015 – to which TPA had been linked.
TAA provides job training, income support, and other benefits to U.S. workers displaced by international trade and has always been strongly supported by trade unions and congressional Democrats. The act, which was set to expire on September 30, 2015, had traditionally been viewed by its supporters as an important lifeline that helped 2.2 million American workers, including more than 23,000 veterans, find new, often better-paying jobs. Yet reauthorization of TAA was soundly defeated on a House vote as a way of stopping “fast-track” trade promotion authority.
In effect, the union lobby threw trade adjustment assistance under the bus to prevent fast track trade authority from being enacted. The union lobby, united in opposition to TAA and suspending political campaign contributions, threatened to fund and support primary opponents against loyal Democratic incumbents in the 2016 elections unless they opposed “fast track.” Organized labor was willing to dispense with one of its “sacred cows” – assistance to workers displaced by foreign trade – as a way of stopping “fast-track” trade deals. AFL-CIO president Richard Trumka criticized the trade adjustment assistance program, which organized labor had created and always strongly supported, as being merely “burial insurance.” The union lobby’s stunning repudiation of President Obama—perhaps its most important political victory in decades—did not last long.
After the defeat of TAA, the House and Senate Republican leadership worked with the president to devise a winning strategy and put trade measures back on the calendar for the following week. Narrow passage of TPA and TAA came after they were de-coupled and voted on separately in both the House and Senate. Both bills were approved by a narrow bipartisan group of pro-trade Democrats and Republicans, although the House passed TAA by voice vote.
The package of trade legislation signed by the president was strongly supported by the business lobby, representatives of which were at the rare, bipartisan White House signing ceremony on June 29 along with Republicans and Democrats from Congress. Upon signing the bills, President Obama praised the bipartisan effort and expressed hope that the new trade laws would set a standard for trade agreements in the 21st century. Labor leaders fumed over their sudden reversal of fortunes brought about by the president they supported in the 2008 and 2012 elections.
A Brief Overview of the 2015 Trade Measures
I. Trade Promotion Authority (TPA)
TPA is more than “fast-track” trade authority. For example, in a floor speech urging passage of TPA, Utah Senator Orrin Hatch, Chairman of the Senate Committee on Finance, noted:
Our TPA bill also requires that U.S. trade agreements reflect a standard of intellectual property rights protection similar to that found in U.S. law. And, it calls for an end to the theft of U.S. intellectual property by foreign governments, including piracy and the theft of trade secrets, and for the elimination of measures that require U.S. companies to locate their intellectual property abroad in return for market access.
II. Other Trade Measures
As part of the TPA package, President Obama also signed into law,
- new trade remedy provisions, known as the American Trade Enforcement Effectiveness Act or the Leveling the Playing Field Act,
- renewal and expansion of TAA,
- 10-year extension of the African Growth and Opportunity Act (AGOA), and
- extension of the Generalized System of Preferences (GSP), which provides preferential duty-free treatment to more than 120 developing countries.
1. Leveling the Playing Field Act
The Leveling the Playing Field Act is designed to protect American industry by closing loopholes and strengthening the administration’s ability to respond to foreign companies attempting to undercut U.S. domestic production. It will also enhance tools used by the government to assess and help prevent injury to American companies that are negatively affected by unfair trading practices. Finally, it strengthens U.S. anti-dumping and countervailing duty laws, which had not been altered in more than 20 years.
2. Trade Adjustment Assistance (TAA)
The bill reauthorizing and expanding the TAA program
- makes service workers, who represented nearly half of the applicants for TAA in 2014, eligible for the program once again;
- covers service workers retroactively, allowing more than 17,000 workers to reapply for benefits;
- expands eligibility to anyone impacted by trade with any country, whether the U.S. has a trade agreement with that country or not;
- extends the number of weeks workers can apply for income support by 26 weeks;
- offers wage insurance for workers over the age of 50; and
- provides career and training support for workers searching for a new job.
3. African Growth and Opportunity Act (AGOA)
AGOA, which was set to expire in September of 2015, provides tangible economic benefits and opportunities to sub-Saharan Africa by helping African companies improve their ability to compete and invest in building a strong private sector. The bill signed by President Obama extends AGOA for 10 years and provides incentives for developing sub-Saharan African countries to adopt good governance and pro-growth and pro-development policies. The bill also gives the administration the ability to withdraw, suspend, or limit benefits if designated AGOA countries do not comply with the program’s eligibility criteria.
4. Generalized System of Preferences (GSP)
GSP, instituted in 1974, is the oldest trade preferences program in U.S. history and is designed to help some of the poorest countries in the world, U.S. businesses, and consumers alike, by providing preferential duty-free entry into the U.S. market for nearly 5,000 products from 122 designated beneficiary countries and territories. After GSP expired in 2012, U.S. businesses paid a high price with over $1 billion in tariffs.
What’s Next?
Negotiation of the Trans-Pacific Partnership trade agreement will resume on July 23, 2015. The provisions of the trade agreement will be closely scrutinized by organized labor and the environmental lobby, especially with regard to labor and environmental protections. Trade will continue to be a hot topic through the 2016 elections. As to the effect of the trade vote on the remainder of the labor and employment agenda, the union lobby flexed its political muscle and won, temporarily. Ultimately, President Obama sided with the business community, which briefly strained the relationship between organized labor and the White House. The rift was partially repaired by the administration’s recent proposal to revise the Part 541 overtime regulations, but the bruising fight on trade legislation is not one either side will soon forget.
