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  March 2014
 

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Yusen Logistics

U.S. Congress Must Renew Our Trade Promotion Authority
Mark Kopp, Yusen Logistics (Americas) Inc.


After 247 rounds of negotiations (perhaps a slight exaggeration), what did Doha accomplish? It depends on who you ask but most people in the trade community would agree, not much; however, the valuable lesson learned from Doha is that our world of international trade continues to become more complex. It is impossible to satisfy the needs of every constituent in every country in the world. Therefore the recent trend has been to draft smaller regional trade agreements.

The United States is now engaged in two important regional trade negotiations. The first is the Trans Pacific Partnership (TPP). This trade agreement is between the United States and 11 other Asian and Latin American countries. Negotiations began in 2005 with the U.S. joining the negotiations in 2008. There are still some issues to be resolved, such as some agricultural compromises between the United States and Japan, but after 19 rounds of negotiation, it appears an agreement may be reached this year.

 

Agreement on the Trans-Atlantic Trade and Investment Partnership (TTIP) between the United States and the European Union could also be reached this year. Tariff rates in this trade lane are already low but the negotiations have focused on non-trade barriers such as auto emissions, industrial subsidies, and genetically modified organisms in food products. Agreement in these areas could open the door for more trade in services as well as hard goods.

According to the February 22nd issue of The Economist, each agreement could add about $600 billion dollars to the world economy with about one third of that directly benefiting the United States.1 Even if agreements are reached on these two programs this year, it is unlikely that they could go into effect for the benefit of the United States until after November. Why? The United States Congress.

All international trade agreements must be approved by Congress. President Obama has been asking Congress to renew the President's Trade Promotion Authority. This "fast-track" authority allows the Administration to present trade deals for congressional approval for a simple yes or no vote with no changes or amendments added by Congress. Congress has not renewed the President's Trade Promotion Authority since it expired in 2007 under then President George W. Bush. Without fast-track authority, our trading partners could be unwilling to make any agreements knowing our Congress could make last minute changes.

Congress is unlikely to renew the Trade Promotion Authority or approve any trade deal until after the November mid-term elections. Democrats are unlikely to open themselves up to charges from union supporters of shipping more American jobs overseas. Republicans are unlikely to grant this president any additional authority. Both parties are unlikely to grant any president more authority on any issue Congress believes to be Congress' constitutional prerogative.

There have been similar conflicts between Presidents and Congress since the founding of the country. This conflict goes to the credibility of the United States in negotiating trade deals with any country. As stated above, it is difficult for any of our trading partners to take us seriously knowing there could be last minute changes to any agreements they have spent months and sometimes years to finalize. The President must have the authority to negotiate with our trading partners and make the deal stand. Even by granting the President fast-track authority, Congress still has a yes or no vote to affirm or reject the agreement. Final constitutional power remains with our Congress.

Renewal by Congress of Presidential Trade Promotion Authority is beneficial. This should not be viewed as a partisan issue or a power conflict between the President and Congress. With renewal of the Trade Promotion Authority, every President and Administration, regardless of party, would have the credibility to negotiate trade agreements. Every Congress, regardless of controlling party, would have the right to accept or reject that agreement. Our trading partners must have the confidence to know that when a final agreement has been made, there will be no further changes.

As of now, it appears that regional and bilateral trade agreements will continue to be the trend. In the increasingly complex world of international trade, all parties in the negotiations must have confidence in the credibility of their trading partners. Without fast-trackauthority, our trading partners can only hope that the agreement will take effect and they will gain the benefits they have agreed to.


[1] "Taking aim at imports." The Economist 22 Feb. 2014 http://www.economist.com/news/united-states/21596939-protectionists-congress-could-scupper-crucial-free-trade-deals-taking-aim-imports.


Mark Kopp is currently the Senior Manager for Import Compliance for Yusen Logistics (Americas) Inc. Mark has over 30 years experience in all aspects of supply chain management and compliance - from product development and buying, cargo management and shipping, customs brokerage, to warehousing, distribution and retail sales. He has managed/directed imports for Kinney Shoe Corporation, Woolworth Corporation, Russ Berrie & Co. and DHL. He has also served on the Footwear Distributors & Retailers of America government customs council, been a member of the Board of Directors for the Toy Shippers Association, and been an instructor at The World Trade Institute in New York. Currently, he is a member of the NY/NJ Freight Forwarders & Brokers Association and serves on the American Apparel & Footwear Association Government Relations Committee. Mark graduated from Franklin & Marshall College in Lancaster, PA with a B.A. in Political Science.

Note: The views expressed here reflect the views of the authors alone and do not necessarily reflect the views of RVCF, its members, or affiliated parties.

 
 
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