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US Leaders Talk TPA, TPP Pros and Cons Before Congress

Talk of trade is well underway in Washington, D.C. this week. On Tuesday, leaders of the U.S. Chamber of Commerce and the AFL-CIO aired their opinions on in-talks trade measures during a Senate hearing, and the House Committee on Ways and Means is holding its hearing on trade Wednesday.

At Tuesday’s hearing, Chamber of Commerce president and CEO Tom Donohue and AFL-CIO president Richard Trumka testified on the pros and cons of pending trade measures, namely Trade Promotion Authority (TPA) and the Trans-Pacific Partnership (TPP).

In short, Donohue stressed the importance of renewing TPA—formerly known as fast-track authority, which lets the president present a trade agreement before Congress for a straight up or down vote without amendment—to create jobs. Trumka, on the other hand, told senators they would relinquish their leverage on outlining key provisions in the trade deals if they approve TPA.

“Without TPA,” Donohue said, “The United States is relegated to the sidelines as other nations negotiate trade agreements without us–putting American workers, farmers, and companies at a competitive disadvantage. According to the World Trade Organization (WTO), 398 bilateral or regional trade agreements are in force around the globe today, but the United States has agreements in place with just 20 countries. There are more than 100 trade agreements currently under negotiation among our trading partners.”

Donohue went on to note that U.S. manufacturers’ exports to trade agreement partners topped $650 billion in recent years, and generated roughly $55,000 in revenue for each American factory worker. Previous trade agreements, he said, boosted U.S. output by more than $300 billion and supports as many as 5.4 million domestic jobs.

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In terms of TPP, the pending trade deal between the U.S. and Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, Donohue said U.S. workers, farmers and businesses need access to the “lucrative” Asia-Pacific market if they have any chance of tapping into the economic growth the region is expected to enjoy in the next five years.

But American companies have lost market share there because a typical Southeast Asian country imposes tariffs five times higher than the U.S. average, and non-tariff and regulatory barriers thwart access in many countries. The TPP agreement would be a way for the U.S. to secure a “level playing field” for trade in the Asia-Pacific region.

“Completing the TPP would pay huge dividends for the United States. The agreement would significantly improve U.S. companies’ access to the Asia-Pacific region, which is projected to import nearly $10 trillion worth of goods in 2020. A study by the Peterson Institute for International Economics estimates the trade agreement could boost U.S. exports by $124 billion by 2025,” Donohue said.

Trumka was less inclined to praise the present pending policies. A new and effective trade negotiating authority, he said, must do the following: ensure that Congress approves trade agreement partners before negotiations begin; ensure that Congress, not the Executive Branch, determines whether the congressional trade objectives have been met; ensure Congress has effective opportunities to strip expedited consideration provisions from trade deals that fail to meet congressional objectives or to incorporate congressional and public participation, and include a broader trade and competitive package that addresses infrastructure, training shortcomings and reform tax policies to ensure that all can benefit from trade.

And TPA as is is not that agreement—at least in terms of TPP.

“The idea that fast track lets Congress set the standards and goals for TPP—I’m not talking about other agreements but for TPP, is an absolute fiction. The agreement has been under negotiation for more than five years and is essentially complete. So the instructions that you send them will have no affect whatsoever. Congress cannot set meaningful negotiating objectives if the administration’s already negotiated most of the key provisions,” Trumka told senators. “I might also add, this will be the worst possible time to pass fast track for TPP because the leverage that you have left for those issues that are remaining is right now. And you give that away if you pass fast track legislation.”

He also noted, “The administration has ignored Congress’ direct instructions to negotiate meaningful currency provisions and to reform the flawed investor state dispute settlement process. Granting fast track now takes Congress out of the picture until the agreement is complete. And while all fast track bills have gone through the charade of listing negotiatings’ objectives, there have been no consequences when the administration willfully ignores or fails to achieve any or all of those objectives. America needs an entirely new trade negotiating authority, not minor tweaks at the margin.”

But the trade policy really boils down to two simple facts for Finance Committee Chairman Orrin Hatch (R-Utah), who noted in his speech to the Senate: More than 96 percent of the world’s consumers live outside of the United States; and in order to be competitive, American businesses need to be able to sell more American-made products and services to those overseas customers.

“Our bill empowers Congress at every step, from trade negotiations to final approval of an agreement. Our bill makes clear what objectives a trade agreement must reach in order to be approved by Congress,” Senator Hatch said. “In fact, the bill contains the clearest articulation of trade priorities in our nation’s history.”