The October 5 announcement of the successful conclusion by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam of the negotiation of the Trans-Pacific Partnership (TPP) agreement is a major accomplishment, but details of the agreement are not yet known. Moreover, even after the text is revealed, there may be many twists and turns as each of the TPP nations acts to obtain approval of the deal at home and to implement the commitments their negotiators have undertaken. Actual entry into force of the agreement is not expected before 2017—and more likely will occur later than that and in piecemeal fashion.
The U.S. Process for Approval of TPP
Pending availability of the agreement text, and in light of the considerable controversy and demands for renegotiation this wide-ranging “21st-century agreement” has engendered, it is worth reviewing the approval process that will apply in the United States and the challenges some prior U.S. free-trade agreements experienced when they came up for consideration during election campaign periods. For the TPP, legislation enacted in June, the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, will govern, but it largely matches and builds on laws under which Congress has, for specific periods
of time and subject to conditions set by Congress, authorized the president to negotiate trade agreements. Better known as Trade Promotion Authority (TPA) or fast-track, the law establishes the respective responsibilities of the administration and Congress and a timeline for each to act.
TPA requires the president, at least 90 days before signing an agreement, to notify Congress of his intent to do so.(A) When to make that formal notification is not a simple decision because it triggers more immediate deadlines. No later than 30 days after notification of the intent to sign, (1) the administration must post online the full text of the agreement, making it publicly available,(B) and (2) federal advisory committees must provide written reports to the administration and Congress.(B)
The U.S. Trade Representative (USTR), Michael Froman, has stated that his goal is to make the TPP text publicly available within 30 days of the October 5 conclusion of the negotiations, but there are no guarantees that his goal will be met. Besides finalizing agreement terms for the issues resolved in the final hours of negotiations at the ministerial level, all participating nations are undertaking a “legal scrub” of the text. The TPP countries also have agreed that the text should be issued simultaneously in three languages—English, French and Spanish—requiring completion of that translation process before the administration can post the text.
On Wednesday, October 14, U.S. negotiators held an all-day meeting with the members of the international trade-related advisory committees to brief them on the TTP’s contents, presumably to enable those committees to prepare the required reports. Those reports are typically relatively short, but they also are negotiated among the members of each committee to reflect the range of views, a process that cannot be accomplished in a single day.
As a practical matter, given the complaints by members of Congress about not yet having access to the TPP text, the administration may conclude that it will do itself no favors by notifying the House and Senate of its intention to sign the TPP before making the text available to them. Hence, the administration could decide to provide formal notice of such an intent concurrent with or shortly after releasing the text.
Not later than 90 days before entering into the agreement, the administration must provide the U.S. International Trade Commission (the Commission) the details of the agreement “as it exists at that time” and request that the Commission prepare an assessment of “the likely impact of the agreement on the United States economy as whole and on specific industry sectors . . . and the interests of United States consumers.”(A) That Commission report must be completed and submitted to the president and Congress not later than 105 days after the president signs the trade agreement.(D) In fact, the administration already has been providing the Commission with information with which to begin its work on the required report, presumably with the hope that the Commission’s report will be completed well ahead of the statutory deadline.
Once the agreement is signed, which may occur later than 90 days after the notice of intent to sign,(C) the administration will have 60 days to provide Congress with a description of changes necessary to existing U.S. laws to bring the U.S. into compliance. Moreover, at least 30 days before providing that description, the administration must submit to Congress a draft statement of administrative action proposed to implement the agreement and formally present Congress with a copy of the final agreement.
In addition to satisfying these prerequisites, the administration will have to work informally with the relevant Senate and House committees to reach agreement on legislative text for the TPP implementing bill, which also serves as the congressional approval bill. Those committees certainly include the Senate Finance and House Ways & Means committees but may include other committees to the extent that laws under their jurisdiction must be amended to comply with the U.S. commitments under TPP.
Typically, the administration drafts the implementing bill text, which is then finalized through informal “mock mark-up” sessions with those committees. This informal process for vetting proposed amendments by members of Congress and reaching consensus on the terms of the bill that will be introduced is necessary because TPA provides that once the implementing bill has been formally introduced, no amendments are permitted either in committee or during floor action; only straight up or down votes are permitted.
Following the mock mark-up process, there should be an agreed bill and a finalized statement of administrative action ready to be submitted to Congress. The administration may make this submission only on a date when both houses of Congress are in session.(E) Once submitted to Congress, procedures established under Section 151 of the Trade Act of 1974 apply, starting with the introduction of the implementing bill “by request” by the majority leader of each house. That begins the clock for congressional action.(F)
Significantly, while the clock for the administration’s action is based on calendar days, the clock for congressional action is based on legislative days. In the House, a legislative day is each day the House is in session. Often the House meets only three or four days a week. In the Senate, a legislative day starts when the Senate meets after an adjournment and ends when the Senate next adjourns. That means that in the Senate, a legislative day may extend over several calendar days.
For TPA purposes, once the implementing bill is introduced, the House committees of jurisdiction have 45 legislative days to report the bill. The full House is required to vote within 15 legislative days after the measure is reported or discharged from the committees. Then the Senate committees have 15 additional legislative days for their action, and Senate floor action is required to be completed within another 15 legislative days. Thus, congressional consideration of the implementing bill could take up to 90 legislative days—and many more calendar days. To put this in context, in 2014, the House was in session for 135 days. This year, it took until the second week of May before the House had been in session for 60 days.
Thus, even if the Obama administration were to (1) notify Congress next week of its intention to sign the TPP, (2) use the period before signing to hold mock mark-ups with the House and Senate committees, (3) sign the TPP in late January 2016, on the 90th day after notification of its intent and (4) promptly send the implementing bill to both houses to be introduced, the congressional process could easily drag out until summer—when the U.S. presidential election (along with congressional elections) will be in full swing.
But there could be other bumps in this road, as has occurred in the recent past. TPA expressly reiterates “the constitutional right of either House to change the rules . . . at any time.” The House of Representatives did just that in 2008.
The George W. Bush administration had signed the U.S.-Colombia Free Trade Agreement (FTA) on November 22, 2006, but delayed formally submitting it to Congress in response to congressional demands for modifications. With Democrats having captured the majority in both houses of Congress in the November 2006 elections, the administration in 2007 agreed to modify the Colombia agreement consistent with what is known as the “May 10th agreement,” a bipartisan consensus on labor, environmental and intellectual property issues. The FTA was then revised. But when the Bush administration presented a draft implementing bill to Congress in April 2008, without the consent of congressional leadership—which was demanding action on a trade adjustment assistance bill before consideration of the Colombia FTA—the House responded by approving a rule change eliminating fast-track procedures for the bill. As a consequence, the Bush administration did not seek congressional action on the FTAs it had concluded and signed in 2007, with Panama and Korea.
It was not until October 2011 that Congress voted on these three FTAs, after the Obama administration put its own imprimatur on them: (1) reaching an agreement with Colombia on a labor action plan to improve Colombian labor laws and protect labor union leaders, (2) securing a Tax Information Exchange Agreement with Panama and (3) signing a “supplemental agreement” with Korea modifying the FTA’s automobile market access commitments and issuing bilaterally “agreed minutes” addressing automotive fuel economy and greenhouse gas emissions regulations and intracompany employee transfer visas. The Senate then considered all three bills under TPA procedures, while the House considered the Colombia FTA under a “closed rule” and the Panama and Korea FTAs pursuant to TPA requirements.
Given that history and the similar situation today, with one party holding the White House and the other both houses of Congress, it is not difficult to imagine a scenario in which the Obama administration does not move quickly to sign the TPP or to present implementing legislation to Congress for a vote. That would increase the likelihood that congressional action will waver until a lame-duck session of Congress, after the November elections. At that point, the outcome of the elections may determine whether Congress votes or kicks the matter over to the next Congress and next administration.
The Process for Entry Into Force
Even assuming that the U.S. Congress approves the TPP in 2016 or 2017, entry into force of the agreement may be farther off. The USTR has confirmed that the TPP will enter into force only when at least six of the signatories have completed their applicable procedures, provided that those six countries together account for at least 85 percent of the combined gross domestic product of the signatories. That ensures that the TPP will not go into force until the United States is ready.
Under TPA rules, not later than 30 days before the agreement is to enter into force with respect to a particular partner, the President must submit to Congress written notice that the party has taken measures necessary to comply with the provisions of the agreement. In the past, there have been considerable gaps between U.S. congressional action and entry into force of the approved FTAs. With respect to the last three U.S. FTAs approved by Congress—the Colombia, Panama and Korea FTAs, in October 2011—the Korea FTA entered into force on March 15, 2012, the Colombia FTA entered into force on May 15, 2012, and the Panama FTA entered into force on October 31, 2012. The experience with the last regional FTA that the United States entered into, the Dominican Republic-Central America FTA (DR-CAFTA), approved by Congress in July 2005, may be even more relevant. DR-CAFTA entered into force between the United States and El Salvador in March 2006, with Honduras and Nicaragua in April 2006, and with Guatemala in July 2006. But it was not until March 2007 that DR-CAFTA entered into force with the Dominican Republic and not until January 2009 with Costa Rica.
Not surprisingly, given the complexities of the TPP—including the large number of parties involved, the pre-existing FTAs between and among the participating countries (the United States has FTAs with Australia, Canada, Chile, Mexico, Peru and Singapore) and the issues being addressed for the first time in an FTA—the parties reportedly anticipate that the entry into force process may take two years or more to complete.
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|Andrew W. Shoyer
|Michael E. Borden