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This Week In Trade

Fast-Track Hearing In Finance, Spending Bills, Focus On China, TPP, TTIP

Posted: January 13, 2014

Posted: January 13, 2014

This week promises to be a busy one in Washington as Congress kicks off its consideration of a bill introduced last week to renew fast-track negotiating authority for the president, along with developments related to legislation to fund the federal government, U.S.-China trade relations, and ongoing U.S. trade negotiations.

The Senate Finance Committee will hold a hearing on Thursday (Jan. 16) at 10 a.m. about the fast-track bill introduced on Jan. 9 by Finance Chairman Max Baucus (D-MT), Ranking Member Orrin Hatch (R-UT) and House Ways and Means Committee Chairman Dave Camp (R-MI).

Finance has not yet released a list of witnesses who will testify at the hearing. One source said the witnesses will include business representatives, although it is unclear whether administration officials will also testify. A weekly schedule released by the Office of the U.S. Trade Representative did not list any USTR officials as participating in the Finance hearing.

The hearing is sure to yield a lively debate among Finance Committee members about the bill. Several Democrats on the panel last week said they would not support a fast-track bill that resembles the current framework for consultations or that does not provide mechanisms that enable Congress to hold the executive branch more accountable throughout the negotiation process, among other changes.

The bill introduced last week by Camp, Baucus and Hatch includes stronger provisions on consultation than the 2002 fast-track law, but critics including House Ways and Means Ranking Member Sander Levin (D-MI) have already blasted it as not going far enough to strengthen the role of Congress in trade negotiations. Levin last week said he was working with other congressional Democrats on an alternative fast-track bill.

The uneasiness of some Finance Democrats about fast-track stems in part from the fact that their aides felt they were not kept in the loop about the details of Baucus-Hatch-Camp bill during its drafting, congressional and lobbyist sources said in November.

The hearing on Thursday will also be notable in that it may be the first time that incoming Finance Chairman Ron Wyden (D-OR) publicly responds to the bill introduced last week. Private-sector sources have said that Wyden, who will take over the chairmanship once Baucus leaves to become ambassador to China, is likely to want to put his own imprint on the fast-track bill.

However, Finance members may have an earlier opportunity to address questions about fast-track at a Jan. 15 nomination hearing for R. Gil Kerlikowske to be commissioner of Customs and Border Protection. Observers have pointed to a customs reauthorization bill as one of several pieces of trade legislation that could be attached to a fast-track bill in committee.

While the House Ways and Means Committee is not expected to hold a hearing on the fast-track bill this week, the issue will nonetheless stay on the agenda in the lower chamber.

White House Chief of Staff Denis McDonough will meet with members of the New Democrat Coalition this week to discuss fast-track legislation, according to congressional aides. One aide said the meeting will likely follow up on previous discussions between the New Dems and USTR Michael Froman on the topic, although this is the first time McDonough has become involved in the discussion.

The House Republican leadership has taken the position that it will not bring a fast-track bill to a floor vote until Democrats can secure at least 50 votes for the bill, including one from a Democratic leader, according to a GOP leadership aide.

But the level of House Democratic support for the bill will hinge partly on whether it is packaged with a renewal of the Trade Adjustment Assistance (TAA) program, according to sources close to Democrats. One congressional aide said some members of the New Democrat Coalition are planning to introduce a TAA bill, although he was not sure when.

The House Democratic caucus late last week launched internal discussions on fast track, but lawmakers who attended the meeting said the caucus did not make any decisions or stake out any firm positions on the issue.

Also on the congressional agenda this week will be a series of bills to fund the federal government, which would set funding for key trade agencies like USTR and the Commerce Department's International Trade Administration. Congress initially faced a Jan. 15 to pass these appropriations bills, but is expected to pass legislation this week extending that deadline until Jan. 18.

Senate Appropriations Committee Chairwoman Barbara Mikulski (D-MD) said in a Jan. 10 statement that House and Senate negotiators have been making “solid progress” on the appropriations bills and expects a bipartisan agreement to be reached this week. A spokeswoman for the House Appropriations Committee said Committee Chairman Hal Rogers (R-KY) said he hopes to introduce the 12 appropriations bills as an omnibus by today.

According to the weekly floor schedule published by the Office of House Majority Leader Eric Cantor (R-VA), the appropriations omnibus will be considered Wednesday (Jan. 15) and Thursday (Jan. 16).

On China, the week will kick off with an announcement today (Jan. 13) by General Counsel Tim Reif of “a new enforcement action with regard to China,” USTR said, without providing further details.

The announcement could be related to one of several cases brought by the U.S. against China at the World Trade Organization. These include a U.S. challenge of Chinese export restraints on rare earth elements a consultation request from the U.S. regarding Chinese subsidies to auto parts makers and U.S. complaints about China's electronic payment services regime.

Later this week, the Congressional-Executive Commission on China will hold a hearing about Beijing's compliance with its WTO obligations that will include the participation of Sen. Sherrod Brown (D-OH), an AFL-CIO representative and private-sector representatives.

The hearing comes less than a month after USTR released its 2013 report on China's compliance with its WTO obligations. The report warned that the U.S. may pursue more litigation in the electronic payments case, in addition to flagging proposed telecommunications restrictions and committing to pursue "needed improvements" in China's approval process for biotechnology applications. However, its section assessing whether China has complied with its WTO obligations differs little from last year's version.

This week will also see several developments related to the ongoing Trans-Pacific Partnership (TPP) negotiations and the separate Trans-Atlantic Trade and Investment (TTIP) talks with the European Union.

A senior South Korean trade official is visiting Washington today week to hold "preliminary consultations" with Acting Deputy USTR Wendy Cutler regarding Seoul's interest in joining the TPP, in one of several such meetings that Korea will hold over the next two weeks with current TPP members.

The discussion between Cutler and Korean Deputy Minister of International Trade Choi Kyonglim will also address key outstanding U.S.-Korea Free Trade Agreement (KORUS) implementation and other bilateral issues, according to USTR's weekly schedule. The U.S. has linked Korea's ability to join TPP with its willingness to resolve bilateral trade irritants largely related to implementation of KORUS (Inside U.S. Trade, Dec. 13, 2013).

On TTIP, a group of European commissioners who are responsible for areas under negotiation in the initiative are also meeting today (Jan. 13) in Brussels to discuss the trade talks, in the first such gathering since the group was established by the commission president to ensure continued high-level engagement in TTIP.

A commission spokeswoman said the aim of the meeting is "to review or take stock of the progress made in the three rounds of negotiations and prepare next stages." EU Trade Commissioner Karel De Gucht and Froman are slated to hold a high-level stock-taking session on TTIP next month, and some sources said the date of Feb. 17 is under discussion and that the meeting could be held via video-conference.