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This Week In Trade

'Fast-Track' Rollout; Chamber 2014 Agenda; Farm Bill; India Tech Rule

Posted: January 06, 2014

Posted: January 6, 2014

As Washington churns back into motion following the holiday break, U.S. trade policy watchers all have their eye on one thing: the expected introduction of a bill to renew Trade Promotion Authority (TPA), also known as “fast track.”

The bill, which one House aide said could be introduced as early as Wednesday, will set off the congressional debate around U.S. trade policy priorities and holds ramifications for the future of the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), the Obama administration's signature trade initiatives.

Although the impending departure of Senate Finance Committee Chairman Max Baucus (D-MT) promises to complicate passage of the bill, its introduction will likely intensify fights over long-simmering issues like congressional oversight of trade negotiations and how to address government intervention in currency markets.

The extent that TPA will be delayed due to Baucus's departure will largely be determined by how long he will remain in the Senate before becoming the next U.S. ambassador to China, and how quickly the incoming chairman, Sen. Ron Wyden (D-OR), can appoint staff and be ready to tackle major policy issues, according to lobbyists.

The introduction of a fast-track bill will also prompt questions about the substance of the bill as well as the political strategy for getting it passed in Congress.

On substance, observers will be keen to see whether the bill includes different language from the 2002 version on the key issues of congressional oversight and currency, and also whether it will be coupled with other trade legislation, such as a renewal of Trade Adjustment Assistance (TAA) and the Generalized System of Preferences (GSP). The House Ways and Means Committee is not expected to pass a TAA bill alongside the TPA bill.

On the political strategy, sources have said that while it may be possible to introduce the bill and also have hearings and markups in the committees of jurisdiction this month, that is highly unlikely. Fast-track supporters expect that the Ways and Means Committee will act first on the fast-track bill, which is a revenue measure because it contains tariff proclamation authority for the president.

After that, supporters believe it would be beneficial to have the Senate Finance Committee approve the bill with strong Democratic support before the House schedules a floor vote. This would be one way of giving more comfort to House Democrats, for whom the vote is a difficult one, and where three-quarters of the caucus are on record as opposing the 2002 version of fast-track.

This week, U.S. Chamber of Commerce President and CEO Tom Donohue is sure to call on Congress and the Obama administration to renew TPA when he delivers his annual State of American Business address on Wednesday (Jan. 8). The speech will outline the top challenges facing the business community this year and introduce the Chamber’s 2014 policy agenda.

The Chamber has been calling for the Obama administration to engage Congress in the TPA debate as far back as the beginning of last year. Donohue's speech will serve as another opportunity to make that call, and could reveal more about the business strategy for passing the legislation.

One House Democratic aide said late last year that opponents of TPA, including labor unions, have been much more active in stirring dissent around the legislation -- especially among freshmen members -- and that supporters have picked up their efforts only recently.

The House will be back in session tomorrow (Jan. 7), but the Senate is already back in full swing as of this morning. Late this afternoon, the upper chamber will consider the nomination Janet Yellen to be head of the Federal Reserve, and then will vote on whether to proceed to a bill to extend unemployment benefits.

Behind the scenes, House and Senate lawmakers are still trying to hammer out a new farm bill for passage before the end of this month. As of Monday morning, however, there had been no public announcement about when the farm bill conference will hold its next public session, which will likely mark the end of the conference process.

The farm bill has significant implications for the future of U.S. trade relations with Brazil, which successfully challenged U.S. agricultural subsidies at the World Trade Organization and wants the new legislation to finally bring the U.S into compliance with that ruling. But it has criticized the direction of the new bill thus far and has geared up to impose trade retaliation in the absence of U.S. settlement payments.

Southeast Asian exporters of catfish and U.S. companies who rely on these imports are also keen to see a repeal of a measure that would tighten inspections of the fish established in the 2008 farm bill.

The farm bill may also have a bearing on trade ties with Mexico and Canada, which have sought a legislative change to the U.S. country-of-origin labeling (COOL) system for meat, which they argue is now even more burdensome as a result of rule changes the U.S. made to comply with a WTO ruling on that issue.

U.S. meat processors and their Canadian and Mexican allies this week will make yet another push to roll back those rules changes in oral arguments at the U.S. Court of Appeals for the Federal Circuit on Thursday (Jan. 9). A district court judge initially rejected their attempt to stall implementation of the new COOL rule.

Other sectors of the U.S. economy have different worries related to trade this week. The U.S. technology industry will be assessing the fallout of the Jan. 3 entry into force of a new Indian regulation requiring all imported electronics to be tested and registered with testing laboratories approved by the Bureau of Indian Standards (BIS).

U.S. companies object to this requirement for several reasons. They have complained that it applies regardless of whether the products have already been tested and certified by internationally accredited labs that India previously recognized, and that BIS simply does not have the testing capacity to handle the business the regulation creates, which leading to long delays for U.S. companies.

The U.S. International Trade Commission (USITC) this morning was slated to vote on whether to keep in place trade remedy duties facing imports of certain off-the-road tires from China, as part of a regular five-year sunset review.

Off-the-road tires from China also faced higher tariffs as a result of a special safeguard that was imposed by the Obama administration in 2009. The higher tariff due to the safeguard expired in September 2012, while the law that allowed the special China safeguard to be imposed, known as Section 421, expired on Dec. 11, 2013 12 years after China's accession to the WTO.