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The Peninsula

Roller Coaster Ride of Trade Politics

Published May 18, 2015
Category: South Korea

This is the first in a three part series looking at the ongoing trade debate in the United States and its impact on Korea. Part two can be found here and part three here.

By Phil Eskeland

Last week saw one of the most interesting weeks in the politics of trade policy on Capitol Hill in many years.  On Tuesday, May 12th, Senate Majority Leader Mitch McConnell brought up legislation on the Senate floor that would provide Trade Promotion Authority (TPA), previously known as “fast-track,” for the President to finally complete negotiations on the Trans Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).  This bill had just a few weeks earlier passed the Senate Finance Committee by a wide bipartisan margin of 20 to 6.  Yet, the motion to proceed with debate on the Senate floor failed by a vote of 52 to 45 after all but one Democrat Senator opposed the parliamentary maneuver.  According to Senate rules, 60 Senators out of the 100-Member body must vote in the affirmative in order to proceed with debate on a particular bill (known as invoking “cloture”); otherwise, the legislation is stalled and cannot be considered any further (known as a “filibuster”) unless the concerns of the objecting Senators are addressed.

What changed between committee and Senate floor?  There is debate as to the reasons why but suffice it to say that within 24 hours, a compromise was reached to allow two other trade related bills dealing with trade enforcement and Africa to advance first, followed by a list of amendments that will be allowed to be debated and considered to the TPA bill later this week by the full Senate.  As a result, two days later, on Thursday, May 14th, the TPA legislation was brought up again on the Senate floor for the cloture vote and it passed by a wider margin of 65 to 33, thus clearing the 60-vote threshold.  Thirteen Democrat Senators switched their vote to yes once a compromise was reached.

This does not mean that every Senator who voted yes on the cloture motion will vote yes on final passage.  In fact, some Senators who voted yes on the motion to proceed plan to vote no on TPA.  But the wide margin on cloture shows that Majority Leader McConnell has a sufficient cushion of votes to pass TPA.  Last week’s action overcame the basic procedural hurdle in the Senate that has stymied many pieces of legislation in the past.

While the drama in the Senate will soon be over, the attention on TPA will quickly move to the House of Representatives.  Many expect that only a handful of House Democrats will vote yes on TPA because, in part, of strong opposition from the core constituency of the Democrat Party.  Thus, the burden of passing TPA will largely depend on House Republicans.  While House Speaker John Boehner has the largest number of Republicans in over 80 years, that does not guarantee every House Republican will vote for TPA.  Many Republicans are still very upset over President Obama’s executive actions, believing that he overstepped his constitutional authority on a variety of issues.  These Members are loathe to give President Obama any new additional authority.  But to address this concern, key Republican leaders have astutely counter-argued that TPA reins in and gives strict parameters to the President with respect to specific instructions from Congress as to what he must accomplish in the trade talks with our Asian and European partners.

But the wild card in this debate may come down to Trade Adjustment Assistance (TAA).  TAA has existed in some form since 1962 as tool to help Congress pass trade liberalization measures, recognizing the reality that some workers are negatively affected by trade.  Because trade policy is a constitutionally enumerated function of the federal government, TAA supporters argue it is a proper role for the U.S. government to offer training programs and other assistance to help these workers become gainfully employed in non-import sensitive industries.  However, in recent years, TAA has been opposed by certain fiscal conservative groups because they believe it duplicates other federal job training programs and is counterintuitive – if free trade agreements results in opening more overseas markets to U.S. goods and services, thus creating more jobs, why is TAA even needed?

During the 2011 debate on the Korea-U.S. (KORUS) Free Trade Agreement (FTA), along with the Colombia and Panama FTA, there was a concern that because the reauthorization of TAA was not included in the implementing legislation for these agreements, these FTAs would not pass Congress.  Many Democrats and some Republicans who were inclined to vote for these agreements withheld their support until they received assurances that the TAA programs would be renewed.  The House had just recently passed another trade related bill by unanimous voice vote that renewed the Generalized System of Preferences (GSP), which allows many goods coming from certain less developed countries around the world to enter the U.S. duty-free.  In a counter-move, the Democrat-controlled Senate amended the GSP bill to add a two-year extension of TAA programs.  On September 22, 2011, this newly combined GSP/TAA bill passed the Senate by a wide bipartisan margin of 70 to 27, and then sent the bill back to the House.

However, when this newly amended GSP/TAA bill came back to the House from the Senate, the legislation became controversial.  While the GSP/TAA combined bill passed the House on October 12, 2011, by a wide bipartisan margin of 307 to 122, it is important to note is that over half of House Republicans voted no solely because of addition of the TAA reauthorization.  This occurred on the same day as passage of the three FTAs.  Two conservative free market organizations – Club for Growth and Heritage Action – urged Members to oppose the combined GSP/TAA bill and included this vote in their annual legislative scorecard, which is used by many conservative activists and Tea Party adherents to judge which candidate has the most fidelity to the cause of a smaller, limited government.

Will history repeat itself?  Will inclusion of TAA in this year’s TPA hinder passage in the House?  Thus far, signs are pointing no.  While Club for Growth and Heritage Action are opposed to TAA, it appears that they will not make TPA a key “no” vote.  While the Club for Growth will negatively score any amendment vote to “plus up” TAA,[1] so far they are not scoring the underlying bill.  Michael Needham, CEO of Heritage Action, said recently, “…free-market conservatives are understandably split on this president’s request for fast-track authority.  Including an egregiously ineffective welfare program in a bill intended to promote trade will only exacerbate the problem.”[2]  Nonetheless, prospects for final passage of TPA will brighten if these two groups remain neutral and do not “key vote” a negative position on this bill.  While there are still some conservative groups opposed to TPA on other grounds, it may not be enough to sway a sufficient number of Members to vote no to doom TPA in the House.

Once TPA passes Congress (most likely by the slimmest margin), it will be up to the Obama Administration to swiftly conclude the TPP and possibly the TTIP talks.  The President only has about 18 months left in office and once presidential primary election season kicks off in early 2016, it will be even more difficult to pass any trade agreement in Congress.  Thus, the TPP talks must reach a successful conclusion within a very short time of TPA passage to give Congress the ability to consider the implementing legislation before the end of the year and the start of the presidential campaign season.  Otherwise, the timeline envisioned by the TPA legislation could push this debate well into the next U.S. administration.  While this could work to Korea’s advantage to give more time to closely study and review the TPP text and possibly join as a founding member (assuming the other nations as part of the TPP would agree as well), it is now too late for Korea to join as part of the original negotiating partners.

Phil Eskeland is Executive Director for Operations and Policy at the Korea Economic Institute of America. The views expressed here are his own.

Photo from Willem van Bergen’s photostream on flickr Creative Commons.

 


[2] “Fight Over China Currency Policies Threatens Vote on Trade Bill,” New York Times, May 11, 2015

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