The Idea Behind TPA
On September 24 a rare alliance between Republicans and the Obama Administration led to passage of the ‘fast-track’ bill granting the President a 6-year renewal of Trade Promotion Authority (TPA). As a result, for the first time since 2007, the President has the power to negotiate trade deals with foreign governments and present them to Congress to be approved or rejected with no amendments. The bill also requires the President to notify and consult with Congress throughout the negotiation process and prohibits Senators from filibustering to prevent passage of finalized free trade agreements (FTAs). TPA is indispensable to successfully negotiating FTAs because it prevents Congress from dragging its feet or altering final agreements reached by the President.
What does TPA mean for U.S. exporters?
Now that the President has the ability to fast-track agreements through Congress, the stage is set for the United States to complete its biggest international trade deal since NAFTA. This means that the Trans-Pacific Partnership (TPP), an agreement between the United States and 11 Asia-Pacific countries that has been in the works for years, could be submitted to Congress for an up or down vote as early as this fall. Although the text of TPP has not been officially made public, the agreement will likely include numerous provisions aimed at lowering trade barriers such as import duties between the signatories and imposing uniform and enforceable labor and environmental standards on each member country. By doing so, TPP aims to level the playing field for American SME’s and open up more of the fast-growing Asia-Pacific market to Made-in-America goods and services.
So as TPP inches closer to completion over the next several months and details of the treaty are slowly released, it is important for exporters to begin to determine if the agreement will have an effect on the cost of doing business in each export markets. An understanding of the ramifications of applicable TPP provisions will not only ensure your business remains compliant with both U.S. and foreign customs regulations once the new agreement is in force, but may also bring to light opportunities to increase profits and market share in the Asia-Pacific region. Oftentimes timing is everything, and in the event TPP passes, those exporters prepared to pounce on opportunities created by the changing trans-pacific regulatory landscape will be in the best position to grow their business. So keep an eye out for developments in the news, and be sure to return here for summaries of major developments in the TPP negotiation process that could affect your business.