A Free Trade Area of the Americas: Status of Negotiations and Major Policy Issues

At the second Summit of the Americas in Santiago, Chile (April 1998), 34 Western Hemisphere nations agreed to initiate formal negotiations to create a Free Trade Area of the Americas (FTAA) by 2005. The negotiating groups completed a draft agreement in January 2001, which was presented at the third Summit of the Americas held in Quebec City on April 20-22, 2001. President Bush expressed strong support for the FTAA and concrete progress has been made in moving it forward. Yet, differences in priorities among the negotiating countries are still evident, suggesting that the FTAA faces many policy hurdles in both the U.S. Congress and the hemisphere

Trade Adjustment Assistance (TAA) and Its Role in U.S. Trade Policy

[Excerpt] When Congress passed the Reciprocal Trade Agreements Act (RTAA) of 1934, it reflected an important transition in national trade policy away from “protectionism” toward greater “trade liberalization.” This shift continues to be the dominant, but hardly uncontested, trade policy of the United States. The substantial national gains from trade have long been recognized, yet trade liberalizing legislation often faces strong political opposition because related costs, although much smaller, affect a vocal and concentrated constituency. Congress first addressed this inherent tension with legislation that allowed higher tariffs and other trade barriers to be reimposed when domestic industries were threatened or hurt by imports. In 1962, however, Congress adopted an additional approach by providing trade adjustment assistance (TAA) directly to trade-affected firms and workers. It remains a much-debated, but enduring pillar of U.S. trade policy today. This report discusses the role of TAA in U.S. trade policy, from its inception as a legislative option in the early 1950s, to its core role as a cornerstone of modern trade policy that many argue has served to promote the long-term U.S. trade liberalization agenda. It will also consider the extent to which TAA has been linked to both renewal of trade agreements authority1 and trade agreement implementing legislation. This includes action taken on TAA in the 112th Congress as part of a grand trade bargain that included passage of implementing bills for free trade agreements (FTAs) with Colombia, Panama, and South Korea. Understanding the origins of TAA, the historical economic and congressional debate, and legislative options considered by Congress over the past 50 years may help inform the recurring discussion on TAA reauthorization

The Proposed U.S.-Panama Free Trade Agreement

On April 26, 2004, the United States began negotiating a bilateral free trade agreement (FTA) with Panama. By building on the U.S.-Dominican RepublicCentral America Free Trade Agreement (DR-CAFTA) text, the negotiations have moved quickly and many chapters are nearly completed. This report discusses The Proposed U.S.-Panama Free Trade Agreement

A Free Trade Area of the Americas: Status of Negotiations and Major Policy Issues - Updated

At the second Summit of the Americas in Santiago, Chile (April 1998), 34 Western Hemisphere nations agreed to initiate formal negotiations to create a Free Trade Area of the Americas (FTAA) by 2005. The process so far has led to two draft texts, the second completed for the November 1, 2002 trade ministerial in Quito, Ecuador. A year later, the third draft is expected at the eighth trade ministerial scheduled for November 17-21, 2003 in Miami. Although implementing legislation is not anticipated until the next Congress, for an FTAA to be signed in January 2005, the 108th Congress will play a crucial role during this last phase of the negotiations given its expanded consultative and oversight authority as defined in the Trade Promotion Authority (TPA) provisions of the Trade Act of 2002 (P.L. 107-210). This report will be updated periodically

Trade Adjustment Assistance for Firms: Economic, Program, and Policy Issues

[Excerpt] Trade liberalization can enhance the economic welfare of all trade partners, but in adjusting to greater competition, many import-competing firms and workers face difficult problems. Since 1962, Congress has responded to these adjustment costs by authorizing trade adjustment assistance (TAA) programs for workers, firms, and farmers, and continues to monitor their performance and amend the governing legislation. This report discusses the Trade Adjustment Assistance for Firms (TAAF) program, which provides technical assistance to trade-affected firms to help them develop strategies to remain competitive in a dynamic international economy. The 113th Congress may consider reauthorizing legislation for all TAA programs given they are set to expire on December 31, 2013

NAFTA at Ten: Lessons from Recent Studies

This report provides an analytical summary of the economic lessons reached in support of Congress's role in the trade policy process. On January 1, 2004, the North American Free Trade Agreement (NAFTA) completed its tenth year and most of its provisions are now implemented. NAFTA is a free trade agreement (FTA) that effectively added Mexico to the U.S.-Canada FTA completed in 1989. Its anniversary has sparked numerous evaluations, which are particularly relevant as the United States pursues free trade agreements with multiple Latin American countries. Most studies found that NAFTA's effects on the U.S. and Mexican economies to be modest at most

Trade Adjustment Assistance (TAA) and Its Role in U.S. Trade Policy

[Excerpt] When Congress passed the Reciprocal Trade Agreements Act (RTAA) of 1934, it reflected an important transition in “national trade policy” away from “protectionism” toward greater “trade liberalization.” This shift continues to be the dominant, but hardly uncontested, trade policy of the United States. The substantial national gains from trade have long been recognized, yet trade liberalizing legislation often faces strong political opposition because related costs, although much smaller, affect a vocal and concentrated constituency. Congress first addressed this inherent tension with legislation that allowed for the reimposition of tariffs and other trade barriers when domestic industries were threatened or hurt by imports. In 1962, however, Congress adopted an additional approach by providing trade adjustment assistance (TAA) directly to trade-affected firms and workers. It remains a controversial pillar of U.S. trade policy today. This report discusses the role of TAA in U.S. trade policy, from its inception as a legislative option in the early 1950s, to its core role as an alternative to import relief that many argue has served to promote the long-term U.S. trade liberalization agenda. It will also consider the extent to which TAA has been linked to both renewal of trade agreements authority, and passage of trade agreement implementing legislation. TAA has become an integral part of an increasingly complex U.S. trade policy. Understanding the origins of TAA, the historical congressional debate, and legislative options considered by Congress over the past 50 years may help inform the current discussion of TAA reauthorization

Trade Preferences: Economic Issues and Policy Options

[Excerpt] Since 1974, Congress has created multiple trade preference programs designed to foster economic growth, reform, and development in less developed countries. These programs give temporary, non-reciprocal, duty-free U.S. market access to select exports of eligible countries. Congress conducts regular oversight of these programs, repeatedly revising and extending them. Two major issues face the 111th Congress: (1) the expiration of two preference programs by December 31, 2010; and (2) possible legislative action on broader reform of the preference programs based on comprehensive reviews in hearings held in both the House and the Senate earlier in this Congress. This report discusses the major U.S. trade preference programs, their possible economic effects, stakeholder interests, and legislative options

The Proposed U.S.-Panama Free Trade Agreement

[Excerpt] On June 28, 2007, after two and a half years of negotiation, the United States and Panama signed a reciprocal free trade agreement (FTA). Negotiations were formally concluded on December 16, 2006, with an understanding that further changes to labor, environment, and intellectual property rights (IPR) chapters would be made pursuant to future detailed congressional input. These changes were agreed to in late June 2007, in time for the FTA to be considered under Trade Promotion Authority (TPA) legislation before it expired on July 1, 2007. TPA allows Congress to consider trade implementing bills under expedited procedures. Panama’s legislature approved the FTA 58 to 4 on July 11, 2007. The 110th Congress did not take up the agreement, and so far there is little indication that the 111th Congress is ready to act on the FTA. The proposed U.S.-Panama FTA is a comprehensive agreement. Some 88% of U.S. commercial and industrial exports would become duty-free upon implementation, with remaining tariffs phased out over a ten-year period. Over 60% of U.S. farms exports to Panama also would achieve immediate duty-free status, with tariffs and tariff rate quotas (TRQs) on select farm products to be phased out by year 17 of the agreement. Panama and the United States signed a separate bilateral agreement on sanitary and phytosanitary (SPS) issues that would recognize U.S. food safety inspection as equivalent to Panamanian standards, which will expedite entry of U.S. meat and poultry exports. The FTA also consummates understandings on telecommunications, services trade, government procurement, investment, and intellectual property rights. The circumstances framing the proposed U.S.- Panama FTA differ considerably from those of two others that have yet to be considered by Congress. The deep concerns that Congress has expressed over Colombia’s violence have not been an issue in the Panama FTA debate, which is framed more by the positive image of a longstanding strategic bilateral relationship based on Panama’s canal. Nor does Panama compare well with the continuing debate over the proposed FTA with South Korea, which as a major U.S. trading partner, can affect key industries such as automobile and beef production. To the contrary, Panama trades little with the United States, even by Latin American standards, and so the FTA cannot have a major effect on the U.S. economy. The final text of the proposed U.S.-Panama FTA incorporates specific amendments on key issues at the behest of congressional leadership. The most significant were adoption of enforceable labor standards, compulsory adherence to select multilateral environmental agreements (MEAs), and an easing of restrictions on developing country access to generic drugs. In these cases, the proposed U.S.-Panama FTA goes beyond provisions in existing bilateral FTAs and multilateral trade rules, including those contemplated in the Doha Round.Two other concerns still linger. The first pertains to a Panamanian labor statute, which some Members of Congress would like to see amended so that the minimum number of workers required to start a union would be reduced from 40 to 20, per ILO guidelines. The second relates to questions raised over Panama’s status as a “tax haven” and its refusal to enter into a tax information exchange treaty. Currently, the government of Panama is working closely with the USTR to find a mutually acceptable solution to both these issues. The time frame for completing this process is unclear and may depend in part on whether the Obama Administration and Congress signal that they are prepared to move ahead with implementing legislation. For more on Panama, see CRS Report RL30981, Panama: Political and Economic Conditions and U.S. Relations, by Mark P. Sullivan