United States-Canada Trade and Economic Relationship: Prospects and Challenges

[Excerpt] The terrorist attacks of 2001 focused attention on the U.S.-Canadian border. Several bilateral initiatives have been undertaken to minimize disruption to commerce from added border security. The focus on the border has renewed interest in some quarters in greater economic integration, either through incremental measures such as greater regulatory cooperation or potentially larger goals such as a customs or monetary union. Congressional interest has focused mostly on trade disputes, and also on the ability of the two nations to continue their traditional volume of trade with heightened security on the border

Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy

Legislation to reauthorize Trade Promotion Authority (TPA), formerly called fast track, was introduced as the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (TPA-2015) (H.R. 1890/S. 995) in the Senate and the House on April 16, 2015. The legislation was reported by the Senate Finance Committee on April 22, 2015, and by the House Ways and Means Committee on April 23, 2015. The legislation, as reported by the Senate Finance Committee, was joined with legislation extending Trade Adjustment Assistance into a substitute amendment to H.R. 1314 (an unrelated revenue measure), and the legislation passed on May 22 by a vote of 62-37. In the House of Representatives, the measure was voted on under a procedure known as “division of the question,” which requires separate votes on each component, but approval of both to pass. Voting on June 12, TPA (Title I) passed by a vote of 219-211, but TAA (Title II) was defeated 126-302. A motion to reconsider that vote was laid by Speaker Boehner shortly after that vote. TPA is the process Congress has made available to the President to enable legislation to approve and implement certain international trade agreements to be considered under expedited legislative procedures for limited periods, provided the President observes certain statutory obligations. Although the President has the authority under the Constitution to negotiate international agreements, typically a reciprocal trade agreement requires an implementing bill and, therefore, congressional action to bring it into force. Many Members of Congress have advocated for renewal of TPA. On July 30, 2013, President Obama first publicly requested that Congress reauthorize TPA. He restated his request for TPA during his January 20, 2015, State of the Union address. Legislation to renew TPA was introduced in the 113th Congress (H.R. 3830) (S. 1900), but it was not acted upon. The previous grant of TPA authority expired on July 1, 2007. The details of the legislation are likely to be subject to considerable debate, including the specific treatment of any related TAA program reauthorization. This report presents background and analysis on the development of TPA, a summary of the major provisions under the expired authority, and a discussion of the issues that have arisen in the debate over TPA renewal. It also explores some of the policy options available to Congress

The Trans-Pacific Partnership Agreement

[Excerpt] The economic and strategic architectures of Asia are evolving. One part of this evolving architecture is the Trans-Pacific Partnership Agreement (TPP), a free trade agreement that includes nations on both sides of the Pacific. The existing TPP, which originally came into effect in 2006, consists of Brunei, Chile, New Zealand, and Singapore. The United States, Australia, Peru, and Vietnam have committed themselves to joining and expanding this group. The third round of discussions among the eight countries took place in Brunei, during the week of October 4, 2010. The third round saw the formal inclusion of Malaysia in the negotiations. Other architectures, such as the Association of South East Asian Nations (ASEAN), Asia-Pacific Economic Cooperation (APEC) forum, and the East Asia Summit (EAS) have both economic and strategic aspects. They can be grouped into two categories: (1) groupings that are Asia-centric in approach or origins and exclude the United States, and (2) those that are Trans-Pacific in nature and that include, or would include, the United States and other Western Hemispheric nations. The TPP is one vehicle that could be used to shape the U.S. agenda with the region. The United States, by signaling its intention to join the EAS and by working to elevate its relationship with ASEAN to a more strategic level, appears to be shaping regional architectures in a way that will be more inclusive and trans-Pacific in nature. Asia is viewed as of vital importance to U.S. trade and security interests. According to the U.S. Trade Representative, the Asia-Pacific region is a key driver of global economic growth and accounts for nearly 60% of global GDP and roughly 50% of international trade. Since 1990, Asia-Pacific goods trade has increased 300% while there has been a 400% increase in global investment in the region. The United States has pursued its regional trade interests both bilaterally and through multilateral groupings such as APEC, which has linked the Western Hemisphere with Asia. There appears to be a correlation between increasing intra-regional economic activity and increasing intra-regional political and diplomatic cooperation. Many observers view the more recent intra-Asian Association of Southeast Asian States (ASEAN) plus three—China, Japan, South Korea—and the ASEAN plus six (also known as the East Asia Summit)—China, Japan, South Korea, India, Australia, New Zealand—groups as having attracted more interest within the region in recent years. China\u27s rapidly expanding economy and Japan\u27s developed economy have made them attractive trading partners to many Asian nations. Until recently, many regional states also viewed the United States as having been distracted by events in Iraq and Afghanistaa This had led some to increasingly look to China and Japan as key partners. China may be shifting to a more assertive posture in the region, which may affect relations in the region. Secretary of State Clinton attended the East Asia Summit in Hanoi in October 2010 and President Obama stated he plans to attend the 2011 East Asia Summit in Jakarta. U.S. participation in the TPP involves the negotiation of FTAs with New Zealand, Brunei, Malaysia, and potentially, Vietnam. The United States currently has FTAs in force with Chile, Singapore, Australia, and Peru. Bilateral negotiations with New Zealand may focus on agricultural goods such as beef and dairy products. The possible inclusion of Vietnam has proven controversial from the standpoint of certain U.S. industry groups, such as textiles and apparel, as well as those concerned with labor, human rights and intellectual property issues. The involvement of Vietnam could add a higher level of difficulty, yet is illustrative of the challenges associated with developing a truly Asia-Pacific-wide trade grouping. All the potential parties may face complex negotiations in integrating the myriad FTAs that already exist between some TPP parties

Trade Promotion Authority (TPA): Frequently Asked Questions

Legislation to reauthorize Trade Promotion Authority (“TPA”), sometimes called “fast track,” was introduced as the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (TPA- 2015; H.R. 1890/S. 995) on April 16, 2015. The legislation was reported by the Senate Finance Committee on April 22, 2015, and by the House Ways and Means Committee the next day. TPA, as incorporated into H.R. 1314 by substitute amendment, passed the Senate on May 22 by a vote of 62-37. In the House of Representatives, the measure was voted on under a procedure known as “division of the question,” which requires separate votes on each component, but approval of both to pass. Voting on June 12, TPA (Title I) passed by a vote of 219-211, but TAA (Title II) was defeated 126-302. A motion to reconsider that vote was laid by Speaker Boehner shortly after that vote. The previous grant of authority expired on July 1, 2007. TPA requires that if the President negotiates an international trade agreement that would reduce tariff or non-tariff barriers to trade in ways that require changes in U.S. law, the United States can implement the agreement only through the enactment of legislation. If the trade agreement and the process of negotiating it meet certain requirements, TPA allows Congress to consider the required implementing bill under expedited (“fast track”) procedures, pursuant to which the bill may come to the floor without action by the leadership, and can receive a guaranteed up-or-down vote with no amendments. Under TPA, an implementing bill may be eligible for this expedited consideration if (1) the trade agreement was negotiated during the limited time period for which TPA is in effect; (2) the agreement advances a series of U.S. trade negotiating objectives specified in the TPA statute; (3) the negotiations were conducted in conjunction with an extensive array of required notifications to and consultations with Congress and other stakeholders; and (4) the President submits to Congress a draft implementing bill, which must meet specific content requirements, and a range of required supporting information. If, in any given case, Congress judges that these requirements have not been met, TPA provides mechanisms through which the eligibility of the implementing bill for expedited consideration may be withdrawn in one or both chambers. The most recent previous renewal of TPA covered agreements reached between December 2002 and the end of June 2007. Current legislation would apply to agreements reached before July 1, 2018, with a possible extension to July 1, 2021. The United States is now engaged in several sets of trade agreement negotiations. Legislation to reauthorize TPA was introduced, but not considered, in the 113th Congress. The issue of TPA reauthorization raises a number of questions regarding TPA itself and the pending legislation. This report addresses a number of those questions that are frequently asked, including the following: What is trade promotion authority? Is TPA necessary? What are trade negotiating objectives and how are they reflected in TPA statutes? What requirements does Congress impose on the President under TPA? Does TPA affect congressional authority on trade policy

The North American Free Trade Agreement (NAFTA)

[Excerpt] The North American Free Trade Agreement (NAFTA) has been in effect since January 1, 1994. NAFTA was signed by President George H. W. Bush on December 17, 1992, and approved by Congress on November 20, 1993. The NAFTA Implementation Act was signed into law by President William J. Clinton on December 8, 1993 (P.L. 103-182). NAFTA continues to be of interest to Congress because of the importance of Canada and Mexico as trading partners, and because of the implications NAFTA has for U.S. trade policy under the Administration of President Donald J. Trump. During his election campaign, President Trump stated his desire to renegotiate NAFTA and that he would examine the ramifications of withdrawing from the agreement once he entered into office. He has also raised the possibility of imposing tariffs or a border tax on products from Mexico. This report provides an overview of North American market-opening provisions prior to NAFTA, provisions of the agreement, economic effects, and policy considerations

NAFTA Renegotiation and Modernization

The 115th Congress faces policy issues related to the Trump Administration’s renegotiation and modernization of the North American Free Trade Agreement (NAFTA). NAFTA negotiations were first launched in 1992 under President H. W. Bush, who signed the agreement in December 1992, and continued under President Bill Clinton, who negotiated additional side agreements on labor and the environment. President Clinton signed the agreement into law on December 8 1993, (P.L. 103-182) and NAFTA entered into force on January 1, 1994. It is particularly significant because it was the most comprehensive free trade agreement (FTA) negotiated at the time, contained several groundbreaking provisions, and was the first of a new generation of U.S. FTAs later negotiated. Congress played a major role during its consideration and, after contentious and comprehensive debate, ultimately approved legislation to implement the agreement. NAFTA established trade liberalization commitments that set new rules and disciplines for future FTAs on issues important to the United States, including intellectual property rights protection, services trade, dispute settlement procedures, investment, labor, and the environment. NAFTA’s market-opening provisions gradually eliminated nearly all tariff and most nontariff barriers on goods produced and traded within North America. At the time of NAFTA, average applied U.S. duties on imports from Mexico were 2.07%, while U.S. businesses faced average tariffs of 10%, in addition to nontariff and investment barriers, in Mexico. The U.S.-Canada FTA had been in effect since 1989. Trade among NAFTA partners has tripled since the agreement entered into force, forming a more integrated North American market. The Trump Administration has made NAFTA renegotiation and modernization a prominent initial priority of its trade policy. President Trump has viewed the agreement as the “worst trade deal,” and has stated that he may seek to withdraw from the agreement. He has focused on the trade deficit with Mexico as a major reason for his critique. On May 18, 2017, the Trump Administration sent a 90-day notification to Congress of its intent to begin talks to renegotiate NAFTA, as required by the 2015 Trade Promotion Authority (TPA) (P.L. 114-26). Negotiations started August 16, 2017. Stating they are committed to an expeditious process, negotiators plan to have a series of seven rounds at three-week intervals for a conclusion by the end of 2017 or early 2018. The fourth round of negotiations began at the time this report was printed. The final text of the agreement will not be released until after negotiations are concluded. NAFTA parties have agreed that the information exchanged in the context of the negotiations, such as the negotiating text, proposals of each government, and other materials related to the substance of the negotiations, must remain confidential. Congress will likely continue to be a major participant in shaping and potentially considering an updated NAFTA. Key issues for Congress in regard to the renegotiation or modernization include the constitutional authority of Congress over international trade, its role in revising or withdrawing from the agreement, the U.S. negotiating objectives, the impact on U.S. industries and the U.S. economy, the negotiating objectives of Canada and Mexico, and the impact on broader relations with Canada and Mexico. The outcome of these negotiations will have implications for the future direction of U.S. trade policy under President Trump. NAFTA renegotiation may provide opportunities to address issues not covered in the original text. Technology and industrial production processes have changed significantly since it was negotiated. The widespread use of the Internet has affected economic activities and the use of e-commerce, for example. A modernization could incorporate elements of more recent U.S. FTAs, such as digital and services trade and enhanced IPR protection. Many U.S. manufacturers, services providers, and agricultural producers oppose efforts to eliminate NAFTA and ask that the Trump Administration strive to “do no harm” in the negotiations because they have much to lose if the United States pulls out of the agreement. Other groups contend that NAFTA should be rewritten to include stronger and more enforceable labor protections, provisions on currency manipulation, and stricter rules of origin

NAFTA at 20: Overview and Trade Effects

[Excerpt] The North American Free Trade Agreement (NAFTA) has been in effect since January 1, 1994. Signed by President George H.W. Bush on December 17, 1992, and approved by Congress on November 20, 1993, the NAFTA Implementation Act was signed into law by President William J. Clinton on December 8, 1993 (P.L. 103-182). NAFTA continues to be of interest to Congress because of the importance of Canada and Mexico as U.S. trading partners, and also because of the implications NAFTA has for U.S. trade policy. This report provides an overview of North American trade liberalization before NAFTA, an overview of NAFTA provisions, the economic effects of NAFTA, and policy considerations

Trade Negotiations in the 108th Congress

CRS ReportCRSTradeNegotiations108Cong25Sept03.pdf: 553 downloads, before Oct. 1, 2020

World Trade Organization (WTO): Issues in the Debate on Continued U.S. Participation

[Excerpt] Following World War II, the United States led efforts to establish an open and nondiscriminatory trading system with the expressed goal of raising the economic well-being of all countries and bolstering world peace. These efforts culminated in the creation of the General Agreement on Tariffs and Trade (GATT) in 1948, a provisional agreement on tariffs and trade rules that governed world trade for 47 years. The World Trade Organization (WTO) succeeded the GATT in 1995 and today serves as a permanent body that administers the rules and agreements negotiated and signed by 153 participating parties, as well as a forum for dispute settlement and negotiations. Section 125 of the Uruguay Round Agreements (P.L. 103-465), which is the law that approved and implemented the agreements reached during the Uruguay Round of multilateral trade negotiations, provided that the U.S. Trade Representative (USTR) must submit to Congress every five years a report that analyzes the costs and benefits of continued U.S. participation in the WTO. The USTR submitted its report to Congress on March 1, 2010, triggering a 90 legislative day timetable in which any Member of Congress may introduce a privileged joint resolution withdrawing congressional approval of the WTO Agreement (to date no withdrawal resolution has been introduced in the 111th Congress). Most observers maintain that U.S. withdrawal from the WTO is at best highly unlikely for both substantive and procedural reasons. Substantively, the withdrawal of U.S. participation could undermine a multilateral system of trade rules and practices, formulated and implemented under U.S. leadership, that on balance has contributed to increased economic prosperity and security at home and abroad. Procedurally, a withdrawal resolution would have to pass both the House and Senate and then surmount a likely Presidential veto via an override with a two-thirds majority vote. Nevertheless, such a resolution provides an opportunity for Members of Congress periodically to debate “whether the WTO is an effective organization” and ways it could better serve U.S. interests. The purpose of this report is to analyze some of the main issues in any debate on U.S. participation in the WTO and to address some of the criticisms leveled at the organization. Academic studies indicate that the United States benefits from broad reductions in trade barriers worldwide, but some workers and industries might not share in those gains. Decisions in the WTO are made by member governments, which determine their negotiating positions, file dispute challenges, and implement their decisions. However, some argue that smaller countries are left out of decision-making and that governments tend to represent the interests of large corporations disproportionately. The United States has been a frequent participant in WTO dispute proceedings, both as a complainant and as a respondent. There have been complaints that countries do not adhere to decisions and that U.S. trade remedy laws have not been judged properly. It is also argued that this multilateral dispute settlement process is unique and that the United States has successfully used the process to advance its economic interests. Certain advocates for the environment, food safety, labor, development, and financial regulation have criticized the WTO. Much of the criticism is based on interpretations of various WTO agreements or rulings that have been controversial. An appendix sets out the legislative procedures for the WTO withdrawal resolution. This report will be updated as events warrant

The Trans-Pacific Partnership (TPP): In Brief

The Trans-Pacific Partnership (TPP) is a proposed free trade agreement (FTA) among 12 Asia-Pacific countries, with both economic and strategic significance for the United States. If approved, it would be the largest FTA in which the United States participates. The 12 countries announced the conclusion of the TPP negotiations on October 5, 2015, after several years of ongoing talks. The President released the text of the agreement and notified Congress of his intent to sign on November 5, 2015. Congress would need to pass implementing legislation for a final TPP agreement to enter into force for the United States. Such legislation would be eligible to receive expedited legislative consideration under the recent grant of Trade Promotion Authority (TPA), P.L. 114-26, if Congress determines the Administration has advanced the TPA negotiating objectives, and met various notification and consultation requirements. TPP negotiating parties include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. Through the TPP, the participating countries seek to liberalize trade and investment and establish new rules and disciplines in the region beyond what exists in the World Trade Organization (WTO). The FTA is envisioned as a living agreement that will be open to future members and may become a vehicle to advance a wider Asia-Pacific free trade area. It is a U.S. policy response to the rapidly increasing economic and strategic linkages among Asian-Pacific nations and has become the economic centerpiece of the Administration’s “rebalance” to the region. The TPP has slowly evolved from a more limited agreement among four countries concluded in 2006 into the current 12-country FTA agreement, with the United States joining the negotiations in 2008. Japan, the most recent country to participate, joined the negotiations in 2013. This significantly increased the potential economic significance of the agreement to the United States, because Japan is the largest economy and trading partner without an existing U.S. FTA among TPP negotiating partners (thus having greater scope for trade liberalization with the United States). The United States already has FTAs with 6 of the 11 other countries participating. Malaysia and Vietnam also stand out among the TPP countries without existing U.S. FTAs, given the rapid growth in U.S. trade with the two nations over the past three decades and substantial presence of state-owned enterprises (SOEs) that will be affected by the TPP’s SOE provisions. Views on the potential impact of the agreement vary. Proponents argue that the TPP has the opportunity to boost economic growth and jobs through expanded trade and investment opportunities with negotiating partners that currently make up 37% of total U.S. goods and services trade, involves writing new trade rules and disciplines, and deepening U.S. trade and investment integration in what many see as the world’s most economically vibrant region. The agreement would eventually eliminate all tariffs on manufactured products and most agricultural goods. It also includes new trade disciplines on issues such as digital trade barriers, state-owned enterprises (SOEs), and regulatory coherence, among other provisions. Opponents voice concerns over potential job loss and competition in import-sensitive industries, and how a TPP agreement might limit U.S. ability to regulate in areas such as health, food safety, and the environment, among other concerns. The Obama Administration, joined by many analysts as well as many policymakers in the region, has argued that the strategic value of a potential TPP agreement parallels its economic value, contending that the agreement would strengthen U.S. allies and partners and reaffirm U.S. economic leadership in the region. The President has repeatedly highlighted the importance of maintaining U.S. leadership in crafting global trade rules, notably with reference to potentially alternative Chinese initiatives. China is not a party to the TPP. Others argue that past trade pacts have had a limited impact on broad foreign policy dynamics