Washington Insider -- Wednesday

Trade Promotion Authority to Expire

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Potato Growers Push Biden Administration On Mexico Access

The National Potato Council (NPC) is calling on the Biden administration to keep pushing Mexico in the dispute over their potato import actions.

While a recent Mexican Supreme Court ruling was "significant progress" in the dispute, the NPC said, "there are serious concerns about the long-term prospects for successful market access for U.S. potatoes in Mexico." NPC contends that Mexico's potato cartel CONPAPA is "exerting great political pressure" to impede competition from the U.S.

They noted Mexico's SENASICA in April changed the U.S. fresh potato import protocol without notification to the U.S. and involves additional sampling of U.S. potatoes to be sent to a lab selected and paid for by CONPAPA. "The clear goal of this unilateral change is to manufacture a reason to close the market to U.S. fresh potatoes at some point in the future," NPC said in the letter to USDA Secretary Tom Vilsack and U.S. Trade Representative Katherine Tai.

Vilsack is currently scheduled to meet with Mexican Agriculture Secretary Victor Villalobos Arambula in early August where issues on GMO corn, glyphosate and the potato trade situation are expected to be key topics.

US-EU Civil Aircraft Dispute 'Solution' Still Reveals Tensions

Even as the U.S. and European Union (EU) agreed to a five-year suspension of trade action in the dual civil aircraft dispute involving Airbus and Boeing, the two clashed a bit during a WTO Dispute Settlement Body (DSB) session June 28 in Geneva.

The U.S. challenged the EU to provide status reports in the matter after the EU requested a status update on a separate trade issue. The U.S. said the EU was being contradictory in asking the U.S. for a status update over U.S. antidumping and countervailing duty transfers to the domestic industry under the Continued Dumping and Subsidy Offset Act of 2000.

The EU countered it is only required to provide status updates at certain stages in the dispute settlement process and the portion of the dispute related to Airbus was still pending appeal and therefore, they were not required to provide a status update.

This shows that even the "agreement" reached between the two sides, there is still a ways to go before the situation is totally resolved.

Washington Insider: Trade Promotion Authority to Expire

July 1 will bring about the expiration of a trade policy tool used by several administrations for decades -- Trade Promotion Authority (TPA) which used to be known as "fast-track" trade authority.

So far, the Biden administration had not submitted legislation to Congress to reauthorize TPA. President Joe Biden should be familiar with the current version of TPA because it was approved by Congress and signed into law in June 2015 by President Barack Obama.

So what does TPA do? It allows an administration to negotiate a trade deal with a foreign country or countries, and bring the implementing legislation for the deal to the U.S. Congress for their approval via an up-or-down vote with no amendments possible.

The reasoning is that no country would likely want to enter into a trade deal with the U.S. if the 435 members of the House of Representatives and 100 members of the Senate could change the deal.

To be covered by TPA, the trade deal has to be negotiated during the time period for which TPA is in effect and it has to advance U.S. trade negotiating objectives that are spelled out in the TPA legislation.

Originally, the current version of TPA was only effective until July 1, 2018, but could be extended through July 1, 2021 if the president asked for an extension. President Donald Trump did that March 20, 2018. To have prevented the extension, Congress would have had to clear a disapproval resolution within 60 days of July 1, 2018. They did not.

The roots of "fast track" go back to the Trade Act of 1974. The term Trade Promotion Authority was adopted in the Bipartisan Trade Promotion Authority Act of 2002.

It was first used to enact the Tokyo Round Agreements Act of 1979 which implemented the 1974-1979 multilateral trade liberalization agreement that were reached during the Tokyo Round of the General Agreement on Tariffs and Trade (GATT). That trade body was the forerunner to the current World Trade Organization (WTO).

TPA has been renewed four times -- 1979, 1988, 2002 and 2015. In 1993 -- a short-term extension was approved by Congress to allow the completion of the GATT Uruguay Round of trade negotiations. According to the Congressional Research Service (CRS), TPA has been used for 14 bilateral/regional free trade agreements (FTAs) and one additional set of multilateral trade liberalization agreements under GATT. One FTA was approved by Congress without TPA -- The U.S.-Jordan FTA. That deal was viewed as noncontroversial and only covered a small amount of U.S. trade.

In the current version of TPA, there are trade objectives spelled out that Congress included that they insist an administration follow if they want the trade deal to be implemented using the TPA rules. There are three categories of trade objectives in the current TPA, including (1) overall objectives; (2) principal objectives; and (3) capacity building and other priorities.

There are separate negotiating objectives for agriculture, 21 in total. The current version had three objectives added to the 18 that previously were a part of TPA. The three new ones covered trade relative to sanitary and phytosanitary measures, that trade negotiators had to make sure on transparency of tariff-rate quotas so they did not impede trade, and the third seeks to eliminate and prevent the improper use of geographical indicators, according to CRS.

As for the Biden administration, only USDA Secretary Tom Vilsack has indicated that TPA is needed. U.S. Trade Representative Katherine Tai, when pressed by House Ways and Means Ranking Member Kevin Brady, R-Texas, about whether the administration would be seeking a renewal of TPA, would only say Tai would only say that the administration wants to win bipartisan support for renewal and wants to rethink the objectives of trade agreements before seeking the authority.

The potential impacts if TPA is allowed to lapse would be on the UK and Kenya trade deal negotiations that were launched under the Trump administration. The Biden administration has only said it is examining those negotiations before deciding whether to move forward.

And, the Biden administration has made clear they are focused on enforcing existing trade deals, not negotiating new ones.

So we will see. TPA is a tool that has been used by both parties and letting it lapse has raised even more concerns about the trade focus for the U.S. and the situation needs to be watched closely, Washington Insider believes.

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