AWPA Wireline - August 2002 - TPA Signed Into Law

After an eight year lapse, Congress finally approved the hard-fought legislation that restores to the president broad authority in negotiating trade pacts. The new law allows President Bush to negotiate trade agreements that Congress would have 90 days to approve or reject but not amend. The new authority expires in June 2005, with an additional two years allowed for trade deals already in the works at that time.

The bill passed the House of Representatives in the wee hours of a Saturday morning in July by a vote of 215-212. The key to passage in the House was the defection of several New Democrats who generally favor free trade and try to work with the business community. The final bill did exclude the controversial Dayton-Craig amendment that would have given the Senate the power to remove provisions in a trade agreement that weakened US laws on dumping and foreign subsidies. Instead the conferees agreed to take steps to ensure that trade negotiators fully consult Congress. It passed the Senate a week later by a vote of 66-34, and the president signed the bill shortly thereafter.

The Trade Act of 2002 (the actual name of the bill) has four major pieces, each of which directly or indirectly benefits companies and workers who depend on international trade for their competitiveness. As mentioned above, the Act gives the President fast track authority; renews and expands the program that helps workers who lose their jobs as a result of trade agreements (trade adjustment assistance); expands trade benefits with countries in the Andean, Caribbean and African regions; and renews a duty-free program for imports from developing countries (the "US Generalized System of Preferences program").

Trade Promotion Authority (TPA)
Trade agreements generally benefit American manufacturers in many ways: by making it easier and less expensive to import raw materials and finished goods, by opening foreign markets to the exports of American companies, and by protecting their intellectual property and investment rights in foreign markets. But finalizing the negotiation of such agreements is only possible if the countries with which the United States is negotiating know that the deal they agree to is the deal they will get after Congress approves the agreement. If Congress could amend the agreement, no international trading partner would finalize a deal with the Administration.

The United States is currently involved in a number of on-going trade negotiations, which will benefit from TPA. These include free trade agreements with Singapore and Chile, a Western Hemisphere free trade agreement (the Free Trade Area of the Americas), among others. Perhaps most significantly is a new round of multilateral trade negotiations under the auspices of the World Trade Organization (WTO), called the "Doha Development Agenda."

Trade Adjustment Assistance (TAA)
The Act extends and expands the TAA program by providing benefits for up- and down-stream workers who can show their jobs have been harmed by trade. It also provides these workers with health care tax credits. This provision will help diffuse any criticism protectionists might have that trade agreements should not be approved by Congress because they will have adverse impacts on American workers.

Andean/Caribbean/African Trade Benefits
This bill renews duty-free treatment to most goods imported from Andean countries through February 2006. These countries include Bolivia, Colombia, Ecuador and Peru.

Generalized System of Preferences (GSP)
The Act renews GSP for another five years. This important program provides duty-free benefits to selected products imported from selected developing countries. All of the eligible products are, by definition, not import sensitive. US companies use the program to source from abroad raw materials needed to produce goods in the United States, as well as some finished goods.