On May 14, the Senate passed customs reauthorization trade preference legislation and gave an affirmative cloture vote for the Trade Promotion Authority Act and the Trade Adjustment Assistance program.
As part of a negotiated settlement between Republican and Democratic leadership following a surprising setback earlier this week, the US Senate voted on and passed trade preference legislation that extends the Generalized System of Preferences (GSP), the African Growth and Opportunity Act (AGOA), the Haitian Hemispheric Opportunity Partnership Encouragement Act (Haiti HOPE), and customs reauthorization legislation. Senate leadership also agreed to consider the customs reauthorization legislation (which contains controversial currency manipulation provisions discussed further below) and the Miscellaneous Tariff Bill (MTB) reform, which passed with a 78–20 vote. Amended versions of the trade preference and customs reauthorization bills that the Senate Committee on Finance approved replaced the contents of two unrelated US House of Representatives bills (H.R. 1295 and H.R. 644, respectively). The two unrelated House bills were replaced with customs reauthorization and trade preference legislation because of a constitutional requirement that the House originate revenue legislation. Although the customs reauthorization and trade preference legislation easily passed with the requisite 60-count vote, the House must still consider the legislation before it can be enacted.
The Senate also passed a cloture vote that allows it to begin considering amendments to the Trade Adjustment Assistance (TAA) program and the Trade Promotion Authority Act (TPA) as early as next week. The Senate had previously voted down the TPA on May 12.
The customs reauthorization bill was crafted to increase and improve US Customs and Border Protection’s (CBP’s) monitoring and enforcement of international trade. A controversial component of the bill is aimed at currency manipulation. In particular, the legislation requires the US Department of Commerce to consider whether to address currency manipulation through countervailing duties and allows the US Department of the Treasury to block an offending country from joining trade agreements with the United States. However, Speaker of the House John Boehner has characterized Congress’s desire to address currency manipulation through legislation as “laughable.” Notably, the House version of the bill does not contain currency manipulation language. If the House passed its own bill, rather than voting on the Senate package, the bills would be sent to conference, where House and Senate negotiators would have the option to strip the currency manipulation language. Another provision of the customs reauthorization bill that has drawn criticism is the MTB reform that will allow US companies to submit miscellaneous tariff bills directly to the International Trade Commission (ITC). The additional provisions require the ITC and Congress to alert US industry of each application.
The GSP provides duty-free treatment to certain products imported from designated beneficiary countries, which are usually developing countries that generally do not reciprocate such duty-free treatment. The GSP also offers similar unilateral benefits to eligible importers under the AGOA and the Haiti HOPE.
The GSP expired on July 31, 2013, meaning that certain products from qualifying countries are currently subject to regular duties under the Harmonized Tariff Schedule. The AGOA will expire on September 30, 2015 absent legislation that extends it. The general benefits of Haiti HOPE expire on September 30, 2020, but certain benefits begin to phase out at the end of this year.
The customs reauthorization bill renews the GSP until December 31, 2017 and retroactively applies it to July 31, 2013. It extends the AGOA and Haiti HOPE until September 30, 2025 and delays the phase-out of certain benefits under Haiti HOPE that was set to begin at the end of this year.
The TAA program is administered by the US Department of Labor and provides assistance to domestic workers affected by international trade. The customs reauthorization bill reauthorizes the TAA for Workers, TAA for Firms, and TAA for Farmers programs through June 30, 2021. Another notable provision of the bill extends the current user fees collected by CBP through September 30, 2025. Without renewal legislation, user fees for various customs services expire on September 30, 2024.
The TPA was created for Executive Branch legislative cooperation on international trade agreements. It sets forth the legislature’s views on what the negotiating objectives should be in trade agreements and requires the Executive Branch to consult with Congress throughout the process of negotiating a trade agreement. In exchange, the legislature agrees that a signed agreement will be considered for approval and implemented by Congress under expedited procedures without amendment more commonly referred to as “fast-track” authority.
The TPA expired in July 2007. The customs reauthorization bill reauthorizes the TPA until July 2018, with the possibility of an extension to July 2021 based on presidential request. Many have asserted that the TPA is essential to being able to conclude both the Trans-Pacific Partnership agreement and the Transatlantic Trade and Investment Partnership agreement.
Although it isn’t clear when the House will consider the trade bills, it appears at this stage that a bipartisan protrade coalition will need to coalesce to ensure that the bills make it across the finish line.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Margaret M. Gatti
Timothy P. Lynch