July | August 2017

by Andy Karellas
Bipartisan agreements in Congress are rare these days. But after months of back-and-forth
negotiations and parliamentary positioning, both chambers and parties applauded the passage of key international trade legislation—most notably the renewal of Trade Promotion Authority, or TPA.
Trade Promotion Authority
The passage of TPA sent a strong message that President Obama’s trade agenda still has some wind in its sails. At the top of his agenda are two multinational trade agreements—the Trans-Pacific Partnership, or TPP, and the Trans-Atlantic Trade and Investment Partnership, or T-TIP—which aim to increase exports from U.S. states and attract foreign direct investment from targeted countries. Combined, these two multinational agreements would help open 39 new markets for U.S. exporters.
Simply put, TPA provides the president the authority to negotiate international trade agreements with other nations and then have Congress vote on the negotiated trade agreement with a simple up or down vote. Without TPA, it would be nearly impossible to reach an agreement in Congress and with negotiating partners.
“America is now back in the game. With TPA in place, the United States can once again play a leading role in writing the rules of the global economy. This will help us create a healthier economy and bolster our foreign policy,” said Rep. Paul Ryan of Wisconsin, chairman of the U.S. House Committee on Ways and Means, which has jurisdiction over international trade policy. “With TPA in place, our attention shifts to the trade agreements currently being negotiated with our friends in the Asia-Pacific region and Europe.”
Trans-Pacific Partnership
The Trans-Pacific Partnership, or TPP, is a multilateral trade agreement being negotiated with 11 other nations: Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. These nations collectively have a market size of nearly 800 million consumers and account for nearly 40 percent of the world’s Gross Domestic Product. Exports of U.S. goods to TPP nations totaled $698 billion in 2013, or about 45 percent of total U.S. exports. A 2012 analysis by the Peterson Institute estimated that a TPP agreement could generate nearly $124 billion in new U.S. exports to those nations.
Exports to TPP countries can be an important component of a state’s economy. For example, according to the Office of the U.S. Trade Representative, Colorado exported $8.7 billion in goods in 2013, and $4 billion of those goods went to TPP nations. According to the latest statistics, those exports helped support more than 80,000 manufacturing jobs in Colorado, or 24 percent of total manufacturing positions in the state.
On Oct. 5, the U.S. and the 11 TPP nations announced they had made significant progress on the negotiated text of the comprehensive trade agreement. “After more than five years of intensive negotiations, we have an agreement that will support jobs, drive sustainable growth, foster inclusive development and promote innovation across the Asia-­Pacific region,” U.S. Trade Representative Michael Froman said at a press conference Oct. 5 in Atlanta. The final text of the agreement must now be released for public comment for 60 days before any congressional vote can take place.

Trans-Atlantic Trade and Investment Partnership
Along with the TPP, the president and Froman continue to work on the Trans-Atlantic Trade and Investment Partnership agreement, or T-TIP, with the European Union. First launched in June 2013, the negotiation aims to reduce trade barriers—most notably, non-tariff and regulatory barriers, as tariffs between the U.S. and EU are relatively low.
The U.S. and EU account for nearly half of the global economic activity, with each producing nearly $17 trillion in Gross Domestic Product. The EU is the largest market for U.S. exporters, which sold more than $450 billion in goods and services in 2012. In addition, companies from the EU invested nearly $1.7 trillion in the U.S. in 2013, directly supporting more than 3.5 million American jobs. A 2013 report by the Bertelsmann Foundation estimated that the increased bilateral trade created from the T-TIP agreement could create as many as 750,000 new jobs in the U.S. and increase U.S. household income by 13 percent per capita.
The report estimated that exports from Michigan could increase 95 percent and create more than 18,000 new jobs as a result of T-TIP, largely through exports of automobiles and advanced manufacturing products. The report highlighted the need for harmonization in automobile regulations as the key factor in reaching these potential outcomes, however.
In addition, the report estimated New York could increase its exports to the EU from $14 billion to more than $17 billion—or a 24 percent increase—and create more than 50,000 new jobs. Pharmaceutical and chemical exports from New York to the EU have grown by 189 percent since 2006, and the report estimated those will grow by an additional 34 percent upon the completion of T-TIP.
Negotiators of the T-TIP agreement completed the tenth round of talks earlier this summer and still have a variety of language to resolve, ranging from agricultural labeling to trade in services such as telecommunications. Formal meetings are scheduled through the fall. Some trade experts anticipate that the T-TIP agreement may not be finalized until the completion of the TPP negotiations.
Despite recent progress in negotiations for the TPP and T-TIP, much work remains for their completion and ultimate implementation. Once negotiators reach an agreement, Congress must then vote on the proposed agreement, and the governments of partner nations must also approve the agreement. Add these procedural hurdles, along with the fact we are entering the final year of the president’s term, and many understand the importance of concluding these agreements soon.