Apparel Sourcing Intelligence - Worldwide

TPP: Apart from progress in negotiations, US approval timetable keeps looking longer

The likely timetable for the US Congress to approve whatever TPP negotiators agree kept getting longer throughout November, as agreement on how approval might happen looked ever more remote and the time required for formal review before Congress can start debating began to lengthen.

  • Congressional Approval.  It is almost certain that Congress will not approve any version of a TPP speedily unless it agrees to a procedure called Trade Promotion Authority (TPA), which would curtail debate. But the reasons the treaty cannot be approved speedily  without TPAare the same reasons no-one is prepared to agree to the TPA process: Congress is deeply divided, and the Administration unskilled at manipulating it. Sandler, Travis & Rosenberg have summarised the current position as:
    • In mid-November nearly two dozen House Republicans and more than 150 House Democrats wrote to the president to express their opposition to TPA, although key House leaders and some Democrats support it. Senate Finance Committee Chairman Max Baucus said Nov. 14 that work on a TPA bill is close to being done and that the measure should be introduced before the end of this year, although further action, including committee markups, is not likely until 2014.
  • Prior review  America’s  International Trade Commission (ITC) reportedly told members of Congress recently that it would need at least 150 days to submit a report assessing the effects of the Trans-Pacific Partnership (TPP) on the US economy.
    • The estimate means it will take longer than most imagine to see any agreed TPP implemented –  and the ITC’s reasoning casts doubts on many arguments put forward for the pact by both supporters and opponents.
    • The ITC said that while it has significant experience analysing the effects of trade agreements, analysis of the TPP presents certain challenges that earlier analyses did not. The most obvious of these is the scope and diversity of countries included in the agreement, which would include at least 12 countries with varied levels of economic development, different economic systems and varied participation in regional and global value chains. The TPP also will reportedly cover a variety of non-tariff issues – including rules of origin, customs and trade facilitation, regulatory harmonization and transparency, international investment treatment, services trade and intellectual property rights – and it will be important to consider the cumulation effects for these issues across multiple trading partners.
    • Given the comprehensive nature of the TPP, the ITC added,  and the unprecedentedly large share of U.S. trade accounted for by participating countries, the agency’s collection of data and information will require a massive effort that will likely need to cover all goods and services sectors. Analysing this data and information will be time consuming, as the scope of traditional tariff analysis will be vast and the application of techniques to quantify the impact of non-tariff provisions will present challenges. The ITC will also require extensive efforts to ensure it collects the views of those potentially affected by the agreement, which will be complicated by the number of countries firms will need to consider in their evaluations. In addition, the magnitude of written submissions and hearing participants is expected to exceed past experience significantly.
    • Its “150 day” estimate starts from the day a detailed text is received. Most chapters of the proposed TPP have not yet even begun negotiationThough there is not at present any legal requirement for the ITC to review the deal, it is hard to imagine any Congressional approval system being established that did not include an ITC review. Its arguments indicate that the net effect of the partnership on the US economy are likely to be exceptionally difficult to predict – and that knee-jerk judgements are likely to be misguided.

The ITC expects that it would need a similar amount of time to analyse other agreements currently under negotiation, including the EU_US  Transatlantic Trade and Investment Partnership.