All in Good Authority

In a successful bipartisan effort President Obama signed the Trade Promotion Authority into law on June 29. The Trade Promotion Authority (TPA) is a federal legislative procedure that requires the President and Congress to work together on trade agreements that support U.S. jobs, eliminate barriers in foreign markets and establish rules to stop unfair trade.

“The TPA sets up or creates the ability to finish trade agreements that will have benefits for farmers,” said Dalton Henry, Director of Policy for U.S. Wheat Associates. “It especially sets up the ability to do trade agreements in the best way possible or to get the best deal possible.”

TPA is commonly referred to as a fast-track. In this process the negotiating authority is a temporary power granted to the President by Congress.

“In short the passage of TPA gives the president the power and ability to actually complete a few of these trade agreements that are currently under negotiation,” explained Henry.

Congress first outlines the different trade policy priorities, negotiating objectives and transparency requirements. These guidelines set by Congress are then given to the Executive Branch in which the President and Office of the U.S. Trade Representatives (USTR) reside. The USTR can then negotiate the agreement according to the congressional guidelines.

Once the negotiations are finalized the agreement goes back to Congress. Members of Congress proceed to vote to accept or reject rules of the agreement set by the President. No amendments can be made at this point in order to pass the agreement. These guidelines are a vital component of the TPA. They reassure trading partners that the United States will stick to the agreements as negotiated and no future changes will be made by Congress.

This TPA law is essential to quickly achieving final Trans-Pacific Partnership (TPP) agreements. The TPP is a multi-national trade agreement to establish a regional trade agreement in 12 countries that border the Pacific Ocean. The objective of the TPP is to boost U.S. economic growth, support American jobs, provide improved market access and to grow American exports to some of the world’s most dynamic and fastest growing countries.

U.S. wheat farmers could benefit greatly from the lower tariffs from Japan and Vietnam.

“Right now the only entity in Japan that can buy outside of that tariff there is the Ministry of Agriculture, Food and Fisheries (MAFF),” said Henry. “Essentially that tariff increases costs for Japanese millers and consumers and reduces demand for U.S. wheat while protecting the domestic Japanese wheat industry.”

Vietnam is a major growth market for U.S. wheat and many competitors will soon have duty-free access to the Vietnamese market.

 “I think it is important to keep those two markets in perspective,” said Henry. “Japan is our number one customer of U.S. wheat and Vietnam is projected to grow tremendously over the next two decades to where they could easily be a major market for U.S. wheat growers.” 

By Audrey Schmitz