The mid term elections have come and gone, the first few days of the Congressional “lame-duck” session have come and gone, and the Thanksgiving holiday has come and gone. As we stand on the edge of December and the waning days of the 109th Congress, Senators and Representatives are preparing their return to Washington on December 5 to wrap-up as many items as plausible within a very short time frame. Many trade issues remain on the Congressional agenda, and we will soon know for sure which items of competing urgencies are addressed, and which are held-over until next year. In most years, this may be a matter of somewhat esoteric interest; however, with important duty preference programs – including the Generalized System of Preferences (GSP) and the Andean Trade Preference Act (ATPA) – scheduled to expire in 34 days, this is a matter of critical commercial interest.
The first item that will likely be up for consideration is a bill granting Vietnam permanent trade relations treatment under U.S. law. The Bush Administration was anxious to have this completed in time for the President’s trip to Southeast Asia prior to Thanksgiving, but Congress failed to muster the two-thirds majority vote necessary to approve this legislation under so-called “suspension” rules. It is more than likely that Congress will approve this bill during the remaining portion of the lame-duck session under rules that require a simple majority, although domestic textile interests may continue to derail these efforts.
It is possible – but unlikely – that Congress will consider the implementing legislation for the Peru Trade Promotion Agreement. Although this free trade agreement was signed in April, the Bush Administration has still not transmitted the implementing legislation to Congress. Although this could still happen before the 109th Congress adjourns next month (the target date for adjournment is December 15), that would presuppose that the necessary votes are lined up. It is very uncertain whether the Peru agreement presently has sufficient votes for passage. Of course, if this agreement is not considered until 2007 when the Democrats take control of both houses of Congress, the agreement could be in jeopardy as it presently stands, or could be subject to re-opened negotiations (especially as to its labor provisions).
The U.S. and Colombia finally signed the negotiated free trade agreement between the two countries last Wednesday, November 22. However, the likelihood of this agreement moving in the current Congress are somewhere between infinitesimal and nil.
On this point, it should be noted that a group of key Congressional Democrats, led by the next chairman of the House Ways and Means Committee, Charles Rangel (NY), sent a letter to U.S. Trade Representative Susan Schwab the day before the signing of the Colombia agreement informing the Administration that they will oppose both the Peru and Colombia agreements unless they are amended to encompass International Labor Organization standards. To the Republicans, this letter signaled that the Democrats will form a vigorous opposition to the Administration’s free trade agreements agenda; to the Democrats, the fact that the Administration proceeded with the signing of the Colombia agreement the day after the letter was sent signals that the Administration has no intention of exploring a bipartisan trade agenda next year.
Lastly, there is the issue of ATPA and GSP extension. During the initial days of the lame-duck session prior to the Thanksgiving break, there was no discernible action with regard to either program. However, most commentators, observers and other followers of these matters remain cautiously optimistic that some form of extension will get done prior to December 31. There does exist several possible legislative vehicles for an extension, including an omnibus trade package (that could also include the Vietnam bill discussed above, an extension of certain expiring African Growth and Opportunity Act provisions, and a miscellaneous tariff bill), a stand-alone bill that would address solely the trade preference programs, a tax-extender package that “sweep” in these trade bills, and an omnibus appropriations bill. On the ATPA side of things, it remains very unclear whether an extension would apply to the four current beneficiary countries (Bolivia, Colombia, Ecuador and Peru), or only the two beneficiary countries that have completed free trade agreements with the U.S. (Colombia and Peru). It is also possible that an extension is done retroactively next year, which would mean that U.S. importers would need to pay duties on entries that occur on or after January 1, 2007, with the possibility of a refund mechanism. Of course, with contentions riding high in Congress and plenty of ill-feeling between the parties in the wake of the November 7 elections, it is possible that the programs will die.
On behalf of the Association, we are continuing with our efforts to get an ATPA extension accomplished prior to the end of this year, or, if absolutely necessary, to have a viable and “importer-friendly” retroactive mechanism in place.
We will, of course, keep Members closely advised. In the interim, do not hesitate to contact Jeff Levin or Bob Bauer if you have any questions on any of these matters.
