Tuesday, December 7, 2010

KORUS and TPA, ctd.

A few more thoughts on last night's open questions re: the US-Korea FTA and its 2011 congressional consideration under Trade Promotion Authority (TPA):
  • An informed reader helpfully points out another scenario that I didn't mention last night: the original 2007 agreement proceeding through congress under TPA, while the 2010 "supplemental agreement" is considered separately and subsequently as a new modifying agreement that would not be subject to TPA's important disciplines.  Under such a scenario, the supplemental agreement would have been "entered into" after July 1, 2007 (the original TPA deadline), so it would have to be considered under the still-in-force 1974 Trade Act (19 U.S.C. 2112), which has none of TPA's protections.  Thus, ill-willed members of Congress could certainly try to meddle with it in all sorts of nasty ways.  (And, of course, if - as we discussed last night - the 2007 agreement was found to be "entered into" in 2010 because of the new deal's significant substantive changes, it too would have to be considered under Section 2112.)   Now, such consideration is not a total death sentence for either of the agreements - implementing legislation for the US-Jordan FTA was considered in 2001 without TPA under the 1974 Act, and it passed both chambers pretty easily.  Of course, that agreement was far less controversial and congressional Democrats hadn't wholly abandoned free trade yet, so easy passage for the KORUS under the 1974 Act is far from certain.  So in sum, unless the entire package is somehow considered to fall under TPA, the administration appears to have a little procedural mess on its hands - either the original FTA was amended, and it's thus no longer under TPA; or they've created a "supplemental agreement" outside the original agreement, and it's not subject to TPA.  Dilemma.
  • It turns out that I am certainly not the first person to consider this potential problem.  Several people are asking questions about it, and, as I suspected last night, the administration was worried about all of these TPA problems back in July of this year when it was trying to figure out how it could possibly appease Ford, Chrysler and the UAW, while still keeping TPA's important procedural disciplines in place by not "re-opening" the KORUS through big, substantive changes.  (So much, as they say, for that.)  The article linked above is a great guide to all of the procedural arcania involved, so be sure to read the whole thing if you're interested in all the different ways that this could play out next year.  The most important nugget, I think, is what happens if the White House submits the FTA legislation under TPA and a congressman or senator objects: "If the FTA were submitted under TPA and a member of the House objected due to a belief that TPA protections no longer applied, that member could raise a point of order.  The ultimate decision on whether TPA applied would then fall to the House speaker, who would rule with the guidance of the House parliamentarian.... That ruling can also be challenged, in which case the entire House would vote on whether the FTA could proceed under TPA.  The majority party typically would support the ruling of the speaker in that instance. Similarly, an objection in the Senate would be ruled on by the chair of that chamber, with a vote possible in the case of further objection."  Very interesting.  The article also makes it pretty clear that, even if TPA becomes an issue for the KORUS, it's very likely that any problem can be overcome with cooperation between the White House and both chambers of Congress.  (Yet another reason to celebrate the GOP's new majority in the House, eh?)
  • It appears that both the administration and House Republicans are sticking with the line that both the 2007 KORUS agreement and the 2010 supplemental agreement will be covered by TPA.  Incoming chair of the House Trade Subcommittee (and strong free trader) Kevin Brady (R-TX) said today that he wants all FTAs - not just KORUS - considered in the 112th Congress' first six months.  And when asked whether TPA would apply to the KORUS "since the new 'supplemental agreement' reached last week changes the terms of the original 2007 deal," Brady said that he was "confident the side agreement did not invalidate the original deal's fast track [TPA] protection."  
  • The White House is apparently also "confident," telling sources (like the Nelson Report's Chris Nelson) that the KORUS is, like, totally covered by TPA, dude.  Nelson states: "On the possible 'Fast Track' problem that the auto tariff sections of the KORUS deal are vulnerable to a Point of Order which could deny it protection from amendments: we are told that the Administration will likely argue that the bottom line on tariffs is not changed, only the timing... so since the tariffs will end up at their "original" planned numbers, timing on when or how quickly is a technical detail, not a disqualifying change in substance."  On this argument, Nelson sounds skeptical ("Whether that will 'fly', along with the planned use of 'side letters' to make legislative changes? Stay tuned."), and he has every right to be. If you take a quick look at the tariff schedules in the 2007 agreement for both the United States and Korea, you'll see that they include the specific "codes" for the tariff elimination schedules (they key for these codes is also in the 2007 agreement here).  The 2010 supplemental agreement amends these codes based on the new, agreed (and longer) timeframes for tariff elimination.  So this remains a substantive, textual change to the 2007 agreement, and the White House's claims seem (to me at least) to be pretty flimsy.  Just think of it this way: if the President could sign a trade agreement, then modify it at will, and still have it covered by TPA, then why did President Bush and his USTR rush to complete and sign the original KORUS by June 30, 2007?  They could have just signed a tariff schedule with all lines ending up at zero, and then hammered out the tariff elimination schedules in the following months (or years).  Hmmmm?
Now, again, with strong House and Senate support for the agreement (and its consideration under TPA) and/or with all of those different ways for congressional leadership to control the fate of the KORUS (with or without TPA), all of this might just be pointless geekspeak speculation.  Then again, it might not be pointless if things start getting out of hand next year and the KORUS ends up getting held hostage (heh) by a rogue Senator or two because of the substantive changes demanded by Ford, Chrysler and the UAW.  And either way, all of this trouble is certainly further proof of why it's always, always a really bad idea for the world's most powerful man to cave to insular special interest groups just to score some cheap political points on a huge free trade agreement when he could have just stood tall and argued the facts, principle and law instead.
    Oh well.

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