Obama, Insurers Welcome Bipartisan Trade Authority Measure

The White House would get its desired clarity of authority to negotiate a Pacific trade agreement while lawmakers would get the right to set negotiating parameters and to have a yes-or-no-vote on such pacts under a bipartisan proposal unveiled Thursday.

The proposal, known as the Trade Priorities and Accountability Act of 2015, is expected to spark a heated debate in Congress, where a small group of Republicans and even more Democrats with support of labor unions oppose President Obama’s proposed Trans-Pacific Partnership (TPP) and similar trade deals.

Observers say passage of new trade promotion authority legislation (TPA), which expired in 2007, is not a sure thing at all, even if paired as promised with a bill to protect workers’ rights.

Senator Orrin Hatch, Republican chairman of the Finance Committee, and Senator Ron Wyden, the committee’s leading Democrat, are introducing the Senate bill. Representative Paul Ryan, Wisconsin Republican, and chairman of the House Ways and Means Committee, is introducing the bill in the House.

TPP Countries

The Trans-Pacific Partnership (TPP) deal aims to cut trade barriers and unify standards among a dozen countries — Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. According to the World Bank, these nations represent one-third of global trade and two-fifths of the world economy.

The new TPA legislation sets forth negotiating objectives that any administration – Republican or Democratic – would be required to follow in trade talks with foreign countries while also giving Congress access to important information surrounding pending trade deals. The public would also see the full details of trade agreements before they are signed.

The legislation allows for trade deals that meet these guidelines to be submitted to Congress for an up-or-down vote, which is seen as an incentive for nations to put their best offer forward for any deal. At the same time, the bill creates a mechanism to withdraw TPA procedures and hold an administration accountable should it fail to meet the requirements of TPA.

“If we want to have a healthy economy with better jobs and bigger paychecks for more families and individuals, we must engage with other nations through trade. Our nation has been without Trade Promotion Authority since 2007. So, while other nations have moved forward and created trade agreements to benefit their workers, the United States has fallen behind,” Hatch said. “This is a smart, bipartisan compromise that will help move America forward. The renewal of TPA will help American workers and job creators unlock new opportunities for growth and promote better, higher-paying jobs here at home. If we want to maintain our nation’s economic leadership and promote American values around the world, we must reach beyond our borders, and this bill is a strong first step.”

The legislation also seeks to address currency manipulation and open up digital trade.

Obama Approval

President Obama urged Congress to pass the legislation, which he said formalizes the approach he is taking to trade deals.

“My top priority in any trade negotiation is expanding opportunity for hardworking Americans. It’s no secret that past trade deals haven’t always lived up to their promise, and that’s why I will only sign my name to an agreement that helps ordinary Americans get ahead. At the same time, at a moment when 95 percent of our potential customers live outside our borders, we must make sure that we, and not countries like China, are writing the rules for the global economy,” he said in a statement.

“The bill put forward today would help us write those rules in a way that avoids the mistakes from our past, seizes opportunities for our future, and stays true to our values. It would level the playing field, give our workers a fair shot, and for the first time, include strong fully enforceable protections for workers’ rights, the environment, and a free and open internet.”

The announcement of the legislation could help Obama administration in upcoming talks with Japan prior to the TPP, which his administration sees as a priority. Japan, a key player in the TPP, as well as other counties, have said that the success of TPP talks rests heavily on U.S. approval of some type of trade approval authority. Obama and Japanese Prime Minister Shinzo Abe are scheduled to meet on April 28 in Washington.

Insurance carriers interested in global trade applauded the bipartisan measure.

Stephen Simchak, director of international affairs for the American Insurance Association (AIA), said TPA will be “essential” for the ratification of the TPP as well as the Trade in Services Agreement (TiSA), and the Transatlantic Trade and Investment Partnership (TTIP) when they are completed.

“TPA empowers Congress by ensuring that members of Congress set clear negotiating priorities for the Administration and are consulted during negotiations. TPA is also important for giving our trading partners at the negotiating table the confidence necessary to make their best offers because they will know that the Administration can get a good agreement ratified. We need TPA to make sure that U.S. insurers are getting the best deal possible,” he said.

AIA’s Simchak said the U.S. insurance industry has “benefited immensely” from past trade agreements, and “those currently under negotiation will go even further to ensure that U.S. insurers are able to compete internationally on a level playing field.”

Evan G. Greenberg, chairman and CEO of ACE Group, called the legislation a “critical first step in advancing America’s trade agenda” and “an essential means to an end. ”

He said the enhanced trade and investment that will result from these agreements “will help create U.S. jobs, drive more robust economic growth and help America remain competitive in an increasingly crowded global marketplace.”

Some insurers and banks see the trade talks as an opportunity to change rules resulting from the Dodd-Frank financial reform bill they do not like.