The Trans-Pacific Partnership trade deal: Understanding trade terminology
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Currency manipulation, ISDS, NAFTA, TAA and TPA: what do they mean, and why do they matter with regard to trade agreements? These terms are essential to understanding the ongoing trade debates. Find out what they mean below.
Currency manipulation
Currency manipulation, also known as foreign exchange market intervention or currency intervention, "occurs when countries sell their own currencies in the foreign exchange markets, usually against dollars, to keep their exchange rates weak and the dollar strong. These countries thereby subsidize their exports and raise the price of their imports, sometimes by as much as 30-40%. They strengthen their international competitive positions, increase their trade surpluses and generate domestic production and employment at the expense of the United States and others," according to C. Fred Bergsten, senior fellow and director emeritus at the Peterson Institute for International Economics.[1]
Sens. Rob Portman (R-Ohio) and Debbie Stabenow (D-Mich.) introduced S Amdt 1299 to S Amdt 1221, which proposed addressing currency manipulation in trade agreements.[2]
After introducing the amendment, Portman argued, "We need a balanced approach on trade – fighting for good jobs through more exports and fighting against unfair trade practices. Unfortunately, some of our competitors tilt the playing-field by manipulating their currencies, so that our American-made exports are more expensive, while our competitors’ exports into our country are cheaper. That’s not fair for Ohio workers who can compete with anyone on a level playing-field, and this amendment provides enforceable measures to achieve that outcome. I will continue to fight to get it included in TPA when it moves to the Senate floor."[3]
President Obama threatened to veto the TPA bill if it included Portman and Stabenow's currency manipulation amendment because he argued that it would hurt and possibly end TPP negotiations. Treasury Secretary Jack Lew said, "We have serious concerns about the inclusion of enforceable currency provisions in this or any trade agreement. ...Enforceable currency disciplines would impair our already-successful efforts addressing currency practices through our bilateral and multilateral engagement and could grant other countries a legal basis to interfere with the flexibility of U.S. policymakers to take the steps necessary to protect jobs, support growth, and ensure continued price stability in the United States."[4][5]
Portman and Stabenow's amendment failed by a vote of 51-48 on May 22, 2015.[2]
Bergsten noted that because China was not involved in the TPP talks and Japan, Singapore, and Malaysia had not attempted currency manipulation in recent years, including the currency manipulation amendment would "solely deter future misbehavior, including by possible future adherents to TPP, which would be enormously valuable but might make it more acceptable now."[6]
Investor-State Dispute Settlement (ISDS)
Investor-state dispute settlement is an international arbitration procedure included in bilateral investment treaties to resolve conflicts when one party believes that provisions of a treaty have been breached. ISDS is designed to protect businesses by granting them the ability to sue foreign governments if the government creates policies or takes actions that cause economic harm to the business.
According to the International Institute for Sustainable Development, "Investment treaties allow foreign investors to sue the host state directly through investment arbitration. This is a powerful tool that enables investors to challenge a wide range of government conduct, including environmental and health measures, as well as many other public interest measures."[7]
Opponents of the TPP argued that ISDS would unfairly favor multinational corporations, allow foreign businesses to change or ignore American labor laws and environmental regulations, and hurt American workers. In an op-ed, Senator Elizabeth Warren (D-Mass.) wrote, "ISDS would allow foreign companies to challenge U.S. laws — and potentially to pick up huge payouts from taxpayers — without ever stepping foot in a U.S. court."[8]
North American Free Trade Agreement (NAFTA)
President Bill Clinton signed HR 3450 - the North American Free Trade Agreement Implementation Act into law on December 8, 1993, and it went into effect on January 1, 1994.[9] The North American Free Trade Agreement (NAFTA) is a trade agreement between the United States, Canada, and Mexico designed to increase trade and economic growth and create jobs by reducing trade barriers.
Opponents of the TPP—most notably Senator Elizabeth Warren (D-Mass.) who released a report comparing TPP to NAFTA—argued that the trade deal would be a repeat of NAFTA, hurting U.S. workers and the environment. During his 2015 speech at Nike headquarters, President Barack Obama (D) addressed this concern. He said, "[T]his agreement fixes some of what was wrong with NAFTA by making labor and environmental provisions actually enforceable."[10] The White House also released an infographic explaining how the TPP and NAFTA differ.
Trade Promotion Authority (TPA)
Trade promotion authority (TPA), also known as fast-track authority, is a legislative procedure that allows Congress to define "U.S. negotiating objectives and spells out a detailed oversight and consultation process for during trade negotiations. Under TPA, Congress retains the authority to review and decide whether any proposed U.S. trade agreement will be implemented," according to the Office of the United States Trade Representative. Before entering into a final trade agreement, Congress votes on the agreement in a simple up or down vote. Congress does not have the ability to amend the agreement or filibuster.[11]
The Obama administration argued that TPA was essential to securing a final TPP deal. A majority of Republicans, including former Speaker of the House John Boehner (R-Ohio) and Speaker of the House Paul Ryan (R-Wis.), supported giving Obama TPA. However, some conservative and tea party Republicans opposed giving the president TPA because they argued that he would negotiate trade deals that were not in the country's best interest.[12][13]
Obama signed TPA into law on June 29, 2015.[14]
Trade Adjustment Assistance (TAA)
Trade adjustment assistance "is a federal program that provides a path for employment growth and opportunity through aid to US workers who have lost their jobs as a result of foreign trade. The TAA program seeks to provide these trade-affected workers with opportunities to obtain the skills, resources, and support they need to become reemployed. The program benefits and services that are available to individual workers are administered by the states through agreements between the Secretary of Labor and each state Governor. Program eligibility, technical assistance, and oversight are provided by the US Department of Labor's Employment and Training Administration's Office of Trade Adjustment Assistance," according to the U.S. Department of Labor.[15]
Sen. Ron Wyden (D-Ore.), the ranking member of the Senate Finance Committee, and Sen. Susan Collins (R-Maine) introduced The Trade Adjustment Assistance Enhancement Act of 2015 on April 16, 2015, which proposed expanding TAA and reauthorizing funding for six years. After introducing the legislation, Wyden said, "TAA is a critical component for our workforce, and expanded TAA should be prioritized in our trade policy. This bill we’re introducing today doubles job training funding. It makes the program whole after the recent cuts it faced in 2014 by supporting workers who were denied TAA or did not apply because they were ineligible to start to receive assistance right away. It also provides a backstop for our fishermen, farmers, and small businesses by providing for a long-term extension of their trade adjustment programs."[16]
According to The Huffington Post, on April 22, 2015, "Wyden (D-Ore.) announced that Obama endorsed providing $450 million a year to the Trade Adjustment Assistance program -- a cut of more than 20 percent from the $575 million a year provided by the last TAA bill that passed in 2011." The proposed cut angered many Democrats and made them more skeptical of the TPP deal.[17]
Obama signed TAA into law on June 29, 2015.[14]
See also
- The Trans-Pacific Partnership trade deal: An overview
- The Trans-Pacific Partnership trade deal: Legislation
- The Trans-Pacific Partnership trade deal: Public opinion on TPP and T-TIP
- The Trans-Pacific Partnership trade deal: Summary of the TPP
- The Trans-Pacific Partnership trade deal: Human trafficking concerns
- 2016 presidential candidates on the Trans-Pacific Partnership trade deal
- The Trans-Pacific Partnership trade deal: Opposition
- The Transatlantic Trade and Investment Partnership
- Currency manipulation
- Trade promotion authority (TPA)
- Trade adjustment assistance (TAA)
- North American Free Trade Agreement (NAFTA)
- Investor-State Dispute Settlement (ISDS)
- Michael Froman
External links
- Office of the United States Trade Representative, "Transatlantic Trade and Investment Partnership (T-TIP)"
- Office of the United States Trade Representative, "Outlines of TPP"
Footnotes
- ↑ Forbes, "Currency Manipulation: Why Something Must Be Done," accessed May 18, 2015
- ↑ 2.0 2.1 Congress.gov, "S Amdt 1299 to S Amdt 1221," accessed May 20, 2015
- ↑ Portman.Senate.gov, "Portman Fights for Level Playing Field on Trade with Amendment Addressing Currency Manipulation," accessed May 20, 2015
- ↑ The Hill, "Senate moves closer to passing Obama trade bill," accessed May 20, 2015
- ↑ The Hill, "Senate panel approves trade bill," accessed May 11, 2015
- ↑ Foreign Affairs, "The Truth About Currency Manipulation," accessed May 18, 2015
- ↑ International Institute for Sustainable Development, "Investment Dispute Settlement," accessed May 17, 2015
- ↑ Washington Post, "The Trans-Pacific Partnership clause everyone should oppose," accessed May 13, 2015
- ↑ Congress.gov, "H.R.3450 - North American Free Trade Agreement Implementation Act," accessed May 17, 2015
- ↑ WhiteHouse.gov, "Remarks by the President on Trade," accessed May 17, 2015
- ↑ USTR.gov, "Trade Promotion Authority," accessed May 14, 2015
- ↑ Politico, "President Obama speaks out on Trade Promotion Authority," accessed May 20, 2015
- ↑ Slate, "Why Obama’s Big Trade Deal Isn’t a Sure Thing," accessed May 18, 2015
- ↑ 14.0 14.1 The White House, "On Trade, Here’s What the President Signed into Law," June 29, 2015
- ↑ DOLETA.gov, "What is Trade Adjustment Assistance?" accessed May 14, 2015
- ↑ Finance.Senate.gov, "Wyden, Collins Offer Bill to Authorize Trade Adjustment Assistance," accessed May 20, 2015
- ↑ Huffington Post, "Democrats Balk At Obama Plan To Cut Funding For Workers Hurt By Trade Deals," accessed May 20, 2015
