A 2015 Trade Policy Outlook

What follows is a report by American Continental Group (ACG), which examines the policy landscape for a a variety of trade issues that are expected to be on the table in 2015. Please contact ACG with any questions related to this report. See also A 2015 IP Policy Outlook.

 

Trade Promotion Authority (TPA)

With Republicans in control of both Chambers, the Administration may finally get TPA, fast- track negotiating authority for trade agreements that allows the President to negotiate international agreements that Congress can approve or disapprove but cannot amend or filibuster. Senator Hatch will likely have an ally in incoming Senate Majority Leader Mitch McConnell (R- KY), who has signaled that TPA is a pro-business measure that could pass Congress and have the support of the President. It is the hope that, with TPA, the Administration will have stronger negotiations in the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP), and the Trade in Services Agreement (TiSA). House Republicans view the Congressional approval of free trade agreements for The Republic of Korea, Columbia, and Panama as one of genuine success in tandem with the Obama Administration and business community over the past four years, especially since many of Members of the House GOP conference had not yet developed a trade voting record. House leadership will be looking to orient their 40-plus new members in a pro free trade direction.

At the end of last Congress, Republican aides for the congressional trade committees had resumed working with staff for outgoing Senate Finance Committee Chairman Ron Wyden (D- OR) to change a pending TPA bill, but without the participation of staff for House Ways & Means Committee Ranking Member Sander Levin (D-MI), according to informed sources. The staff is hoping to unveil the revised legislation as early as February, although that is an ambitious timeline.

Incoming House Ways & Means Chairman Paul Ryan (R-WI) is not expected to radically change the dynamic in the negotiations toward a bipartisan compromise on TPA. Chairman Ryan has asked Angela Ellard to stay on as his chief trade counsel on the Committee, and she has been involved from the start in the effort to update the 2002 fast-track bill.

 

Trans-PacificPartnership(TPP)

TPP countries are planning to hold an informal round of negotiations in late January in the United States followed by a ministerial meeting in February or March, as part of a strong push to conclude the negotiations as soon as possible. This informal round, which will involve chief negotiators and some working groups, will take place Jan. 26-Feb. 1 in the U.S., although the exact location has not been announced.

U.S. Trade Representative (USTR) Michael Froman recently told a group of House Democrats that he expects a TPP deal in 2015 and wants Congress to pass a completed deal as soon as possible. Previously, he had the ambitious goal of Congress passing a completed deal by the end of 2014.

Under that timeline, a TPP deal would likely have to be concluded by mid-2015, since it would subsequently have to undergo legal scrubbing and economic analysis by the International Trade Commission (ITC) before Congress would consider it. The ITC has said its economic analysis of a completed TPP deal will take at least five months to complete due to the number of countries involved in TPP and the complex issues under negotiation.

The mid-2015 target has been endorsed by several TPP ministers, including New Zealand Trade Minister Tim Groser and Chilean Foreign Minister Heraldo Munoz, as well as other sources following the negotiations. However, an important factor that is likely to impact whether TPP countries can conclude by mid-2015 is whether the U.S. Congress can pass TPA prior to that time.

 

Transatlantic Trade and Investment Partnership (TTIP)

The momentum for TTIP continues to slowly build as we begin 2015. The most recent TTIP round (the seventh thus far), held in Washington D.C. in early December, concluded with positive comments from USTR Froman and his counterpart, EU Trade Commissioner Cecilia Malmström, which addressed the challenges and opportunities that TTIP provides Europe and the U.S. Malmström emphasized the importance of an open debate about controversial issues such as regulation, public services, and investment, and made a strong case for promoting the benefits of TTIP for consumers, producers, and especially small and medium-sized enterprises more openly and publicly.

President Obama recently spoke at the BRT’s annual CEO meeting and noted his focus on TTIP in the New Year. He has also cited it (and trade generally) as an area where he may be able to find more common ground with a Republican-controlled Senate. The next TTIP negotiation round will take place in February, 2015 in Europe. The overall outlook for TTIP is much longer- term than TPP. Top officials (including Froman and Malmström) have said it is “possible” that TTIP could be concluded before the next Presidential election, but that deadline appears to be very ambitious.

In terms of IP policy, TTIP is not expected to break a lot of new ground. USTR has initially discussed a four-part approach to the IP chapter in TTIP:

1. A listing of existing treaties and agreements which the U.S. and EU are party to.
2. Statement of principles that would stress the importance of strong IP protection similar tostatements which have been made in other fora such as the G8.
3. There could be some new, binding obligations in “cutting edge” areas such as trade secretprotection. Both sides also seem open to finding some ways to promote stronger customs enforcement of stolen and counterfeit goods. The U.S. also sees an opportunity to strengthen EU respect for technical protection measures for copyrighted material. It seems very difficult to craft new civil or criminal enforcement provisions as the transatlantic environment (mostly EU) still suffers from the defeat of ACTA.
4. Finally, there will likely be a section that lays out priorities and mechanisms for U.S.-EU collaboration to address IP enforcement in third countries. This is a long-standing matter for the U.S.-EU IP Working Group that was formed in 2005.

 

Trade in Services Agreement (TiSA)

It may be worth keeping an eye on the TiSA process in 2015. It is currently being negotiated by 23 members at the WTO, including the U.S. and EU. Together, these countries account for 70% of world trade in services.

TiSA is focused opening up markets and improving rules in areas such as licensing, financial services, telecoms, e-commerce, maritime transport, and professionals moving abroad temporarily to provide services.

There is no specific reference to IP or plan to include it in any way in the Agreement, but the TiSA could include issues such as cross-border data flows that might impact global operations for content companies.