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Shadow Government

Everything You Need to Know About the Long, Complex Process of Passing the TPA

Last week, in a stunning turn of events, Democrats in the House of Representatives imperiled U.S. trade policy and, in the process, U.S. foreign policy, voting to block a key step towards the Trans-Pacific Partnership (TPP) and derailing President Barack Obama’s flagship legislative effort for his second term. The critical moment came amid intricate legislative ...


Last week, in a stunning turn of events, Democrats in the House of Representatives imperiled U.S. trade policy and, in the process, U.S. foreign policy, voting to block a key step towards the Trans-Pacific Partnership (TPP) and derailing President Barack Obama’s flagship legislative effort for his second term. The critical moment came amid intricate legislative maneuvering, when Democrats followed Minority Leader Nancy Pelosi (D-Calif.) and voted strategically to reject a program they had backed for decades — Trade Adjustment Assistance (TAA). In combination with Republicans who sincerely opposed TAA, the effect was to block any progress on the U.S. trade agenda by a 302-126 vote.

The reactions were split between those who took the result seriously and those who did not. The White House put itself firmly in the latter camp, dismissing the result as a “legislative snafu.” This harkened back to a similar episode last month in the Senate, in which roughly a dozen Democrats voted first against, then for Trade Promotion Authority (TPA). To give the White House credit, however, at least President Obama has been clear that he wants the trade package to pass and has been actively lobbying for it.

Former Secretary of State Hillary Clinton, shortly after declaring her candidacy for president, broke her silence on trade by dismissing the pending trade authority legislation as a “process issue” and taking no stance on it whatsoever. If this stance is genuine, it is an exceedingly odd one for someone who has been around Washington policymaking as long as she has, and who holds a law degree from Yale.

To illustrate the critical relevance of process at this key juncture of U.S. commercial and foreign policy, there are three procedural points about the sausage-making aspects of trade that are important to understand. (I will leave the parliamentary process to others, not because it is unimportant but because that situation seems to be changing daily).

The Executive Branch Trade Process

Anyone listening to Secretary Clinton’s rather vague statements about what she would like to see in the Trans-Pacific Partnership (TPP) trade agreement could be forgiven for thinking that she was a newcomer to the issue.

In fact, trade negotiations in the United States are overseen by an interagency process. Committees representing 20 different agencies work out details formally at the staff level. The office of the United States Trade Representative (USTR) oversees this process, but it needs to build consensus among the participating agencies. Among the leading economic agencies that play a central role are the Treasury, the Department of Commerce, and, of course, the State Department.

Issues that cause disagreement or that are sensitive are taken up by political appointees at the assistant secretary level, the deputy secretary level, or “principals,” meaning cabinet level. The President decides on disagreements that persist.

If a secretary of state had qualms about the way a trade agreement was being shaped, she would have ample opportunity to have her concerns addressed. As Jake Tapper of CNN has reported, however, Secretary Clinton repeatedly voiced her satisfaction with the TPP.

The Process for Completing a Trade Agreement (TPA)

Secretary Clinton argued that her focus was on the TPP, rather than the negotiating authority under debate. Yet the two are inextricably linked, for several reasons. First, TPA is the means by which Congress directs the executive branch on trade policy (Congress has the responsibility under the Constitution, Article 1, Section 8). It was an unusual and unwise move for the Obama administration to postpone its pursuit of TPA for this long, but it is hard to argue that negotiating instructions are irrelevant on the eve of the negotiations’ conclusion.

Second, TPA is a prerequisite for striking the best deal possible. No other country wants to offer sensitive concessions without the assurance that the ultimate deal will be immune from congressional amendments and delay. The Obama administration recommitted the United States to TPP negotiations in late 2009. For a number of years, U.S. negotiating partner countries in the TPP were diplomatic in overlooking the lack of TPA, as President Obama and U.S. Trade Representative (USTR) Mike Froman assured them that they had the domestic politics under control. Now the other TPP countries have become more explicit – there can be no deal without the president getting TPA.

The final, important aspect of TPA is that its strictures allow TPP opponents to kill prospects for the agreement merely through delay. Commenting on the U.S. situation from Australia’s point of view, Trade Minister Andrew Robb just said, “You can see the political heat’s rising by the day over there, because of the presidential election next year… if (TPA)’s not dealt with in the next two or three weeks, I think we’ve got a real problem with the future of the TPP.”

It’s all in the process. Suppose there were a breakthrough and TPA were to pass the House tomorrow, be signed by the president, and come immediately into effect. What needs to happen next?

The first step is that the negotiations would have to conclude. U.S. delays have led TPP ministers to cancel scheduled meetings; they would have to convene and work through the difficult political issues. Some resolutions seem straightforward, but others could prove difficult.

In a rush of optimism, let us further suppose that the final TPP talks begin within days and conclude within a week. Imagine they wrap up by the end of June. Now we come to the procedural requirements of TPA. Sixty days must pass between the public release of the agreement and the date when the president signs. Then, 105 days after that, the U.S. International Trade Commission needs to release a report on the economic effects of the agreement. It is only at that point that the agreement would move to Congress, which has a maximum of 90 days to consider the implementing bill. Note, those are 90 legislative days, not calendar days; the House has averaged 137 legislative days per calendar year since 2001.

It is hard to boil these steps down to a set length of time, given some possibilities for accelerating the process or exploiting overlap, but six months is a decent rule of thumb.

Six months from the end of June, revelers are preparing to celebrate the New Year, and politically-oriented folk are gearing up for presidential primaries. This is the reason for Minister Robb’s caution about timing. It is also why opponents of the TPP need only delay the TPA vote. President Obama postponed his TPA push until the very last moment and left himself almost no room for error. Unless one likes the idea of a TPP vote nestled in amongst the primaries and caucuses, the clock is running out.

The Process for Launching a New Administration’s Trade Policy

What if the clock does run out and it becomes impossible to pass TPP this year? The final political bargaining would be passed along to a new administration in 2017. Again, process rears its head.

It takes time for an administration to get its new team in place. When President Obama took office in 2009, his USTR, Ron Kirk, was not confirmed until March 18. In 2001, Bob Zoellick took over as USTR sooner than that, but he was announcing appointments to key positions (chief of staff, general counsel, assistant USTR for congressional affairs) in mid-March. These people need to be in place to conclude the TPP. Note, also, that there is another trade agreement with Europe (the TTIP) waiting in line behind.

Any new administration will prioritize. There is nothing magical about the “first 100 days,” but the idea does capture the real sense that the best opportunity for legislative achievement and defining an administration may come during its debut. While a number of Republican prospects for the presidency have expressed enthusiasm about trade, it is still a question whether it would be a top priority.

For skeptical Democrats who campaign against the agreement, it seems highly unlikely that completing trade agreements would be their first order of business. There is recent experience along these lines. President Obama campaigned in 2008 against the already-completed deals with South Korea, Colombia, and Panama, arguing that they needed to be improved. In the end, after prolonged delays, minimal adjustments, and a bruising congressional battle, the agreements passed in the fall of 2011.

This is part of why the Foreign Minister of Singapore was laudably blunt this week: “(W)here is the United States? It’s been the guarantor of peace; it’s been the guarantor of progress and prosperity up to now. If you don’t do this deal, what are your levers of power? … Trade is strategy and you’re either in or you’re out.”

When playing a game, it helps to know the rules. Procedure matters. The time pressure on trade helps explain why skeptics are throwing themselves so avidly into a battle to delay TPA. There is a great deal at stake. The devil is in the details.

Alex Wong/Getty Images

Phil Levy is the chief economist at Flexport and a former senior economist for trade on the Council of Economic Advisers in the George W. Bush administration. Twitter: @philipilevy

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