Fast-Track Trade Authority could be Revived

With Republicans soon to become the majority party in the Senate, will the Obama administration receive trade promotion authority, moving much-anticipated dairy trade agreements forward?

The dairy industry is watching two pending trade agreements that have the potential to further increase U.S. dairy exports to countries like Japan, Canada, France, and Vietnam. And with leadership of the Senate soon to transfer from the Democrats to the Republicans, negotiated trade pacts could move more quickly through Congress if fast-track, or trade-promotion, authority is revived.

“The midterm upheaval in Congress has made allies of the Republican leadership and President Barack Obama when it comes to putting the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) one step closer to the finish-line,” says Sara Dorland, analyst with the Daily Dairy Report and managing partner of Ceres Dairy Risk Management, LLC, Seattle. “Since the start of the year, Senator Harry Reid (D-Nev.) has been a vocal opponent of fast-track authority and has kept it out of President Obama’s reach.”

The last time fast-track authority was in play was between 2002 and 2007. It expired in July 2007 for new agreements, but continued to apply to agreements already being negotiated. The authority allows the U.S. Trade Representative (USTR) and the other parties involved in a trade pact to negotiate a deal and present it to Congress for a vote while preventing Congress from making amendments to the agreement or using a filibuster to stall it.

Long walk across a short aisle

“Trade-promotion authority could be one of the first tests of ‘new management’s’ willingness to get to work in Washington. Despite the alignment of President Obama and the Republicans on fast-track, it could require a long walk across a short aisle to convince Democrats to get on board,” says Dorland. “Without fast-track authority, it is arguably difficult for the USTR to achieve meaningful negotiations because other countries could be apprehensive about putting their best offers forward and concerned that Congress could ultimately override whatever bargain the USTR strikes.”

Of the two agreements that the dairy industry is watching, the Trans-Pacific Partnership (TPP) and is much further along in the negotiations than the Transatlantic Trade and Investment Partnership (T-TIP. The TPP is a trade agreement that is being negotiated between the United States and 11 other countries throughout the Asia-Pacific region, including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

One of the sticking points in the TPP for the U.S. dairy industry is Japan’s attempt to exclude dairy market access from the agreement. In a June 3, 2014, joint letter, the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council threatened to withdraw support from the pending agreement if Japan and Canada refuse to provide comprehensive market access for U.S. dairy products.

If Canada eventually allows market access to U.S. dairy products, it would in effect remedy the issues left over from the 1994 North American Free Trade Agreement (NAFTA), which excluded access to Canada’s dairy market, says Dorland. The TPP also would increase dairy market access in growing Asian markets, reduce non-tariff barriers, and potentially slow or halt the spread the use of geographic indications to protect certain cheese names.

The much younger T-TIPP agreement is being negotiated between the European Union and the United States, and geographic indications are a major issue on both sides of the Atlantic.

“U.S. dairy has benefited from past free-trade-agreements, experiencing remarkable growth in markets like Mexico, South Korea, and Morocco,” says Dorland. “Opening new lucrative overseas markets and reducing trade barriers and tariffs would provide a tremendous shot in the arm for U.S. dairy exporters.

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