Trade Negotiations During the 109th Congress

Publication Date: May 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Trade

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Abstract:

The Bush Administration has made bilateral and regional free-trade agreements (FTAs) more important elements of U.S. trade policy, a strategy known as “competitive liberalization.” This strategy, it argues, will push forward trade liberalization simultaneously on bilateral, regional and multilateral fronts. It is meant to spur trade negotiations by liberalizing trade with countries willing to join FTAs, and to pressure other countries to negotiate multilaterally. Critics contend, however, that the accent on regional and bilateral negotiations undermines the multilateral forum and increases the risk of trade diversion away from competitive countries not in the trade bloc.

The controversial CAFTA (Central American Free Trade Agreement) — an agreement signed with the five countries of the Central American Common Market (CACM) and the Dominican Republic — was passed by the House on July 28, 2005, by a vote of 217- 215. Later in the day, the Senate approved the House version of the legislation to implement CAFTA, and President Bush signed it on August 2 (P.L. 109-53). In December 2005, Congress approved implementing legislation for the Bahrain FTA and President Bush signed the legislation of January 11, 2006 (P.L. 109-169).

The United States is participating in several other regional and bilateral trade negotiations. Agreements were concluded and became effective during the 108th Congress with Australia, Chile, and Singapore. Also during the 108th Congress, an agreement with Morocco was approved, but it did not take effect until January 1, 2006. Negotiations are underway with Panama, Thailand, three Andean nations (Colombia, Peru, and Ecuador), and the United Arab Emirates. Negotiations have recently concluded with Peru, Colombia, and Oman. USTR announced the launch of FTA negotiations with South Korea on February 3, 2006, and with Malaysia on March 8. Several other trade initiatives are under discussion, including a U.S.-Middle East FTA and an FTA with countries in southeast Asia.

An ongoing regional initiative is the Free Trade Area of the Americas. In April 1998, 34 Western Hemisphere nations formally initiated negotiations on tariffs and nontariff trade barriers in the hemisphere, but the talks have now stalled.

The broadest trade initiative being negotiated is the multilateral trade negotiations in the World Trade Organization (WTO). In November 2001, trade ministers from 142 WTO member countries agreed to launch a new round of trade talks covering market access, trade remedies, and developing-country issues. The WTO’s 6th Ministerial was held at Hong Kong in December 2005, but no breakthrough on negotiating modalities was reached. An April 30, 2006 deadline to reach agricultural and industrial market access modalities was also missed.

Potential agreements resulting from current trade negotiations may be considered by Congress under trade promotion authority (TPA)legislation enacted in 2002. That legislation covers agreements signed before June 30, 2007. Under the legislation, if the President meets notification requirements and other conditions, Congress will consider a bill to implement a trade agreement under an expedited procedure (no amendment, deadlines for votes). The notification requirements include minimum 90-day notices before starting negotiations and before signing a trade agreement.