USTR Sends Draft Statement of Administrative Action to Congress, Sets TPP Implementation in Motion

According to the draft SAA, the implementation bill would grant the president proclamation authority to implement “by proclamation U.S. rights and obligations under Chapter 2 of the Agreement through the application or elimination of customs duties and tariff-rate quotas,” the draft says. Specifically, the bill would authorize the president to carry out any duty treatment deemed “necessary or appropriate” to fulfill TPP provisions outlining treatment for elimination of customs duties, goods re-entered into the U.S. after repair and alteration, duty-free entry of commercial samples of negligible value and printed advertising material, temporary admission of goods, and treatment for certain handmade or folkloric textile or apparel goods.

The bill’s proclamation authority would also authorize the president, subject to consultation and layover provisions of Section 104 of the implementing bill, to impose, modify, continue or change the phase-out schedule for any duty whenever the president deems it “necessary or appropriate to maintain the general level of reciprocal and mutually advantageous concessions with respect to a TPP Party provided by the Agreement,” according to the draft SAA. Before making such a change, though, the president would be required to get advice from private-sector advisory committees and the International Trade Commission, as well as submit a report to the Senate Finance and House Ways and Means committees laying out the action, reasons behind it and the advice obtained. This “Section 104” administrative advice and notification process would also apply to modifying TPP’s specific rules of origin, but the implementation bill would limit the president’s ability to make substantial changes to TPP rules of origin related to textile or apparel goods to within one year after enactment.

The implementation legislation would authorize the president to raise duties on goods from Japan, particularly motor vehicles, up to the prevailing most-favored nation duty rate, or to delay the reduction of duties on those vehicles, if a dispute settlement panel finds that Japan acted “inconsistently with or nullified or impaired an obligation under [TPP], and that this action materially affects the sale, offering for sale, purchase, transportation, distribution or use of U.S. motor vehicles,” the draft statement says. This proclamation authority would align with TPP’s Appendix D-1, which sets special rules of automotive trade between the U.S. and Japan under TPP. Hill Democrats have expressed concern that TPP’s automobile rules of origin won’t help U.S. automakers (see 1601120051).

Notably, the bill would also grant the president proclamation authority to provide duty-free treatment for certain textiles or apparel products the U.S. and exporting TPP party agree fall within the categories of hand-loomed fabrics of a cottage industry, hand-printed fabrics with a pattern created with a wax-resistance technique, handmade cottage industry goods made of such hand-loomed or hand-printed fabrics, or traditional folklore handicraft goods, as long as both the U.S. and exporting nation agree the goods meet requirements for such duty-free treatment. Also, pursuant to U.S. TPP tariff commitments and the Vietnam earned import allowance program, the implementation bill would give the president proclamation authority to order elimination of customs duties on certain goods from Vietnam classified under Harmonized Tariff Schedule subheadings 6203.42.20 (men’s or boys’ bib and brace overalls of cotton), 6203.42.20 (“other” men’s or boys’ suits, ensembles, suit-type jackets, blazers, trousers, bib and brace overalls, breeches and shorts, other than swimwear, of cotton), 6204.62.20 (women’s or girls’ bib and brace overalls of cotton), 6204.62.40 (“other” women’s or girls’ suits, ensembles, suit-type jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts, other than swimwear, of cotton).

A Senate Finance Committee Republican spokeswoman said USTR’s submission of the draft SAA was premature, especially considering that “significant issues” of the deal “remain unresolved” in GOP-led Congress’ eyes. In light of this, the submission raises questions of whether the administration is serious about garnering the broad, bipartisan support needed to pass the implementation legislation, she said. A Republican spokeswoman for the House Ways and Means Committee also cited outstanding congressional concerns, saying the White House must address them before TPP implementation legislation can move forward. “As [House Speaker Paul Ryan, R-Wis.,] has stated for months, there are problems that remain with the administration’s TPP deal, and there can be no movement before these concerns are addressed,” a Ryan spokeswoman said.

But a USTR spokesman said submission of the draft is intended to chart early consultations between the administration and Congress on TPP implementation legislation. “As such, the draft SAA was sent today in order to continue to promote transparency and collaboration in the TPP process,” he said in an emailed statement. “We will continue to consult with Congressional leaders on the final SAA and on appropriate timing for additional steps laid out in the bipartisan [Trade Promotion Authority] legislation." Business Roundtable in a statement (here) welcomed submission of the draft statement, reciting general arguments in favor of TPP and urging Congress to work with the administration to approve TPP by the end of 2016.