Republican gains in November could boost chances of US trade dealsAmerican companies can expect progress on some critical U.S. trade initiatives if the Republican Party takes control of both houses of the U.S. Congress this November.
By: David Gaffen, Reuters
American companies can expect progress on some critical U.S. trade initiatives if the Republican Party takes control of both houses of the U.S. Congress this November.
A Republican victory in the Senate might prevent the chamber’s Democrats, backed by labor unions concerned about the impact of free trade on American jobs, from blocking trade legislation favored by both President Barack Obama and Republican leaders.
Pollsters currently see the Republicans with a reasonable chance of winning just enough seats to gain control of the Senate in mid-term elections, which would give them their first majority in both chambers since 2006. They easily control the House of Representatives.
There should be enough support from Republican lawmakers to advance trade legislation, though some Tea Party members are also wary of such deals. One area that might take a hit is future funding of the Export-Import Bank of the United States, the nation’s export credit agency, as some conservatives see it providing “corporate welfare” through loans to foreign buyers of goods made by major U.S. companies.
A change in control of the Senate could smooth the way toward passage of a broad trade agreement with 11 Asia-Pacific nations and another pact with the European Union, say political strategists advising Wall Street firms. The trade deals could benefit exporters of agricultural produce, chemicals and auto parts, among other products and services.
The Republicans could also help get approvals for more exports of U.S. energy products, in abundance because of the shale oil and gas boom, to Europe and Asia.
“A unified Congress in one party could lead to a compromise” on trade, says Daniel Clifton, head of policy research at Strategas Research Partners in Washington.
The Obama Administration’s desire for fast-track negotiating powers, which Democrat Senate Majority Leader Harry Reid opposes, could be granted in a Republican-controlled chamber. Fast-track authority sets objectives for U.S. trade negotiators in exchange for an up-or-down vote in Congress on trade deals, with no amendments allowed. Without this any deal Obama negotiated could be subject to amendments that could destroy it.
Many trade experts say this would aid talks on the Trans-Pacific Partnership, which is now in its fifth year of negotiations. Central to Obama’s strategic shift toward Asia, the TPP would connect many countries, including the U.S. and Japan, by cutting trade barriers and harmonizing standards in a deal covering a third of global trade.
Estimates from the Peterson Institute put the potential increase in U.S. exports from the TPP at about $124 billion annually, mostly in business and financial services as well as agricultural and other products. Cracking open Japan’s protected farm market is a key goal for the United States — while Japan was the fourth-largest importer of U.S. agriculture products, with $12.1 billion in sales in 2013, it is seen as having much bigger potential.
“We’d be getting (certain) U.S. agriculture products into Japan for the first time in 80 years,” Clifton says.
Companies such as chicken, beef and pork producer Tyson Foods and agrochemical and genetically modified seeds company Monsanto Co have been lobbying for the TPP. Tyson is the largest U.S. exporter of beef; and Japan now imposes a 38 percent tariff on beef imports.
Still, some U.S. farmers are angry over growing signs that Japan could maintain certain barriers to imports, including beef, sugar or dairy products, as part of TPP compromises. If tariffs are not cut sufficiently, that could anger farmers, and invite Republican opposition to a deal.