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Trade Alert: Obama May Get Fast-Track Authority on Large Pacific Trade Deal

Obama Trade Deal

April 17, 2015 – With the agreement of key Congressional leaders on Thursday, President Obama was given special authority to finish negotiating one of the world’s largest trade deals. Though he faces a divisive fight with fellow Democrats over this bill, this development is a step in the right direction for proponents looking to reduce existing barriers to international trade.

Reynolds Hutchinson, Associate Editor of the Journal of Commerce (JOC), has reported that the Senate and House tax-writing committees re-introduced the “Trade Promotion Authority” bill Thursday afternoon. If approved, the legislation would give the President the power to fast track signed trade pacts to Congress for straight up-or-down votes — with no room for amendments and limited floor debate.

This Trade Promotion Authority could expedite signing of the recently introduced Trans-Pacific Partnership. According to the JOC article, the Trans-Pacific Partnership agreement would include Japan and 10 other Pacific nations, and stands to be the largest trade deal since the North American Free Trade Agreement (NAFTA).

How It Affects Your Business

  • If this bill passes, and you are importing high duty rate goods into US from one of the countries involved in the agreement, you may see some relief on the duty/tax side if the free trade agreement is reached.
  • Could lead to more competition in the market by lowering the cost of getting goods into US, could open door to smaller importers being able to get into the mix and grow over time.

How You Should Handle It

  • If the free trade agreement is reached, check to see if your suppliers are located in the countries involved. Where do your competitors manufacture competing products? Knowing how businesses in the market will benefit from the proposed trade agreement may provide valuable insight on how to leverage this new competitive cost advantage.
  • If your suppliers do not currently operate in these countries, thoroughly research possible alternative sourcing options in these 11 countries.
  • Be aware that lower cost of goods will lead to decreased market prices on transportation, be sure to stay ahead of the game and cost your products accordingly.

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