Industry News

Trade Authority Bill Sent to President

Jul. 31, 2023
By: Chaney A. Finn

The U.S. Trade Representative (USTR) has the responsibility of administering trade agreements. However, historically Congress has approved trade agreements before they entered into force. Several agreements impacting trade have recently been implemented which have bypassed Congress, such as the Americas Partnership for Economic Prosperity (APEP), Indo-Pacific Economic Framework for Prosperity, and the U.S. – Japan Critical Mineral Agreement. There are also many similar agreements in process with key partners of India, Kenya, and Taiwan that we have reported on.

On several occasions, members of Congress have objected to the USTR announcing these types of trade deals, arguing that the USTR lacks the Constitutional authority to enter the U.S. into trade agreements without Congressional approval. Notably, most of the recent USTR agreements pertain to the sourcing of critical minerals for Electrical Vehicle batteries after backlash of the tax credit provisions outlined in the Inflation Reduction Act, requiring at least 40% of their minerals sourced domestically or from free-trade partners to qualify for a potential $7,500 tax credit.

To reassert its authority to approve or reject trade agreements, Congress has sent a bill to President Biden that would prevent the Taiwan trade initiative from being implemented until the administration submits an economic analysis of its effects and answers questions from Congress. Additionally, the bill requires a trade deal with Taiwan to receive approval from Congress. Ways and Means Chairman Jason Smith (R-MO) issued a statement that, “The Constitution gives Congress authority over trade, because we are the branch closest to the people. With today’s vote in the Senate following a strong show of bipartisan support in the House, Congress has sent a clear message to President Biden that we are serious about safeguarding our Constitutional trade authority and upholding our duty to protect the workers, farmers, families, and small businesses who are impacted most by our trade policies."

The Taiwan trade initiative would allow the administration to eliminate duties with tariffs up to 5% and cut other tariffs in half without coming to Congress for a vote. The U.S. heavily depends on Taiwan as the small island-country is the global leader in semiconductor manufacturing. Consequently, a trade agreement between Taiwan and the United States could be beneficial to both parties.

Should you have any questions on trade agreements or any other trade-related questions, please contact any attorney at Barnes, Richardson & Colburn LLP.