TRALAC - Trade Law Centre

Op-Ed: US Congress fails to renew vital trade deals, AGOA at risk

Monday, 25 August 2014 Published: | Rick Helfenbein

Source: American Apparel and Footwear Association

African leaders and Heads of State recently visited Washington, D.C. to re-affirm that the United States is focused on  doing business with Africa.

However, in spite of the seemingly productive meetings, unless the African Growth and Opportunity Act (AGOA) is renewed by this Congress in the next few months, it’s safe to say, that our trade effort will be a lame duck. Long-term investments in plant, property, and equipment that are subject to time constraints are effective suicide missions.

AGOA expires in 2015, and an immediate assurance of continuance needs to be made now. Essentially, without a quick renewal, there is no future. It’s not that the U.S. doesn’t want to contribute to the development of the African market, it’s just that we can’t get our act together, and Congress is to blame.

Let’s face it – with regard to passing trade legislation, the 113th Congress is a trade failure.

We are in mid-August, baseball is in its home stretch, and the 113th Congress of the United States of America is on holiday, following their slow and painful death march to a vacation after months of doing nothing.

Congress has not shown any improvement on issues related to international trade. They have not passed any new trade legislation, they have not renewed existing trade bills that required only rollover, and by failing to act, they are aiding and abetting a declining U.S. Gross Domestic Product, and average Americans are asking – can we trust this Congress with the business of America?

It’s hard to imagine what Congress is thinking, and how they can possibly go into recess when they have done so little to improve our nation’s woes. History and pop culture remind us of what happens when you take your eye off the ball and leave business unfinished. Simon and Garfunkel said it so well, “Where have you gone Joe DiMaggio, a nation turns its lonely eyes to you. What’s that you say, Joltin’ Joe has left and gone away.”

Trust in Congress is much the same as Trust in our U.S. currency. So much so that we proudly display our national motto on every bill and coin that says, “In God We Trust.” As we presuppose a supreme being, the key word that creates value for our currency is our unbridled trust in the U.S. Government.

So, if we trust our currency, can we trust this Congress with matters of trade? Unfortunately, 80 percent of this Congressional session is already completed, and the answer is no.

The tale of the tape on renewal items that this Congress has ignored is as follows:

In 2007, we failed to rollover (and still haven’t renewed) the Trade Promotion Authority (TPA). This bill grants the President the ability to fast-track trade legislation, and is critical to the establishment of international trade deals.

In 2012, Congress failed to renew the Miscellaneous Tariff Bill (MTB). Some in Congress call this bill an earmark, not realizing that MTB’s offer a tax incentive for component parts shipped to American manufacturing, and that these parts are not available in the U.S.

In 2013, Congress failed to renew the Generalized System of Preferences (GSP), an honorable legislative agenda that has been in existence since 1974, allowing the U.S. to provide jobs to Third World economies, in return for duty free access on products used as raw component parts for American manufacturing.

In 2014, Congress will likely not renew the Nicaraguan tariff preference level (NIC-TPL) causing pain and suffering to U.S. companies that have invested in Nicaragua because of that very specific trade program.

In 2014 or 2015, Congress must deal with the renewal of AGOA, which is heralded as one of the great steps for the U.S. to help develop Africa as a market. Given all of the prior failures to renew, should companies now invest in Africa when no one knows what Congress will do?

Where is the trust? How can the trade investment community deal with a Congress that is seemingly incapable of renewing the very programs that they encourage us to invest in? How can they ask investors to go to Nicaragua to build factories, and then take the TPL incentive away? How can they ask us to invest in “developing” economies to provide stability, and then take the GSP incentive away? How can they ask us to invest in Africa today, when they can’t convince us that they will renew AGOA tomorrow? We need an adult in the room. We need someone who understands the absolute havoc that these ongoing non-renewals are causing, to the total despair of our international investors and our domestic economy.

Much like an individual who can’t talk without moving their hands, our economy can’t grow without an aggressive trade policy. This is fact, not fiction. Our Congress can’t even help us to achieve the U.S. 66-year average of 3.22% real GDP growth when we have been hovering below 3 percent for the last four years!

Could it be possible that all this non-action on trade was pre-planned?

In Bob Schieffer’s CBS show “Face the Nation” one year ago, Speaker Boehner said of Congress, “We should not be judged on how many laws we create. We ought to be judged on how many laws we repeal.” For Speaker Boehner, this was either fortune telling or laying out an agenda that clearly was achievable.

At least in the mid-90s there was an attempt for Congress to have a “Contract with America.” Today, we are running without a contract and the results are disastrous. This is also quite similar to what happens when a ship’s captain tries to navigate without a compass. Sooner or later, we all end up on the rocks.

Congress needs to get on the right path, and it’s not that some in Congress don’t care; it’s just that consensus needs to be reached; so that we can all move forward together.

If we can put a trust motto on a dollar bill, we ought to be able to hang it on the walls of Congress. Let’s hope for better results in the 114th Congress–it’s time to give up on the 113th.

 

Rick Helfenbein is Chairman of the Board of the American Apparel and Footwear Association. He is a fierce advocate for a robust USA Trade Agenda and speaks frequently on the subjects of supply chain and international trade.