Congressional Passage of Preliminary Taiwan FTA First Shot in Trade Deal Authority Fight

The House of Representatives passed a bill that signs off on the Biden administration's preliminary free trade agreement with Taiwan but is widely seen as a message to the White House that it has overstepped its authority by cutting out Congress.

Passed on a voice vote late on June 21, the United States-Taiwan Initiative on 21st-Century Trade First Agreement Implementation Act gives Congress' approval for the "early harvest" deal with Taiwan on trade facilitation and customs administration, good regulatory practices, domestic service regulations, anticorruption and small and medium-sized enterprises (see 2305190074), but also imposes requirements on the negotiations of certain further trade agreements between the two countries (see 2306130061).

The trade deal can't enter into effect earlier than 30 days after the president certifies in writing to Congress that Taiwan has taken measures necessary to comply with the agreement.

The bill would impose requirements on the negotiation of further agreements under the United States-Taiwan Initiative on 21st-Century Trade, such as requiring the Office of the U.S. Trade Representative to share any U.S. negotiating texts with Congress prior to sharing the text with Taiwan and within three days of receipt, as well as provide daily briefings to certain members of Congress during negotiations. Any additional agreement wouldn't take effect unless the president makes the text publicly available at least 60 days before and a bill is enacted into law expressly to approve that agreement.

"The relationship between the United States and Taiwan is vital to U.S. interests in the Indo-Pacific," Ways and Means Chairman Jason Smith, R-Mo., said in a June 21 statement. The bill "restores Congressional authority on trade policy," he said. "Congress is sending a bipartisan message to President [Joe] Biden today that we will not sit idly by as the administration ignores our Constitutional role in developing U.S. trade policy."

This is about a lot more than just trade with Taiwan, said Wendy Cutler, former USTR negotiator, in an interview with International Trade Today. "It is about congressional frustration with the administration for not respecting Congress’ role in trade policy and trade negotiations." Cutler noted that the speed with which the bill moved through committee and to the House floor shows the importance of the issue from the congressional perspective. "I can't think of any other trade vote that went through the Ways and Means Committee unanimously," Cutler said.

The Senate Finance Committee "strongly supports the U.S.-Taiwan trade legislation and is working to pass it into law as quickly as possible," said Keith Chu, deputy policy director for committee Chairman Ron Wyden, D-Ore.

However, Cutler said, that the bill won't sail by as easily. Progressive members of the committee who are philosophically against any trade agreement may not approve, though the role of congressional power is still important to them, she said.

Once through the Senate, it is possible that Biden could veto the bill. The administration "strongly feels that they have the authority to pursue trade agreements, like the Taiwan deal, as long as no changes to U.S. law are needed nor tariff cuts included," Cutler said.

Another issue is what the bill and similar legislation means for the future of U.S. trade agreements. "I’ve already been asked by trading partners on what the back-and-forth on this matter means for other trade initiatives being pursued by the administration," Cutler said. There is now "an element of uncertainty about the U.S. domestic process for potential foreign partners," which could slow down and cool future agreements like the Indo-Pacific Economic Framework for Prosperity or the Americas Partnership for Economic Prosperity.