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Obama Signs Trade Facilitation & Trade Enforcement Act

Sadie Keljikian, Top Billion Finance
Two weeks ago, President Obama signed H.R. 644, or the Trade Facilitation and Trade Enforcement Act of 2015. The Act includes supplemental provisions to international trade agreements including the recent Trans-Pacific Partnership.

The Act provides general policy adjustments and covers potential loopholes to existing and future trade agreements. Among them is the official authorization of CBP, allowing Customs and Border Patrol to operate within the Department of Homeland Security for the first time since its establishment in 2003. The Act also provides funding to the CBP to update automated tracking systems to ensure that US customs laws are upheld.

H.R. 644 also provides enforcement against currency manipulation and “dumping,” or predatory pricing used in international trade to undercut local markets and drive away competition. The Act combats these practices with strengthened semiannual currency reports and more specific guidelines to identify and quickly rectify any currency manipulation attempts by foreign governments.

Labor practices are also addressed in the Act. While it has proven difficult for the US to combat unethical labor practices abroad and even at home, particularly in the apparel industry, one aspect of the difficulty has been negated with H.R. 644. Formerly, there was an exception known as “consumptive demand,” meaning that if a scarce product was available, it would be allowed into the US regardless of the conditions under which it was produced. This exception no longer applies, limiting the irresponsible and illegal behaviors that occur in many supply chains, including forced or indentured labor.

Trade between the US and Israel as well as between the US and Nepal will also be bolstered, as the Act combats politically motivated obstructions to Israel and allows duty free export of certain products from Nepal to the US. This will create a more open trade route to strengthen the relationship between the US and Israel as well as assisting Nepal in its economic and social recovery.

The Act has several other provisions, including clear criteria regarding intellectual property protection, a permanent ban on taxing internet access on a state or local scale, promotion of small business exports, and strengthening of the Trade Promotion Authority, or TPA. The reaffirmation of TPA is unsettling to those who oppose trade agreements like the recent Trans-Pacific Partnership and NAFTA, since it allows the President to fast-track these agreements, allowing less time for Congress to review and discuss the potential effects of the deal.

In general, H.R. 644 seems to protect the US from dishonest trade practices and solidify systems that are already in place, making international trade simpler and more cost effective. It also seems to streamline the customs process and discourage unsafe and irresponsible labor practices, but obviously, it is yet to be seen what the real effects will be.

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