Taiwan Trade Bill Passes Out of Ways and Means
A bill that approves the Taiwan trade initiative, but says it cannot take effect until the administration submits an economic analysis of its effects and answers questions from Congress on implementation, passed out of the House Ways and Means Committee on a 42-0 vote.
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The Office of the U.S. Trade Representative announced in May (see 2305190074) that the U.S. and Taiwan had an early harvest in trade facilitation and customs administration, good regulatory practices, domestic service regulations, anticorruption and small and medium-sized enterprises, and the agreement was signed June 1. Entry into force, however, follows written notification by Taiwan and the U.S. that "internal procedures" are completed.
Under the previous trade promotion authority law, the administration had the authority to eliminate duties on goods with tariffs up to 5% and cut other tariffs in half without coming to Congress for a vote. That's how it concluded the Japan mini-deal in 2019 (see 1910070074 and 1909260014).
The Biden administration has continued that practice, arguing that deals like the one with Taiwan and the in-progress Indo-Pacific Economic Framework don't require a vote in Congress, because they do not lower tariffs at all.
With this bill, which also has bipartisan support in the Senate Finance Committee, Congress is telling the administration it strongly disagrees. The text says that the administration should continue to negotiate with Taiwan, and the next round should be "high-standard, enforceable and meaningful to both the United States and Taiwan" -- and it lays out specific briefing requirements and says Congress will need to approve it as well.
Ways and Means Chairman Jason Smith said "the substance of the initial agreement with Taiwan is sound," but said "unfortunately, the way the administration went about establishing this agreement was not only inappropriate but also unconstitutional."
He said this bill "rights that wrong, while confirming strong support for our partnership with Taiwan."
He said, "When it comes to trade, we are speaking with one voice, that this administration -- nor any future administration for that matter -- must not circumvent Congress."
During a June 13 markup, Rep. Ray LaHood, R-Ill., who also is a member of the House Select Committee on China, said the Taiwan 21st Century Trade Initiative has the same problem as the Indo-Pacific Economic Framework and the Japan critical minerals agreement -- Congress is not involved in them, nor ratifying them.
This bill text specifies that any future Taiwan agreement would not allow critical minerals processed in Taiwan to qualify as critical minerals that come from a free trade partner under the Inflation Reduction Act consumer electric vehicle tax credits.
LaHood said the committee's message to the administration is: "The approach to leave out Congress needs to change."
Similarly, Rep. Suzan DelBene, D-Wash., said she wanted the administration to know that there's a "bipartisan interest in Congress in constructing enforceable, commercially meaningful trade agreements. This means more than just consultation."
Rep. Judy Chu, D-Calif., said she would like to see a comprehensive FTA with Taiwan, which she says would benefit both parties. "We can and should do more to build on this initiative," she said.