The Proposed U.S.-Panama Free Trade Agreement

J. F. Hornbeck
Specialist in International Trade and Finance

On June 28, 2007, the United States and Panama signed a reciprocal free trade agreement (FTA). Negotiations were formally concluded on December 16, 2006, with an understanding that further changes to labor, environment, investment, and intellectual property rights (IPR) chapters would be made pursuant to future detailed congressional input. These changes were agreed to in late June 2007, in time for the FTA to be considered under Trade Promotion Authority (TPA) legislation before it expired on July 1, 2007. TPA allows Congress to consider trade implementing bills under expedited procedures. Panama’s legislature approved the FTA 58 to 4 on July 11, 2007. Neither the 110th nor the 111th Congress took up the agreement.

The 112th Congress conducted multiple hearings on the FTA in the first quarter of 2011. On July 7, 2011, the House Ways and Means and Senate Finance Committees held simultaneous “mock markups,” where they informally approved draft implementing legislation. One issue that had delayed introduction of a final implementing bill was finding a compromise for congressional action on legislation that would reauthorize trade adjustment assistance programs (H.R. 2832). With Senate passage of this bill, and assurances that it would be taken up expeditiously in the House, on October 3, 2011, President Obama formally submitted implementing legislation for the proposed U.S.-Panama FTA (H.R. 3079). On October 5, 2011, the House Ways and Means Committee ordered the bill favorably reported 32-3. It awaits further action in the House and the Senate.

The proposed U.S.-Panama FTA is a comprehensive agreement. Some 88% of U.S. commercial and industrial exports would become duty-free upon implementation, with remaining tariffs phased out over a 10-year period. Over 50% of U.S. farm exports to Panama also would achieve immediate duty-free status, with tariffs and tariff rate quotas (TRQs) on select farm products to be phased out by year 17 of the agreement (year 20 for rice). Panama and the United States signed a separate bilateral agreement on sanitary and phytosanitary (SPS) issues that would recognize U.S. food safety inspection as equivalent to Panamanian standards, which will expedite entry of U.S. meat and poultry exports. The FTA also consummates understandings on telecommunications, services trade, government procurement, investment, and intellectual property rights.

The final text of the proposed U.S.-Panama FTA incorporates changes based on the bipartisan agreement of May 10, 2007, crafted by the Bush Administration and leadership in the 110th Congress. These include adoption of enforceable labor standards, compulsory membership in multilateral environmental agreements, and an easing of restrictions on developing country access to generic drugs, provisions that go beyond those in existing bilateral FTAs and multilateral trade rules. Concerns raised in Congress on labor and tax transparency issues have also been addressed by Panama in statute and by ratification of a Tax Information and Exchange Agreement (TIEA) with the United States. The TIEA provides greater tax transparency in support of curbing illicit financial transactions associated with money laundering activities.

For more on Panama, see CRS Report RL30981, Panama: Political and Economic Conditions and U.S. Relations, by Mark P. Sullivan and Donald J. Marples.


Date of Report: October 6, 2011
Number of Pages: 35
Order Number: RL32540
Price: $29.95

Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports

Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.

Trade Adjustment Assistance (TAA) and Its Role in U.S. Trade Policy

J. F. Hornbeck
Specialist in International Trade and Finance

Laine Elise Rover
Research Associate

Congress created Trade Adjustment Assistance (TAA) in the Trade Expansion Act of 1962 to help workers and firms adjust to dislocation that may be caused by increased trade liberalization. It is justified now, as it was then, on grounds that the government has an obligation to help the “losers” of policy-driven trade liberalization. In addition, TAA is presented as an alternative to policies that would restrict imports, and so provides assistance while bolstering freer trade and diminishing prospects for potentially costly tension (retaliation) among trade partners. As in the past, critics strongly debate the merits of TAA on equity, efficiency, and budgetary grounds. Nonetheless, TAA still appears to serve what is now a historically pragmatic legislative function: it remains important for forging a compromise on national trade policy.

Over time, the legislative fortunes of TAA have ebbed and flowed. When Congress considered TAA as part of a major trade legislation package, as was the case in 1962, 1974, and 2002, it tended to receive long reauthorizations and increased programmatic funding. When isolated from its main policy rationale, as was the case at times during the budget-cutting 1980s, TAA struggled sometimes to achieve even short-term extensions and maintain funding levels when faced with political opposition. TAA was most recently expanded in the American Recovery and Reinvestment Act (ARRA) of 2009, although the higher funding levels and program enhancements expired on February 12, 2011, leaving TAA programs to operate at pre-ARRA levels until February 12, 2012, when all TAA program authorizations are scheduled to expire.

The 112th Congress is considering legislative action to extend TAA. Congressional views of TAA reauthorization range from repeal to support for the higher ARRA program and funding levels. Supporters see TAA as vital to address the costs of freer trade; opponents view it as costly and ineffective. Passage of a TAA bill has become linked to consideration of implementing legislation for the proposed FTAs with Colombia, Panama, and South Korea. Congress faces two challenges: (1) reauthorization of TAA programs; and (2) determining the legislative procedures for the bills.

The Senate passed a TAA compromise bill (H.R. 2832) on September 22, 2011. It would extend the programs for workers, firms, and farmers through December 31, 2013. The communities program would be repealed. Many, but not all of the enhanced programs and funding levels contained in the ARRA would be reauthorized, including extending benefits to services workers and firms, and requiring expanded evaluation and reporting requirements on the programs. The provisions of the bill would apply retroactively to the expiration date of the ARRA enhancements.

Procedural issues over how to move the TAA and FTA implementing bills are still under discussion. H.R. 2832 passed in the Senate by a vote of 70-27. Consideration of H.R. 2832 in the House depends on finding an agreement with the Obama Administration over sequencing House consideration of the three FTA implementing bills, which have yet to be introduced. The Obama Administration has made clear that it will not transmit to Congress implementing legislation for the FTAs until the House votes on TAA, in part because of the possibility that it would not pass if the FTAs were voted on first. House Republican leadership insists that the House take up the TAA legislation after the FTA implementing bills have been sent over from the White House to ensure that Congress has a chance to consider them. At present, a procedural solution has not been finalized.


Date of Report: September 28, 2011
Number of Pages: 17
Order Number: R41922
Price: $29.95

Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports

Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.

Reauthorization of the Export-Import Bank: Issues and Policy Options for Congress

Shayerah Ilias
Analyst in International Trade and Finance

The Export-Import Bank (Ex-Im Bank, EXIM Bank, or the Bank), a self-sustaining agency, is the official U.S. export credit agency (ECA). It operates under a renewable charter, the Export-Import Bank Act of 1945, as amended. Ex-Im Bank’s most recent reauthorization (P.L. 109-438) was in 2006, when Congress extended the Bank’s authority through FY2011. Since its inception, Ex-Im Bank programs have supported more than $400 billion in U.S. exports.

The Bank’s charter expires on September 30, 2011. Potential issues for the 112th Congress as it examines reauthorization of Ex-Im Bank include the following: 

•          The economic rationale for the Bank, including the role of the federal government in export promotion and finance;

•          Specific Bank policies, such as those relating to content, shipping, economic and environmental impact analysis, and tied aid, including how these policies balance U.S. export and other policy interests;

•          Statutory requirements directing Ex-Im Bank to support certain types of exports, such as exports of small businesses and “green” technology, including the tension that such requirements can create between desiring to support specific economic sectors and allowing Ex-Im Bank flexibility to fulfill its mission to support U.S. exports and jobs; and 

•          International developments that may affect the Bank’s work, such as the growing role of emerging economies’ ECAs and the sufficiency of the Organization for Economic Cooperation and Development (OECD) Arrangement on Officially Supported Export Credits to “level the playing field” for U.S. exporters. 

Potential options for Congress include, but are not limited to, the following areas: 

•          Structure of the Bank. Congress could maintain Ex-Im Bank as an independent agency, reorganize or privatize the functions of the Bank, or terminate the Bank. 

•          Length of reauthorization. Congress could extend the Bank’s authority for a few years at a time (as in previous reauthorizations), for a longer period of time, or permanently reauthorize the Bank. 

•          Bank’s policies. Congress could maintain the status quo, or revise the Bank’s policies, such as those related to the requirements and limitations on Ex-Im Bank’s credit and insurance activities. 

•          International ECA context. Congress could seek to enhance international regulation of official export credit activity through the OECD or other mechanisms, or enhance Ex-Im Bank’s understanding of international export credit activity and trends. 

In the 112th Congress, the House and Senate have introduced bills, H.R. 2072 and S. 1547 respectively, to reauthorize Ex-Im Bank through FY2015. Among other provisions, both bills would raise the Bank’s aggregate loan, guarantee, and insurance authority; require the Bank to review its national content policy; and prohibit it from supporting transactions with entities unless they certify that they are not engaged in sanctionable activities with respect to Iran.


Date of Report: September 26, 2011
Number of Pages: 28
Order Number: R41829
Price: $29.95

Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports

Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.

Trade Adjustment Assistance (TAA) for Workers

Benjamin Collins
Analyst in Labor Policy

Trade Adjustment Assistance (TAA) for Workers provides support to qualifying workers who have been adversely affected by foreign trade. The two largest components of the TAA program for workers are (1) training assistance for workers who have lost their jobs directly due to increased imports or shifts in production out of the United States, and (2) income support for these workers who have exhausted their unemployment compensation. Certified workers who cannot obtain employment in their local commuting area may also be eligible for job search and relocation allowances. Some workers aged 50 or older are eligible to participate in Alternative Trade Adjustment Assistance (ATAA), a wage supplement program. Both TAA- and ATAAeligible workers can receive a Health Coverage Tax Credit (HCTC), which provides a refundable tax credit to offset a portion of qualified health insurance premiums.

This report provides background on the TAA and ATAA programs, including eligibility criteria, available benefits, and program participation data. It also discusses the temporary changes made to TAA by the Trade and Globalization Adjustment Assistance Act (TGAAA), which was enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). This report concludes by discussing recent congressional action on TAA, including the passage of a reauthorization bill by the Senate in September 2011.


Date of Report: September 27, 2011
Number of Pages: 22
Order Number: R42012
Price: $29.95

Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports

Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.