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Amid rancor, a chance for U.S. action on trade bill

By Doug Palmer

WASHINGTON (Reuters) - Major trade legislation appears increasingly likely to clear Congress this year despite an intensely partisan atmosphere made worse by scandals plaguing President Barack Obama's administration.

Business groups are preparing to push for the bill, which would give the White House enhanced ability to negotiate trade deals and set out U.S. negotiating goals on issues ranging from cross-border electronic data flows to global supply chains and potentially even foreign currency practices.

"I really think Congress is about ready to do something on trade," said Scott Miller, a trade policy specialist at the Center for Strategic and International Studies, referring to a bill known as trade promotion authority, or TPA.

Bill Reinsch, president of the National Foreign Trade Council, which represents major exporters like Boeing and Caterpillar, said he was optimistic that Congress could pass a bipartisan TPA bill by the end of the year.

"They all know they have to do it. You can't be a modern country in today's trading system and not have authority to negotiate these things," Reinsch said.

Bipartisan legislation could emerge soon from talks between the top Democrats and Republicans on the Senate Finance Committee and the House of Representatives Ways and Means Committee, which have jurisdiction over trade laws.

The action is driven by White House efforts to strike major trade deals with 11 other countries in the Asia-Pacific region and the 27 nations of the European Union.

The legislation would allow Obama to submit trade agreements to Congress for straight up-or-down votes without amendments, giving other countries the assurance that any deal they reach with the United States will not be changed by the House or Senate.

"(Countries) don't want to make the hard and final decisions, where they put their best offers on the line, if they think they're going to be undermined by an amendment," said former Representative Jim Kolbe, a Republican.

A TPA bill would also give lawmakers a chance to shape U.S. trade policy by setting negotiating objectives for trade deals.

Those instructions are expected to include how to address issues such as state-owned enterprises, digital data flows, supply chains, investment, labor, the environment and intellectual property in trade agreements.

NEGOTIATING POINTS

Senate Finance Committee Chairman Max Baucus, a Montana Democrat, hopes to unveil a bipartisan bill by June.

His team is in talks with staff for Senator Orrin Hatch, the top Republican on the Finance Committee, and Representatives Dave Camp and Sander Levin, the Republican chairman and top Democrat, respectively, on the House Ways and Means Committee.

A bill backed by all four lawmakers would have a good chance of becoming law, although opposition from labor groups that see trade protection authority as a license to move jobs overseas could make the job tough. The four also have differences on trade that could snarl their efforts.

Levin, a Michigan Democrat closely aligned with Detroit-based auto producers, is pushing for a broad bill to address the overall issue of U.S. competitiveness and wants future trade deals to include rules against currency manipulation, a controversial area not included in prior trade deals.

Hatch, a Utah Republican, has been critical of a retraining program for workers who have lost their jobs because of foreign competition. Democrats insist the provision must be renewed.

With the White House looking to clinch deals on two trade agreements covering about 60 percent of world economic output, U.S. lawmakers have plenty of incentive to craft the legislation and lay out their negotiating priorities, even if Obama is reluctant to lead the fight for the bill.

Those deals include the proposed Trans-Pacific Partnership agreement, which the White House hopes to reach by the end of the year. Many trade experts doubt that the deal can be closed unless Congress passes the TPA bill.

The Obama administration also plans to begin free trade negotiations in July with European Union, providing another motivation for Congress to act.

But one question is how forcefully Obama will push for the trade bill, given Democratic divisions on the issue.

During the 2002 battle over trade promotion authority, many House Democrats did not want to give Republican President George W. Bush the authority and voted 183 to 25 against the bill, which barely passed by a 215 to 212 margin.

Now that Obama is in the White House, the politics appear to have changed, with Democrats less inclined to fight a president from their own party and most Republicans eager to pass the bill even if they oppose Obama on other issues.

While Republicans are attacking Obama on the Internal Revenue Service's scrutiny of conservative groups seeking tax-exempt status and the administration's explanation of last year's Benghazi attack, they are likely to be his allies on TPA, which many see as a tool all presidents should have.

Representative Devin Nunes, Republican chairman of a House trade subcommittee, called on the White House to intensify its efforts to pass TPA, which expired in 2007.

"If you had told me 10 years ago that one of the few things that could get done in Washington is trade policy, my head would have exploded. But it seems to be the case that trade is actually something we can get done," said Edward Gerwin, a senior fellow at Third Way, a Democratic policy think tank.

TPA legislation, which typically is extended for five years at time, could also cover additional pacts, such as an international services trade agreement being negotiated in Geneva and new negotiations not yet contemplated.

(Reporting by Doug Palmer; editing by Jackie Frank)

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