House reverses course, passes 'fast-track' provision crucial for Trans-Pacific Partnership

The U.S. House of Representatives on Thursday reversed course, approving "fast-track" legislation central to President Barack Obama's trade deal with Pacific Rim nations and sending it back to the Senate.

The close vote in the House, which last week rejected a related bill, kept alive Obama's goal of bolstering U.S. ties with Asia through a 12-nation Trans-Pacific Partnership (TPP), the economic element of a foreign policy shift aimed in part at countering the rising influence of China.

The House voted 218-208 to give Obama the fast-track authority to speed trade deals, including the TPP, to conclusion with reduced interference from Congress. The TPP would encompass 40 percent of the global economy and is close to completion.

But the outlook in the Senate for fast-track, seen by Japan as crucial to sealing the deal on TPP, was uncertain.

Senate aides said support among Democrats hinged on another trade issue, the Export-Import Bank, which may have to close at month's end.

The House's vote was its second in less than a week on fast-track, which would restrict lawmakers to a yes-or-no vote on trade deals. Democrats last week blocked it by voting down a companion measure to extend aid for workers hurt by trade.

That was a slap in the face to Obama, who urged his fellow Democrats to support fast-track and the worker assistance program, despite skepticism among Democrats close to labor unions about the impact of trade deals on U.S. jobs.

In an unusual alliance, the president and Republican House Speaker John Boehner turned last Friday's loss into a win by excising the worker aid program that was voted down by the House. That neutralized the ability of some Democrats' to use it to stymie fast-track, and capitalized on support from a bloc of 28 pro-trade Democrats.

Those House Democrats resisted intense pressure from unions, after House and Senate Republicans - who generally oppose the worker support program - promised to attach the worker assistance bill to a separate trade bill.

SENATE BACK IN FOCUS

The trade package still faces three more congressional votes, including two in the Senate, which took nearly two weeks last month to approve fast-track and worker aid.

"The House took the hot potato and threw it back to the Senate," said Lori Wallach of consumer group Public Citizen, which has been campaigning against fast-track.

Many Democrats fear trade deals such as the TPP will cost U.S. jobs as employers chase lower costs in signatory countries.

Republicans, who generally favor trade, do not have the muscle to pass fast-track on their own, especially in the Senate, where a super-majority is needed for major legislation.

Senate Majority Leader Mitch McConnell took steps to attach the worker aid program to a bill that renews trade benefits for African countries, setting up votes next week. He said there were enough votes to pass the "fast track" and aid bills separately.

Democratic Senator Ron Wyden told Reuters that pro-trade Democrats were determined to pass both fast-track and the worker aid program.

"We're having almost around-the-clock meetings to make sure the process is such that it actually will happen," he said.

Senator Heidi Heitkamp, one of 14 Democrats who backed fast-track in May, said she was waiting to see the path forward for the worker program and a customs bill - and a vote on the Export-Import Bank, known as Ex-Im.

Some Republicans want to close down Ex-Im, which provides support to U.S. exporters and buyers of U.S. goods. Its charter expires at the end of the month. Republicans promised a vote as part of a deal to pass the trade package on its first run through the Senate.

"I'd love to see this as an opportunity to do something to avoid the charter for the Ex-Im Bank to expire," Heitkamp said.

POSITIVE SIGN

The House vote is a positive sign for the TPP, which would harmonize standards on issues such as intellectual property and labor protections, and lower trade barriers among the dozen emerging and developed countries.

The deal, backed by the business community, would open new markets for major U.S. exporters such as Boeing , General Electric , Ford , IBM , Caterpillar , Merck and Cisco , policy analysts said.

Negotiators are under pressure to finish the pact, which is already more than five years in the making, to allow the TPP to clear Congress before the 2016 U.S. presidential election campaigns dominate the agenda.

Some TPP partner countries want fast track in place before making final offers on the trade deal, which economists estimate would boost the global economy by almost $300 billion a year.

(Reporting by Krista Hughes and Richard Cowan; Additional reporting by Alex Wilts, David Lawder, Jeff Mason and Susan Cornwell; Editing by Steve Orlofsky and Ken Wills)