Why fast track and the TPP and TTIP could open up US LNG exports

Susan L. Sakmar's picture
Susan L. Sakmar, Independent consultant, author and adjunct law professor, University of Houston Law Center
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On May 22, 2015, after weeks of intense debate and a much-publicized feud between President Obama and US Senator Elizabeth Warren, the US Senate passed the Trade Promotion Authority (TPA) bill, more commonly referred to as “fast track.” It’s called fast track because it’s designed to speed up the passage of any free trade agreement (FTA) negotiated by the President by giving Congress only an “up or down” vote on the deal after it has already been negotiated.

The fast track debate is significant because the Obama administration has been negotiating two sweeping US-FTA’s, the Trans-Pacific Partnership (TPP) with 11 Asian nations (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) and the Transatlantic Trade and Investment Partnership (TTIP) with the European Union (EU). Neither agreement is likely to conclude unless President Obama secures fast track authority.

Thus far, the debate has been mainly focused on issues related to the environment, loss of jobs, and the Investor-State Dispute Settlement provisions. However, the progress of fast track and the TPP and TTIP is worth watching in the global gas world since these agreements could dramatically open up US LNG exports to a much wider range of countries. How so?

Under current US law, if a company is seeking to export US LNG to a country with which the US has an FTA, that export is deemed to be in the “public’s interest” and the US Department of Energy (DOE) must approve the application without delay – generally a matter of a few weeks. Applications to so called non-FTA countries require more scrutiny by DOE and these applications have taken much longer to be processed.

If fast track and the proposed trade agreements ultimately pass, the DOE would have to expeditiously approve the pending LNG export applications seeking to export to the new FTA countries. This could dramatically open up US LNG exports to Asia and Europe and would no doubt make the US one of the largest LNG exporters in the world.

The fast track bill now goes to the US House of Representatives where it is expected to face an uphill battle with Democrats, environmental NGOs, and labor groups. While the ultimate passage of fast track, TTP and TTIP is far from certain, given the potential impact on US LNG exports, it is a development worth watching in the coming weeks. [Article ends].

LNG exports will bring numerous benefits to the U.S domestic economy. President Barack Obama supports Gastech Singapore and in a recent message said "The business relationships developed at this trade show will help increase economic growth and create jobs throughout the United States".

At Gastech Singapore we will analyse how US LNG exports will affect the global energy market. Baker Botts' Jason Bennett will also discuss the challenges of hub-linked pricing for U.S LNG. Click here to view the conference programme.

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