Congress poised to approve Bush-era trade deals

Reuters News
Posted: Oct 12, 2011 12:59 PM
Congress poised to approve Bush-era trade deals

By Doug Palmer

WASHINGTON (Reuters) - The U.S. Congress was poised on Wednesday to approve long-delayed trade pacts with South Korea, Colombia and Panama that are expected to create U.S. jobs by boosting exports by about $13 billion a year.

The House of Representatives and Senate are expected to back the deals in a series of votes later on Wednesday.

Supporters hope the action marks an end to a long U.S. drought on deals to open trade. Each pact had been stuck at the White House for at least four years.

"We will send a strong signal to the world that America is back on the trade field," said Representative Kevin Brady, a Texas Republican, at a rally with business groups.

U.S. farm and manufactured goods exports are expected to rise under all three agreements as tariffs are phased out. The agreements also open new markets for U.S. companies in service sectors such as banking, insurance and express delivery.

Critics say the pacts will harm U.S. employment, but the Obama administration and other proponents think the pacts will support tens of thousands jobs.

The biggest gains are expected from the pact with South Korea, a longtime ally and a $1 trillion economy in a region increasingly dominated by China. The agreement will help anchor the United States in the fast-growing Asia Pacific region so it can share in its growth, analysts say.

The House and Senate action comes just a day before South Korean President Lee Myung-bak speaks to a joint session of the U.S. Congress, a visit that has given lawmakers an added impetus to move the deals.

President Barack Obama sent the three agreements to Capital Hill just nine days ago, four to five years after they were negotiated. The deals had foundered primarily on Democratic Party concerns over labor practices abroad and the potential for increased competition to cost U.S. jobs.


While U.S. farmers and big agricultural exporters are excited about new sales opportunities for beef, pork, poultry, corn, wheat, soybeans and other food products in the three markets, they lament the long delay as a lost opportunity as other countries nailed down bilateral deals.

"We can't underestimate how much U.S. agriculture has lost out," while the current pacts were stalled, said Devry Boughner, director of international business relations for the food, agriculture and risk management giant Cargill.

"Corn, soybeans and wheat exports from the U.S. have gone from a 78 percent market share in the Colombian market to 28 percent, owing in part to the fact that Canada got to Colombia first," Boughner said.

The White House is negotiating a regional trade agreement known as the Transpacific Partnership pact with eight other countries in the Asia-Pacific region, but any congressional action on that deal might be delayed until after the 2012 election even if it is concluded next year.

The Obama administration also has been unable to conclude the Doha round of world trade talks, which will soon enter their 11th year, and has begun no new bilateral trade negotiations during its nearly three years in office.


The deal between the United States and South Korea, the world's largest and 14th largest economies, respectively, would be the biggest U.S. trade deal since the North American Free Trade Agreement, which went into force in January 1994.

In a study in 2007, the U.S. International Trade Commission estimated the pact would lift U.S. imports from Korea by $6.4 billion to $6.9 billion a year, with gains in areas such as clothing, leather goods, footwear, electronics and cars.

A study by the labor-backed Economic Policy Institute estimates the Korea deal will cost about 159,000 jobs over seven years; the White House says that it will help create or maintain more than 70,000 and congressional Republicans estimate as many as 250,000 new jobs.

All three agreements were negotiated and signed during the administration of former President George W. Bush, who was unable to win their approval from the Democratic-controlled Congress before leaving office in 2009.

The oldest and most controversial pact, the one with Colombia, was signed in November 2006 and the other two accords in mid-2007. Since then, other countries have negotiated scores of new trade agreements around the world.

Two rival deals between the European Union and South Korea and between Canada and Colombia were negotiated, signed and implemented during the period when the U.S. trade pacts were stuck at the White House.

A broad coalition of farm, manufactured and services industry groups have pushed ceaselessly for the agreements, and found a more favorable environment after the 2010 elections when Republican regained control of the House.

Ted Austell, a vice president at Boeing, said the aircraft manufacturer expects to benefit both directly and indirectly from the free trade agreements.

"When commerce increases, downstream that turns into aircraft orders. More movement of people and certainly of goods opens up more opportunity to sell aircraft," Austell said.

Support for the Colombia pact has been the weakest of the three because many Democrats believe Colombia needs to do more to stop killings of trade unionists and prosecute those responsible.

The White House has pledged the agreement with Colombia will not go into force until Bogota "has successfully implemented key elements" of an action plan to address the violence.

(Reporting by Doug Palmer; Editing by Jackie Frank)