Update on Pending US FTAs

1 November 2007

The US Senate approved the US-Peru free trade agreement on 4 December. The fate of three other pending FTAs, however, remains uncertain.

The Peru FTA, already endorsed by the House of Representatives on 8 November, is the first free trade deal approved by Congress since Democrats took control of both chambers a year ago. In May 2007, the administration and Congress agreed on a new blueprint for US FTAs with developing countries (Bridges Year 11 No.4 page 13). The revised template contains more stringent environmental and labour clauses, as well as less exacting requirements for intellectual property rights regarding pharmaceuticals. Peru’s agreement also commits the government to take a large number of measures aimed at combating illegal logging and illegal trade in wildlife (Bridges Year 11 No.5 page 14).

The Bush administration hopes that the passage of the Peru deal will create momentum for approval of three other agreements – with Colombia, Panama and South Korea – in the pipeline. Consideration of the Korea agreement appears stuck for the foreseeable future owing to Democrats’ objections to Korean restrictions on US beef imports on account of mad cow disease, as well as their demands for improved US access to the Korean automobile market.

Colombia Defends Labour Activist Track Record

In the case of Colombia, congressional concerns centre largely on the level of violence against trade unionists. However, Colombian Vice President Francisco Santos argued forcefully in early November that the debate had less to do with his country’s factual record than domestic US politics. He said labour union assassinations were down to 20 in 2007, compared to 60 last year and 205 in 2001. Mr Santos also pointed out that 27 anti-union assassins had been convicted so far this year, while only one conviction was obtained in 2001.

Echoing the views of US Senator Charles Grassley (Bridges Year 11 No.1 page 18), Vice President Santos warned that a rejection of the US-Colombia agreement would be a ‘huge mistake’ that would hurt US geopolitical interests in the long term.

Displaced Worker Benefits Could Affect FTA Outcome

The fate of all three pending FTAs is tied with the trade adjustment assistance (TAA) bill approved by the House of Representatives on 31 October despite a presidential veto threat.

The administration has made it clear that the threat will be carried out if the Senate, which is yet to consider the legislation, does not drop some of its key provisions. These include, inter alia, an extended period of income support to cover worker retraining following job losses caused by trade, expanded eligibility criteria and the extension of trade adjustment assistance to service sector and public agency workers.

Several Democratic leaders, including House Speaker Nancy Pelosi, have linked approval of a strengthened TAA bill to support for new bilateral trade agreements. The Senate is unlikely to consider the bill before next year, when some say a quid pro quo could emerge between Democratic support for the Colombia agreement and concessions by the administration on improved protection for workers displaced by trade.

Andean Preferences

In related news, US Trade Representative Susan Schwab has called for a further extension of the Andean Trade Promotion and Drug Eradication Act (ATPDEA), currently slated to expire on 28 February 2008. Four Andean countries – Bolivia, Colombia, Ecuador and Peru – are entitled to unilateral trade preferences under the legislation. ATPDEA was extended by eight months last June although a number of congressional Republicans, led by Senator Grassley, argued at the time that it was contrary to US interests to extend benefits to leftleaning Bolivia and Ecuador (Bridges Year 11 No. 5 page 14).

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