US FTAs Reach Congressional Committees, Only to Face Political Limbo over Worker Aid

6 July 2011

After signs last week from the White House that the US Congress was ready to move on the long-awaited free trade agreements with Colombia, Panama, and South Korea, Republicans in both chambers have renewed their push against the reauthorization of extensions to a worker aid programme, even at the expense of slowing the ratification of these FTAs.

Republicans have long been in support of these trade deals. However, the prospect of reauthorizing an extension of the Trade Adjustment Assistance (TAA) programme, which provides assistance to workers displaced by foreign competition, has various Republicans balking, anxious about the increased spending such a measure would require in an era of spending cuts. Over the last several weeks, US President Barack Obama has been pushing for the worker aid bill to be passed concurrently with the FTA legislation (see Bridges Weekly, 1 June 2011).

On 30 June, Republicans on the Senate Finance Committee boycotted a hearing to review the trade pacts, objecting to the limited period of time that Democrats on the committee were allotting for the discussion of various proposed amendments to the legislation. One of these amendments would involve the attachment of the TAA programme to one of the trade deals.

The same day, all eleven Republicans on the committee jointly sent a letter to Obama on the subject, stating that, "while we may share different views regarding our support for these agreements and on trade adjustment assistance, we are united in our opposition to inclusion of expanded Trade Adjustment Assistance in this implementing bill submitted to Congress under Trade Promotion Authority [i.e. the fast track process for approving FTAs]."

The boycott came as a bit of a surprise, given that White House Press Secretary, Jay Carney had issued a statement just two days prior suggesting that a compromise on the matter had been reached: "as a result of extensive negotiations, we now have an agreement on the underlying terms for a meaningful renewal of a strengthened TAA."

The White House deal would reauthorize the extension of TAA between old funding levels and levels set by the 2009 version of the bill, though details regarding how scaled back the programme would be from its 2009 levels have yet to be released.

Meanwhile, the US House Committee on Ways and Means will begin considering the US' free trade pacts with Colombia, Panama, and South Korea tomorrow, 7 July, without the Trade Adjustment Assistance (TAA) package that Obama has been pushing for.

Scott Lincicome, a Washington-based international trade lawyer, commented to Bridges that, "at this point, both sides [Democrats and Republicans] are firmly entrenched. It's very difficult to tell who is posturing and who isn't." Given both sides' firm stances on the TAA subject, "we're heading for a big showdown."

Lincicome added that the ongoing negotiations on raising the US debt ceiling are "the wildcard" in this process, adding another layer to the worker aid bill discussion as Congress pushes to cut government spending.

The trade pacts are currently set to go through a fast-track process, in which the Senate Finance and House Ways and Means committees both do a "mock mark-up" of the trade pact legislation where committee members propose amendments to the bills. Following these "mock mark-ups," the White House will decide which, if any, of these amendments to keep, and submit a final version of the trade pacts for an up-or-down vote in both chambers; at that final stage, no more amendments can be added.

In a statement, US Trade Representative Ron Kirk decried the Republican boycott. "Today the agreements were there - and Senate Finance Committee Republicans were not. Americans need their leaders at work - in their seats, eyes on the ball, pushing every day to enact policies that create jobs here at home, advance this country's economic recovery, and help our working families."

He was also hesitant to praise the Ways and Means Committee's push forward on the matter, "welcom[ing] the effort to move the three pending trade agreements forward," while noting that the documents released by the committee "do not provide a path forward for the bipartisan agreement to renew Trade Adjustment Assistance, and therefore are at odds with the Administration's stated intentions."

Lori Wallach, Director of the Global Trade Watch programme at Washington-based advocacy group Public Citizen, criticised the potential labour losses that might come from the trade pacts, in a statement issued on 28 June. Wallach found that "pushing a deal on TAA is being used as political cover to move more NAFTA-style trade agreements that will kill more American jobs in the first place, especially given our high unemployment rates."

Possible impacts from EU-South Korea deal

The continued setbacks to the passage of these FTAs have prompted fears that the US will fall behind, as Colombia, Korea, and Panama look to set up pacts with other trade partners. On 1 July, the EU-South Korea free trade agreement went into effect, which could put US automobiles, pharmaceuticals, and scientific equipment at a disadvantage against the US' European competitors.

The entry into force of the EU-South Korea deal was part of the reason for trying to push the US FTAs for passage before the August congressional recess, Lincicome noted, as US exporters and consumers will soon feel the economic ramifications of Brussels having a preferential agreement with Seoul. For more on the EU-South Korea deal, please see our article later in this issue: "EU, South Korea Free Trade Pact Enters into Force.

All three trade agreements were signed during the administration of former US President George W. Bush. However, they need to be ratified before they can come into force. Earlier this year - prior to the TAA controversy - the US resolved its market access issues on automobiles and beef for the South Korea pact, set up a labour "Action Plan" for Colombia, and established a tax information exchange agreement for Panama, making Congressional ratification by some point this year appear likely.

The US-Korea pact is the largest of the three that Congress is considering. The US International Trade Commission (ITC), in a study on the US-Korea agreement, estimated that the Korea trade deal would boost US gross domestic product by between US$10.1 to 11.9 billion, with merchandise exports from the US to Korea increasing by between US$9.7 to 10.9 billion.

Overall, the White House claims that the combined impact of the trade deals would raise US exports by approximately US$13 billion.

Colombian labour rights remain a concern

While the battle over TAA extension has dominated headlines, concerns over the protection of labour rights in Colombia continue to persist in discussions over these trade deals. While the two countries have an action plan for improving labour rights in the South American nation, Democrats want to ensure that the action plan language is included in the trade pact legislation.

On 30 June, John Larson, a Democrat on the House Ways and Means Committee, expressed his "[extreme disappointment] that Congressional Republicans have prevented any meaningful reference to the Action Plan Related to Labor Rights in the Colombia Free Trade Agreement implementing legislation that we're being asked to consider."

Larson was joined by various other Democrats in insisting that the action plan language be included in the bill, promising not to vote for a deal that excludes these terms.
On 15 June, Kirk announced that Colombia has met the necessary milestones under the action plan, which aims to improve labour rights protection in Colombia, while preventing violence against union leaders. The plan, which was negotiated between the US and Colombian government, was announced in April of this year.

ICTSD reporting; "US trade official ‘dumbfounded' by Republican move," ASSOCIATED PRESS, 1 July 2011; "House to Debate Trade Accords Minus Worker Aid," BLOOMBERG, 5 July 2011; "Republican Trade Boycott Derails Swift Vote," BLOOMBERG, 1 July 2011; "Congress moves forward on free trade deals," CNN, 29 June 2011; "Opposition to Colombian trade deal grows among House Democrats," THE HILL, 30 June 2011; "Trade agreement meeting blocked by GOP," POLITICO, 30 June 2011; "House Ways and Means Committee to take up 3 trade agreements but not worker aid bill," WASHINGTON POST, 5 July 2011; "Senate Finance Committee postpones action on free-trade deals after GOP boycott," WASHINGTON POST, 1 July 2011.

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