AS/COA Online - Washington Steps up Talk on Passing Trade Pacts

Could trade deals with Colombia and Panama see action from the U.S. Congress along with the South Korea pact? Treasury Secretary Timothy Geithner gave one of the strongest indications yet that the Obama administration wants all three free-trade agreements (FTAs) passed this year during yesterday’s Senate Finance Committee hearing. “They're overwhelmingly in our favor economically and if we don't do it, what it means is that business just goes to other countries,” said Geithner. “So we need to find a way to pass them.” For more than three years, the deals have been gathering dust while awaiting congressional approval. But President Barack Obama’s job creation push coupled with pressure from key Republican legislators to pass the FTAs could help usher the deals through U.S. Congress within the coming months.

Lest free-trade critics complain about the treasury secretary’s call for the FTAs’ approval, Geithner said the pacts should pass “alongside trade adjustment assistance.” In fact, Congress let the Trade Adjustment Agreement (TAA)—a program that provides benefits to workers who lost work due to international trade—lapse this week with an eye to pushing the trade deals forward.

But legislators also chose not to renew the Andean Trade Promotion and Drug Eradication Act (ATPDEA). That program seeks to allow Colombia, Ecuador, and Peru (Washington suspended Bolivian participation in 2009) to export thousands of duty-free products to the United States with the goal of helping them reduce drug production. On February 11, House Ways & Means Committee Chairman David Camp (R-MI) urged for passage of Colombia and Panama along with South Korea FTAs, saying: “Without this commitment from the administration, other trade measures—such as TAA and [ATPDEA], which we sought to extend this week—are now in limbo, and American workers will suffer as a result."

The Obama administration faces Senate pressure on the Colombia and Panama accords as well. Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) submitted a February 14 letter to U.S. Trade Representative Ron Kirk asking that, when he testifies before the Committee on March 9, he submit a timeline for passing the two deals. Baucus travels to Colombia during the week of February 20, when Congress will be in recess.

Obama has taken steps to move forward on the South Korea pact, the biggest of the three, and gained concessions in December to get buy-in from U.S. autoworkers. The Colombia deal has been held up by concerns over violence against trade union leaders, even as those crimes decrease and prosecutions step up, while U.S. legislators have sought reforms from Panama to ensure transparency to counteract its reputation as a tax haven. The U.S. International Trade Commission estimates that tariff reductions stemming from the three deals would increase annual exports by as much as $10.9 billion to South Korea, by $1.1 billion to Colombia and slightly less than to Panama, reports Reuters.  A new Americas Quarterly Charticle tallies state-by-state exports to Colombia and Panama, focusing on those states whose congressmen have largely rejected free trade deals.

Sometimes the way the United States behaves in Latin America seems calculated to oblige its friends to seek other allies,” notes The Economist in an article exploring the stalled trade deals. But Colombia, Panama, and South Korea don’t appear to be waiting for the tide to turn. The European Parliament approved a trade pact with South Korea on February 17. Colombia’s president has talked openly of turning to China for trade and investment dollars. “Evidence to the Senate Foreign Relations Committee forecasts that China, already Colombia’s number two trade partner, will become the biggest in the next decade without an agreement,” reports The Economist article. “That may concentrate minds in Washington.”

Learn more:

  • Access the new issue of Americas Quarterly, covering free trade and market access.
  • Watch the February 16 Senate Finance Committee hearing covering the White House budget for Fiscal Year 2012, including testimony from Secretary Geithner.
  • Office of U.S. Trade Representative overviews of the Colombia, Panama, and South Korea.
  • U.S. Department of Labor’s TAA overview page.