The Last Push Is On for Three Free-Trade Agreements

If all goes well, the pending free-trade agreements with South Korea, Panama and Colombia could be a done deal by Halloween.

A green light was given for the trade accords after a major battle between President Obama and Congress was resolved.

On Sept. 22, the Senate passed the Trade Adjustment Assistance amendment, which will fund training programs and give extended unemployment benefits to workers who lose their jobs due to free-trade pacts.

Obama repeatedly said he would not introduce the three lingering free-trade agreements for congressional approval until money was found for the job-training program, which expired in February. The Senate passed the job-training amendment after it was attached to a bill to renew the General System of Preferences program. The bill and its amendment passed on a 70–27 bipartisan vote. The GSP is a program that gives 130 developing countries the ability to ship 4,800 products, mostly raw materials and components, to the United States without paying duties.

Now the House of Representatives must approve the TAA amendment before the free-trade agreements are introduced for voting. Everyone is wondering when that will happen.

“The question still is a little bit about timing,” said Nate Herman, vice president of international trade for the American Apparel & Footwear Association in Arlington, Va. “We could have an approval in October before Halloween, but for sure it will get done by Thanksgiving.”

The question is when the Obama administration will choose to send the free-trade accords for approval. Will he wait for the House to approve the job-training program and then send the free-trade agreements for debate? Or will everything hit the House floor at the same time?

“Hopefully, the timing of that will be resolved next week,” Herman said. The House and the Senate are on recess from Sept. 26 to Oct. 2 for Rosh Hashanah. The Senate takes another break from Oct. 7 to Oct. 10 for Yom Kippur and Columbus Day, while the House is out between Oct. 17 and Oct. 20.

Despite these various holidays, Stephanie Lester, vice president of international trade for the Retail Industry Leaders Association in Washington, D.C., expects the free-trade pacts to get swift passage. “My sense is it is going to happen in the next few weeks,” Lester said. “I expect the House to act very quickly to pass the free-trade agreements and then send them to Obama for a signature.”

House Speaker John Boehner has said he will take up the TAA worker-training bill at the same time as the three trade treaties. Once the free-trade accords are introduced, Congress has 90 working days to approve the agreements on a yes-or-no vote. No amendments or adjustments can be made.

Fighting over money

The three free-trade agreements have been in limbo for years. They were negotiated and signed during the administration of George W. Bush, who was a free-trade advocate. Under his watch, he championed a host of free-trade accords with Central America, Jordan, Morocco, Chile, Singapore and Australia.

Obama came into office pushing for free trade to help boost the faltering economy and employ more people. But he was adamant about saving TAA, a Kennedy-era program from 1962. President Kennedy said that when higher tariffs are avoided, “those injured by that competition should not be required to bear the full brunt of the impact. Rather, the burden of economic adjustment should be borne in part by the federal government.”

The $1 billion-a-year program expired in February, and cost-conscious Republicans had been reluctant to renew it. But a push by the Obama administration and compromises to reduce the program’s cost led to the Senate vote.

Those compromises include reducing unemployment benefits from 156 weeks to 117 weeks, with an additional 13 weeks available under certain circumstances.

The new package approved by the Senate will cost about $900 million over three years instead of $1 billion a year.

Free-trade benefits

The free-trade accord with South Korea is one of the United States’ most commercially significant trade pacts in the last 16 years. South Korea is the world’s 12th-largest economy, and it is one of the economic power engines in Asia with its huge automobile industries and shipbuilding. The country is also a major producer of textiles, electronics and steel. The U.S. International Trade Commission estimates that U.S. exports to South Korea will grow by $10 billion a year after tariffs on 95 percent of goods are eliminated.

Colombia has the third-largest economy in Central and South America. A free-trade pact with that country will expand U.S. exports by $1.1 billion a year.

Exports to Panama would grow by millions of dollars with beef, pork and auto sales gaining a clear advantage.