Latin America Advisor

A Daily Publication of The Dialogue

Are Long-Stalled US Free-Trade Pacts Headed for Passage?

Q: U.S. Trade Representative Ron Kirk said Sept. 12 that negotiations on passing free-trade agreements with Colombia, Panama and South Korea are currently underway in the U.S. Senate, where the Obama administration last week won approval of the revamped Trade Adjustment Assistance job retraining act. Kirk has expressed optimism that the trade pacts would be passed by the time President Barack Obama hosts leaders of the Asia-Pacific Economic Cooperation in November. Will the three accords receive congressional approval by then? What is standing in the way of the FTAs' approval? What would continued delay mean for U.S. economic and political relations with Colombia and Panama?

A: Peter Hakim, member of the Advisor board and president emeritus of the Inter-American Dialogue: "The three accords could be approved by November. Whether they are or not, they show the difficulties of framing a coherent U.S. policy toward Latin America or anywhere else. The problem did not arise yesterday. After a heroic effort to ratify NAFTA in 1993, Bill Clinton seemed to lose interest in trade agreements and never pushed very hard for congressional renewal of trade promotion authority (TPA), then called "fast track." George W. Bush revived TPA in December 2001 and used it to win approval of pacts with Chile, five Central American countries, the Dominican Republic and Peru. The United States negotiated agreements with Colombia and Panama, but the Democrats, who regained the House majority in 2007, refused to consider them. Four years later, the Obama White House says it is ready to send them to Congress, but demands the renewal of Trade Adjustment Assistance (TAA), which aids workers who lose jobs to foreign trade. This demand was expected and is endorsed by the U.S. Chamber of Commerce. With today's partisan polarization and mistrust, however, the administration has insisted the free-trade deals and TAA be voted on together, or TAA be voted on first. Republicans initially balked, but in a critical step forward, the Senate passed TAA and made clear it would approve the trade pacts. So, we now wait to see whether Obama will send the pacts to the House, which gets first vote on them. Without an airtight guarantee that the House will accept the Senate's version of TAA, the administration could well delay this further. It could go on forever, or be resolved tomorrow. Latin Americans, however, no longer care as much as they once did. They are pursuing other opportunities."

A: Celeste Drake, international trade policy specialist at the AFL-CIO: "Working Americans-liberal, conservative and independent-are rightfully skeptical of current trade policy. This skepticism does not come from a failure to understand basic economics. Every day, ordinary Americans live the results of the last 20 years of corporate-driven 'free' trade policy. They know 'more of the same' will continue to accelerate offshoring of jobs and inequality at home and abroad. But trade policy needs to change if we are to create jobs, strengthen the global middle class and meet the needs of both business and workers. While some argue that the current delay in ratification means the United States is turning its back on friends in Latin America, the opposite is true. Labor, land reform, Afro-Colombian and indigenous rights activists in Colombia oppose the trade agreement-knowing that the bulk of the benefits will go to global corporations and that 'trickle down' doesn't work. This is especially true in a country where forming a union or bargaining for better pay and benefits can literally require risking one's life. The best thing the United States could do for the people of Colombia and Panama would be to renegotiate the agreements to ensure that the benefits of trade can be shared widely-not concentrated in the hands of a few. The Republican Party has delayed action on the pending trade deals, simply to block approval of TAA-a program that has enjoyed support of both parties and business and labor for decades. We have real issues at stake in the trade debate-but assistance and training for displaced workers should not be one of them."

A: Carlos Mateo Paz-Soldan, member of the Advisor board and partner at DTB Associates LLP: "Prospects for passage of all three free-trade agreements (FTAs) are the best they have been in years. Last week, after months of stalled progress, the U.S. Senate took up the House of Representatives' Generalized System of Preferences (GSP) bill, attached Trade Adjustment Assistance (TAA) as an amendment and succeeded in keeping the combined GSP-TAA bill 'clean' (free of divisive amendments) that would have killed the bill's prospects and the subsequent introduction of the FTAs' implementing bills. To date, this follows the roadmap to moving the broader trade agenda that was agreed to by the administration and both congressional chambers. Congressional approval of all three FTAs before the APEC summit in November may be ambitious, but is within reach, if Congress wills it. Although, Washington's hyperpartisan atmosphere and the 'trust deficit' among both parties may yet claim another victim, substantively, there are no major obstacles in the way and a broad coalition of business and agricultural interests remains engaged and optimistic. With the Trans-Pacific Partnership (TPP) negotiations moving forward, and both Asia and Latin America booming in an otherwise bleak global economic picture, passage of all three FTAs before the end of the year would send a strong signal to the broader and increasingly interconnected Pacific Basin region, about U.S. engagement with the region and its ability to deliver on its commitments."


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