13 March 2008

Colombia Trade Deal Seen as Pivotal to U.S. Agenda

Next president expected to take fresh look at trade policy

President Bush discusses trade policy in Washington March 12. (© AP Images)

By Andrzej Zwaniecki
Staff Writer

Washington -- Chances for congressional approval of a high-stakes U.S. bilateral trade agreement will improve once lawmakers focus on its strong strategic and commercial merits, according to an independent expert.

Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, said he expects the Bush administration soon will submit the U.S.- Colombia free-trade agreement to Congress for approval.

President Bush has pressed lawmakers to move forward on the deal when they come back from a congressional recess March 30.

“Time is running out, and we must not allow delay to turn into inaction,” Bush said March 12.

Under the Trade Promotion Authority, Congress is limited to an up-or-down vote within specific time limits on free-trade agreements negotiated by the administration.

Administration officials said that, so far, they have not been able to agree with Democratic congressional leaders on how to get reluctant lawmakers to consider the Colombia agreement.

Those leaders have not said what kind of commitments or assurances they want from either Colombia or the Bush administration to clear the way for action on the pact, according to Hufbauer.

Senator Max Baucus, chairman of the Senate Finance Committee, which has jurisdiction over trade issues, said earlier in March that he cannot consider moving the agreement with Colombia or two other deals -- with Panama and South Korea -- until a strengthened and expanded program is in place for U.S. workers negatively affected by foreign competition.

Winning congressional passage of the three deals is at the center of the administration’s trade agenda for 2008 because each concerns U.S. strategic interests.

Baucus said none of the three agreements has unanimous support in Congress, but each can pass if “fairly handled and properly addressed.”

In the House of Representatives, however, some Democratic lawmakers want to delay the vote on the Colombia pact until that country does more to reduce violence against labor leaders.

But officials say Colombia, under President Alvaro Uribe, has been transformed and has made remarkable progress in curtailing violence and fighting drug trafficking.

A congressional debate on the Colombia agreement, Hufbauer said, would be useful because it would crystallize the question, “How [do] we as a country think about trade policy?”

Hufbauer said once many still undecided lawmakers see the whole picture -- the strategic and commercial interests involved -- he expects they will vote for the deal.

Commercially, the United States has more to gain than does Colombia because the agreement opens Colombian markets to U.S. exports but gives Colombian exporters only assurances on U.S. market access they already enjoy under a trade-preference program.

Politically, the pact’s approval would send the message that the United States remains committed to the region and supports its democratic and free-market reforms, according to Hufbauer.

Outright rejection of the deal or even an indefinite delay, on the other hand, would be viewed negatively in the hemisphere.

“It would be trumpeted [loudly] by U.S. adversaries in the region,” he said.

Bush said such a rejection would undermine U.S. influence and play into the hands of demagogues and terrorists in the region.

Hufbauer said that, beyond the Colombia pact, Congress is likely to handle only noncontentious renewals of trade preference programs in 2008.  Most experts agree the trade pacts with South Korea and Panama will be put off until 2009 and then most likely ratified.

U.S. TRADE AGENDA 2009

Hufbauer said he expects the next president will rethink U.S. trade policy.

Former U.S. Trade Representative Mickey Kantor indicated that the next president is likely to take a fresh look at trade in the context of economic competitiveness.

Although research shows that the U.S. economy has benefited greatly from international trade, many U.S. workers remain skeptical about the benefits of trade and tend to blame it for what they see as job insecurity and stagnant wages.

Democratic presidential candidates Senator Hillary Clinton and Senator Barack Obama have expressed doubts about the positive effects of trade agreements on the U.S. economy. (See "NAFTA Challenged by Presidential Candidates.")

Baucus said the U.S. trade policy must shift away from the “singular focus on trade agreements” toward a more comprehensive approach, one that aims to ensure certainty and fairness for American workers.

Senator John McCain, the presumed Republican nominee, has voiced strong support for free trade. But if elected, he will have to work with Congress, where Democrats are expected to remain the majority.

Hufbauer believes the next administration may try to pursue free-trade deals with some of its biggest trading partners, such as the European Union and Japan, which do not have major social problems. Or it may decide to negotiate agreements that cover only services, which make up much of the U.S. economy.

A transcript of President Bush’s remarks and a related fact sheet are available on the White House Web site.