Analysis: U.S. "time out" on trade deals nears end

By Doug Palmer

WASHINGTON (Reuters) – A U.S. “time out” on new trade agreements rooted in the Democratic Party’s battle for the White House in 2008 appears to be nearly over as officials watch the European Union and others strike deals of their own.

Within months, free trade deals with South Korea, Panama and Colombia could be approved by Congress, ending years of frustrating delays for U.S. business and sending a signal of U.S. seriousness in other trade talks.

The turnaround bolsters the Obama administration’s moves to improve ties with business after a bumpy first two years, and its goal of doubling exports by the end of 2014 to propel U.S. economic growth.

Paving the way would be a deal to address longstanding U.S. concerns over labor rights and anti-union violence in Colombia, which many believe is now within reach.

“When I’m president we’ll have a time out to take stock of where we are on trade,” then-Senator Hillary Clinton told the United Auto Workers in November 2007 in the midst of the Democratic Party’s fierce presidential nomination contest.

A few months later, Clinton and then-Senator Barack Obama threatened to “opt out” of the North American Free Trade Agreement as they vied for votes in union-heavy Ohio.

Labor groups, who say trade deals make it easier for companies to move jobs abroad, fought former President George W. Bush on a number of trade deals.

Congress has approved only one new free trade agreement since Clinton called for the time out. That was with Peru in December 2007, when Clinton and Obama were still in the Senate. Neither voted on the pact.

Pending deals with Panama, Colombia and South Korea negotiated and signed when Bush was in office have languished. In contrast, the European Union, Canada and others have proceeded to nail down new trade pacts.

Now, months after Republicans captured control of the U.S. House of Representatives and made gains in the Senate, the Obama administration is pressing Congress to approve the deal with South Korea before a competing agreement the European Union has struck goes into effect on July 1.

To reach this point, it had to renegotiate provisions of the agreement to the satisfaction of the UAW and the U.S. auto industry, which complained the original pact failed to tear down barriers that have kept American cars out of South Korea.


Under pressure from Republicans and Democrats, including Senate Finance Committee Chairman Max Baucus and Senate Foreign Relations Committee Chairman John Kerry, the White House also is pushing to resolve concerns with the Colombia and Panama deals so they can be brought for a vote.

“For the first time really in a long time, I am very confident we will see all agreements pass in relatively short order,” said Brian Pomper, a partner at Akin Gump Strauss Hauer & Feld and former senior aide to Baucus.

The key to unblocking all three agreements is the Colombia pact, which the 12.2 million-strong AFL-CIO labor federation vehemently opposes. It argues Colombia has not done enough to protect worker rights, to stop killings of union leaders and other anti-union violence and to prosecute those responsible.

Meanwhile, Republicans have threatened to hold up action on the Korea agreement unless Obama also submits the Colombia and Panama deals for a vote by July 1.

Having gotten that message, the White House has been working in earnest to find a way forward on the Colombia pact, even though it is unlikely to satisfy all of the AFL-CIO’s concern, Pomper said.

U.S. businesses believe a vote on all three pacts is long overdue, even if that means one might fail, said Terry McGraw, chairman of McGraw-Hill Companies and the Emergency Committee for American Trade, a business coalition.

“It’s extremely frustrating that this is 2011 and they’re still sitting on the table … . There’s a time to put the pencils down and that time has long been past,” McGraw said.

Approval of the Korea-U.S. agreement, known as KORUS, could help Obama’s signature trade measure, the TransPacific Partnership with Australia, Vietnam, Chile, Singapore, Brunei, New Zealand, Malaysia and Peru.

“I think all of Asia looks at the KORUS as the litmus test” of U.S. seriousness on trade, said Ernie Bower, director of the Center for Strategic and International Studies’ Southeast Asia Program.

Supporters see the TransPacific pact as crucial to making sure the United States is not put at a disadvantage by other countries increasingly linking their economies to China.

They hope it will become the basis for the Asia Pacific Economic Cooperation forum’s long-term goal of creating a free trade pact covering all 21 members, including China. Obama will host the group’s annual meeting in November.

“If we can complete the TPP negotiations this year, so that President Obama goes to Hawaii in November and joins hands with his fellow leaders in celebration of strengthened ties, that would be a big development that would strengthen our APEC relationships,” McGraw said.

(Reporting by Doug Palmer; Editing by Xavier Briand)

Analysis: U.S. "time out" on trade deals nears end