Obama gets win as Congress passes free-trade agreements
Congress
resoundingly approved long-stalled trade agreements with South Korea,
Colombia and Panama late Wednesday, authorizing the most significant
expansion of trade relations in nearly two decades.
While the
deals with Colombia and Panama are likely to have limited economic
impact, the agreement with South Korea is designed to break down
barriers between the United States and the world’s 15th-largest economy.
The
South Korea deal has the potential to create as many as 280,000
American jobs, according to a recent assessment by the staff of the U.S.
International Trade Commission, and to boost exports by more than
$12 billion. Several major labor unions have warned that any gains will
come at the cost of layoffs among American workers because of heightened
competition from South Korean imports.
The
South Korea deal is widely hailed as the most consequential trade pact
since the North American Free Trade Agreement was ratified in 1994.
The
House approved all three deals and was quickly followed by the Senate.
Final approval of the agreements represents a victory for the Obama
administration and congressional leaders in both parties, who have
touted the trade pacts as a means to jump-start the flagging economy
without additional government spending. Ratification of the agreements
holds particular importance for President Obama, who has set a goal of
doubling U.S. exports by 2015 and is facing a tough bid for reelection
with unemployment stuck at 9.1 percent.
“I look
forward to signing these agreements,” Obama said late Wednesday. He
hailed passage as “a major win for American workers and businesses.”
“Tonight’s
vote, with bipartisan support, will significantly boost exports that
bear the proud label ‘Made in America,’ support tens of thousands of
good-paying American jobs and protect labor rights, the environment and
intellectual property,” Obama said.
A variety of U.S. industries
are expected to benefit from the agreements. Producers of beef, dairy,
pork and poultry products, chemicals, and plastics are all likely to
increase exports to Korea. The banking and financial services industries
could also be big winners, analysts said, benefiting from relaxed
regulations and rules relating to foreign investment.
“These
free-trade agreements will give our economy a much-needed shot in the
arm and create tens of thousands of American jobs,” said Sen. Max Baucus
(D-Mont.).
“The passage of these agreements today is a
significant victory for American workers and businesses, and will help
create jobs here at home.”
Several Democrats and
prominent labor unions, however, oppose the deals, arguing that they
could help U.S. companies without bringing much benefit to U.S. workers,
particularly if increased imports lead to widespread layoffs. Some also
argue that the agreements serve to reward two countries, Panama and
Colombia, that have been hostile to organized labor and international
environmental standards.
“The truth is, I think this is going to
cost us jobs,” said Clyde Prestowitz, a Reagan administration Commerce
Department official who founded the nonpartisan Economic Strategy
Institute. Prestowitz noted that South Korea is a major exporter of
textiles, steel, machined parts and semiconductors, among other goods.
Overall,
the agreement is expected to increase imports into the United States by
as much as $7 billion, with the textile industry potentially being
hardest hit.
“You can see how various American companies can benefit,” Prestowitz said. “It’s hard to see how the United States benefits.”
To
soften the blow of increased imports, Congress also renewed the Trade
Adjustment Assistance Program, which provides job retraining and
temporary income support to workers who lose their jobs as a result of
free-trade pacts — the final piece of a bipartisan agreement that
cleared the way for ratification of the agreements after a nearly
four-year wait.
The trade agreements are a central part
of Obama’s strategy for increasing exports to drive economic growth.
With U.S. consumer demand lacking, Obama is looking to sales abroad to
fuel job creation at home.
The pacts were first negotiated under
President George W. Bush but were updated by Obama to include more
guarantees for labor and human rights and environmental protections. The
pacts were recently held up in a dispute between Obama and
congressional Republicans over renewing the worker assistance program.
During
Obama’s bid for the Democratic presidential nomination, he tended to
underscore the risks that free trade posed for U.S. workers and the
environment rather than potential benefits.
But for much of the
past year, passing the trade pacts has been a tenet of Obama’s plan to
bolster the economic recovery, along with other measures including an
overhaul of patent laws, which Congress passed last month.
Lately,
though, the trade pacts have been relegated to a supporting role,
because the number of jobs would, at most, be a mild economic stimulant.
Obama is urging Congress to pass elements of his jobs plan, which is
worth as much as $447 billion in fresh spending and tax cuts. The Senate
voted Tuesday not to proceed with this plan in its current form.
On
Wednesday, the congressional Joint Economic Committee warned that free
trade often has high costs for workers, particularly those in the
manufacturing industry, who tend to be older and without a college
education.
The report said: “Given the already high national
unemployment rate and depressed home values still evident in most
states, policies that seek to liberalize trade may impose even larger
costs on these workers, bolstering the need for additional investments
in training or other forms of trade-adjustment assistance.”
In
pursuing the trade pacts, Obama has aligned himself with the U.S.
Chamber of Commerce over key labor groups, including the AFL-CIO and the
Teamsters.
Richard Trumka, president of the AFL-CIO, called the deals “lousy” in a speech in Washington this month.
Trumka
asked: “Should we say yes to the Korea [pact], which will destroy
159,000 U.S. jobs? Should we approve an agreement with Colombia, where
51 trade unionists were assassinated last year? Should we trade away
even more jobs to Panama, a country that routinely tramples workers’
rights and shelters money launderers and corporate tax dodgers?”
But
Obama successfully enlisted support from other important members of the
labor movement, including the United Auto Workers and the United Food
and Commercial Workers. The unions tend to represent workers in
industries that could gain from the pact.
The
administration said this week that the South Korea pact would slash
tariffs on 95 percent of U.S. exports of industrial and consumer goods
and make it far easier for automakers and agricultural companies to sell
their products into the $1 trillion economy. The administration also
said it had worked out “high standards” for protecting labor rights and
environmental concerns in its deals with Colombia and Panama.
Overall,
the trade pacts with South Korea, Panama and Colombia could increase
U.S. exports of goods by $12 billion or more a year. American companies
will also have an easier time selling services in those countries,
making the deals yet more advantageous. But the amount of goods imported
is also likely to increase significantly, dampening the overall effect
on the economy.
South Korean President Lee Myung-bak is to
deliver a joint address to Congress Thursday and then travel with Obama
on Friday to a General Motors plant near Detroit that is described as a
likely beneficiary of the agreement.
Obama has a mixed history on
trade. As a candidate in 2008, he questioned whether free-trade pacts
give an edge to countries with low labor and environmental standards and
criticized the North American Free Trade Agreement. Later in the
campaign, however, he strongly endorsed trade agreements that addressed
labor and environmental concerns.
The United States has similar
agreements with 17 other nations, striking its last deal in 2007 with
Peru. Other countries with such agreements include Canada, Israel and
Australia.
Staff writer Felicia Sonmez contributed to this report.
