Administration And Congress In Showdown Over FTAs

As the Democratic leadership of
Congress steps up its involvement in international trade issues, a showdown is developing between
the Bush administration and Congress over ratification of four pending free trade agreements
(FTAs). Agreements with Peru, Panama, Colombia and South Korea were negotiated before the
President’s trade promotion authority expired June 30, but they now are facing some stumbling
blocks in the way of congressional approval.

Last May 10, House Speaker Nancy
Pelosi, D-Calif.; House Ways and Means Committee Chairman Charles Rangel, D-N.Y.; and US Trade
Representative (USTR) Susan C. Schwab announced they had agreed on a set of guidelines for FTAs
designed to expedite congressional approval of FTAs. Under the administration/congressional deal,
US free trade partners will have to abide by basic international labor standards, and they will
have to adopt and enforce certain environmental standards. At the core of the labor standards are
International Labor Organization declarations guaranteeing freedom of association, the right to
collective bargaining and abolition of forced and child labor.

It was felt the
administration/congressional deal would pave the way for quick passage of the Peru and Panama FTAs,
that there likely would be some problems with Colombia because of alleged labor and human rights
violations, and the South Korea agreement was in the most trouble because of lack of market access
and concerns by US auto makers about increased import competition. The National Council of Textile
Organizations (NCTO) has announced its support for the Peru, Panama and Colombia FTAs; and while
its Board of Directors has not yet taken a position on the Korea FTA, NCTO President Cass Johnson
said his members are “worried and concerned” about a number of aspects of the agreement and the
impact it will have on an industry already besieged by imports.

The administration/congressional deal
now appears to be falling apart, and the USTR has written to Speaker Pelosi saying she is “deeply
concerned to learn that some members of Congress are considering imposing “unprecedented new
pre-conditions on our trading partners,” which she says would further delay congressional

In unusually harsh terms, Schwab said: “We understand that some may want to insist that our
trading partners go beyond ratification of the agreements and make changes to their domestic laws
before Congress even acts on the FTAs. Unilaterally requiring another sovereign country to change
its domestic laws before the US Congress approves a trade agreement would be a fundamental break
with US law, policy and practices. No past administration of Congress — Democratic or Republican —
has taken such a step.”

Schwab noted that on May 10, in a press release entitled “A New Trade Policy for America,”
the House Democratic leadership stated the bipartisan agreement “clears the way for broad,
bipartisan congressional approval for the Peru and Panama FTAs.” She said moving forward on
ratification in July would pave the way for approval of the other pacts. Rep. Rangel, however,
announced that he would not consider acting on the agreements until he had a chance to visit the
region, probably along with Trade Subcommittee Chairman Sander Levin, D-Mich., during the
congressional August recess.

Schwab told Pelosi the Latin American countries have lived up to their end of the bargain,
and she urged Congress to do the same by acting expeditiously on the agreements. She said the
administration looks forward to working with the Democratic leadership “to make the vision of the
May 10 agreement a reality and rebuilding bipartisan support for opening markets around the world.”&
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July 24, 2007