Showdown Looming On Colombian Free Trade Agreement

The powerful chairman of the Senate Finance Committee has made a strong appeal for Congress to pass
an expanded trade adjustment assistance (TAA) bill to help workers who lose their jobs as a result
of imports, and he has warned the Bush administration that the Senate will not act on pending Bush
administration free trade agreements (FTAs) until that has been accomplished.

In an opening statement at a Finance Committee hearing on the Bush administration’s 2008
trade agenda, Sen. Max Baucus, D-Mont., said: “I have made it clear where we must begin. We must
begin with reform, expansion and implementation of trade adjustment assistance. After listening to
my constituents, my colleagues and my conscience, I am certain that we must put a better TAA
program in place before Congress can move on to other trade priorities, especially the pending free
trade agreements.”

A number of textile state members in both the House and Senate have been backing expanded TAA
programs to help textile and apparel workers who have lost their jobs to continuing import

Following the hearing, US Trade Representative Susan Schwab appeared to be heading for a
confrontation with Baucus when she said the administration would be sending the Colombian FTA to
Congress shortly after the Easter recess. “Given the calendar, and given the President’s desire and
commitment to see a vote on the Colombian FTA this year, we will be forced to send it up absent
that kind of a commitment from the leadership in Congress,” she said. Under the “fast track”
procedure that permits an up or down vote from Congress without any amendments, Congress has 90
days after the date it receives the bill to vote on it.

The administration’s position could result in a major showdown between the Democratic
leadership in Congress and the administration.

While there is considerable support for the Colombian FTA, including support from US
importers of textiles and apparel and manufacturers, action has been delayed by congressional
concerns over some labor rights issues in Colombia.

With respect to other trade issues, Senator Baucus has called for stronger border enforcement
to block illegal and unsafe imports. He said he will pursue his Border Protection Act that will
give government officials more resources to “identify, destroy and keep pirated and counterfeit
goods off of our store shelves.” He said fair enforcement of trade regulations includes a World
Trade Organization-consistent approach to addressing misaligned currencies such as China’s yuan and
better protection of intellectual property rights.

Trade Officials Promote Colombian Agreement

As a potential showdown on the Colombian FTA was developing, the White House staged a press
briefing by some of its leading trade officials in an effort to highlight what President George W.
Bush sees as economic, national-security and hemispheric-relations benefits of the pact.

Noting that a number of labor and environmental issues have been raised in connection with
the Colombian FTA, Deputy US Trade Representative John Verineau cited a series of meetings that
have been held between US government officials — including members of Congress — and Colombian
government officials. He said a number of issues have been addressed and that changes have been
made in the original agreement “knowing that making changes would greatly enhance the ability to
move the agreement through Congress.” As a result, he said, the administration is prepared to find
a path toward approval, and “we will continue to leave no stone unturned in terms of trying to find
a way forward that is bipartisan.” He said President Bush has made it clear that there will be a
vote this year.

Under Secretary of Commerce for International Trade Chris Padilla pointed out that the United
States already has an agreement with Colombia that permits 92 percent of its exports to enter the
United States duty-free under the Andean Trade Preference Act, which Congress recently extended
until the end of this year. The purpose of the Colombian FTA is to gain greater access to the
Columbian market for US goods. The Colombian FTA would make the duty-free treatment permanent, and
there would be no need for periodic renewals.

Padilla said the economic case for the agreement is clear. “It is very strong,” he said. “It’s
an agreement about fairness; it is an agreement that opens an important and growing market in
South America to our products when our market is already wide open to imports.”

Addressing the subject of security and stability in the hemisphere, Dan Fisk, director of
Western Hemisphere Affairs for the National Security Council, said that while some problems still
exist, progress is being made in addressing illegal drug trafficking and human rights abuses. He
said that through determined Colombian leadership and strong bipartisan support from the United
States, Colombia has experienced “impressive progress” with significant reductions in violent
crimes and a reduction of poverty. He believes the FTA will help keep Colombia’s future and US
national security “on the right track.”

March 18, 2008