House Passes 3 Free Trade Accords

October 13, 2011

WASHINGTON — Congress began final debate on Wednesday over three trade bills expected to pass both chambers later in the day. The final chapter of a partisan stand-off that stretched across two presidencies seemed headed for a rare bipartisan accord in a divided government.

The impending trade agreements with South Korea, Colombia and Panama, which were submitted to Congress by President Obama last week, bridge the divide between many Democrats who fear American job losses and myriad Republicans who opposed measures to mitigate those losses.

The accords mark a rare moment of fiscal policy alignment between Mr. Obama and House Republicans, with whom he has battled much of the year. However, his support for the measures, some of which remain the subject of strong opposition among unions and other groups, is unlikely to win Mr. Obama kudos from his base. President Bush, whose administration first crafted the agreements, was unable to get traction with Democrats in Congress to seal the deals.

Free trade agreements eliminate tariffs and other policies designed to protect American manufacturers. Economists generally predict that free trade deals benefit participating nations by creating a larger common market, increasing sales and reducing prices. But while consumers may benefit from the availability of cheaper foreign goods, American workers, who make up a more costly labor force, often lose jobs as a result of less costly imports.

Some of the bills have been tweaked in various ways to garner bipartisan support. On the House floor Tuesday, Representative Jim McDermottt of Washington, the ranking Democrat on the trade subcommittee, spoke favorably of the Panama agreement.

"The last administration finally accepted our demands on labor, the environment and other issues," he said, "such as access to medicine. This agreement includes all of these." However, Mr. McDermott, like many Democrats, still opposes the deal with Colombia, he said, citing the killing of union leaders in that South American country.

Democrats, many of whom are still expected to vote heavily against at least the Colombia agreement, have long sought extensions of trade adjustment assistance to help workers displaced by the deal. Disagreements between the parties, fueled by mutual distrust, led to a slowdown of the passage of these agreements, which both chambers labored to finish before a joint Congressional session Thursday with the South Korean president, Lee Myung-bak.

The White House and Republican leaders say that these three agreements will provide a big boost to the lagging American economy and put people back to work. But the government itself estimated in a series of studies published in 2007 that the impact on employment would "negligible," and that the three deals in total would increase annual gross domestic product by about $14.4 billion, or 0.1 percent. The reason is that the three countries offer relatively small markets for American goods and services.

The modest projected increase in demand will come mostly from South Korea, the world's 14th largest economy, which would join a short list of developed nations that have free trade pacts with the United States, alongside Australia, Canada, Israel and Singapore.

The Colombia and Panama deals are projected to have almost no impact. Studies by the United States International Trade Commission predicted that American farmers would benefit most, because of increased demand for dairy products and beef, pork and poultry.

Conversely, the studies predicted the pacts would eliminate jobs in some manufacturing sectors, particularly the textile industry, because of increased imports from South Korea. Opponents of the deal, including textile companies, say that the deals will harm the economy by undermining the nation's industrial base. They argue that South Korean companies will benefit much more than American companies because they are gaining access to a much larger market. Mr. Obama himself raised this concern during the 2008 presidential campaign, when he spoke in opposition to the South Korea agreement.

But his administration decided to embrace the deal after renegotiating some provisions to increase protections for American automakers. The White House now describes the deals as a major element in its program to bolster economic growth.

The White House also insisted that Congress pass an expansion of a benefits program for workers who lose jobs to foreign competition. Democrats expanded the Trade Adjustment Assistance program in 2009, while they controlled Congress. When Republicans regained control, they let the program lapse. The two sides worked out a deal this summer to restore some of the financing, which extends benefits to include workers in service industries as well as manufacturing.

The United States has existing free trade agreements with 17 countries, almost all of which also were negotiated under the Bush administration and approved while Republicans controlled Congress. The most recent to win approval was an agreement with Peru ratified in 2007.

On the House floor Thursday, the partisan split on the Colombia agreement was evident as Republicans generally praised the deal while Democrats denounced it.

"It's been five years in the making, but we are finally here," said Representative Lynn Jenkins, a Kansas Republican, urging the passage of the agreement.

- JENNIFER STEINHAUER and BINYAMIN APPELBAUM

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