The Obama administration is hoping to win quick approval for its new free-trade pact with South Korea, but that deal may be held up by two trade agreements with Colombia and Panama that the White House says aren't ready yet. House Republicans insist that all three be considered together.
The free-trade agreement with South Korea is a key ingredient in President Obama's recipe for doubling U.S. exports. U.S. Trade Representative Ron Kirk says the lower tariffs and trade barriers that would result from the agreement should boost sales to South Korea by $10 billion a year and support some 70,000 U.S. jobs.
"Our No. 1 mission is to create jobs," Kirk said. "We firmly believe trade can be a valuable tool to help us get there."
An Eye On Latin America
Tom Spika, who runs a manufacturing company in Lewistown, Mont., that makes equipment for maintaining aircraft, believes in trade as well. He recently ventured into the South American market, and thinks sales to Colombia could be worth up to $30 million over the next five years.
"That equates to jobs and opportunity for growth of our local economy," he says.
But Spika's Colombian sales have been hampered by tariffs that raise the price of his goods by about 15 percent. The Colombians are willing to eliminate those tariffs if the U.S. would approve a Colombian free-trade agreement.
"They pretty much have the attitude, 'Look, we want to do business with the United States. But if you don't want to do it, don't complain when we take our business elsewhere,' " Spika says.
We've been very clear that it would be a mistake to send the Korean agreement alone. It's very important that we reach agreement on the package of the three before we start that process.
The Bush administration negotiated trade agreements with both Colombia and Panama, but they were never approved by Congress. The main objections concerned labor rights. The Obama administration is now working to strengthen those agreements, as it did with the South Korean deal.
GOP Eyes Three Pacts Together
Kirk says the Colombian and Panamanian pacts are not yet ready.
"We don't believe this is going to be a long, drawn-out process," he said. "But there is some critical work to be done over the next several weeks and months."
So the White House wants Congress to endorse the Korean trade agreement this spring, and says it hopes to finalize the other two deals later this year.
"That timetable won't work for House Republicans," says Rep. Kevin Brady (R-TX), who is chairman of a key trade subcommittee.
He and other House Republicans want the Korean, Colombian and Panamanian agreements all taken up by July 1.
"We've been very clear that it would be a mistake to send the Korean agreement alone," Brady says. "It's very important that we reach agreement on the package of the three before we start that process."
In other words, the Korean trade agreement, which Republicans and the White House agree on, could become a hostage to the two other deals.
Tweaking Deals With Panama, Colombia
Jeff Schott, a senior fellow at the Peterson Institute for International Economics, says that at a minimum Republicans want to prevent the Colombia and Panama deals from languishing much longer.
"They're using a variety of legislative tactics, some of them coarser than others, to encourage the administration to come up with a concrete plan of action on Colombia and Panama," Schott said.
Kirk will be pressed for such a plan this week, when he appears before the Senate Finance Committee. The U.S. trade representative says that while he appreciates Republicans' sense of urgency, many Americans are still skeptical about free trade, and so the White House wants to take its time to get the agreements right.
"One of the reasons we believe there is now such widespread support for Korea is we did not rush to make a judgment," Kirk said. "We did not just do a deal for the sake of doing one. We produced a deal that frankly was better."
Brady agrees that hard bargaining by the administration resulted in a more favorable deal with South Korea. Now he and his GOP colleagues are trying to drive a hard bargain of their own.
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