Deal with US Congress likely to advance FTAs with Peru and others

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(Official press release – U.S. Department of State)

The Bush administration has reached a tentative agreement with key Democratic congressional leaders, significantly increasing chances that a host of free trade agreements (FTAs) will clear Congress and give a boost to global trade negotiations.

The deal was announced May 10 by the Democratic speaker of the House of Representatives, Nancy Pelosi, and also by administration officials.

The trade deal with the Democrats removes a major stumbling block to the FTAs with Peru and Panama, which have languished in Congress, and those with Colombia and South Korea, which have been completed but not yet submitted to Congress.

The main obstacle in negotiations between U.S. Trade Representative Susan Schwab and chairmen of key congressional committees was the Democrats’ insistence on tougher labor and environmental standards in future free trade agreements, including those already negotiated.

Under the administration-Congress deal, U.S. free-trade partners will have to abide by basic international labor standards outlined in a 1998 International Labor Organization (ILO) declaration. They also would have to adopt and enforce laws consistent with seven major multilateral environmental agreements.

The core principles in the ILO declaration guarantee freedom of association, the right to collective bargaining, abolition of forced and child labor and the elimination of employment discrimination.

A trade official said in a May 11 telephone briefing the administration expects to come up with proposed changes to the FTAs quickly, “hopefully in the next couple of days.” He would not speculate on the likelihood of those changes being accepted by U.S. trading partners. He said, however, that winning congressional approval without those changes would be difficult.

Moving ahead will require that Democratic leaders win the support of their rank-and-file for the pacts that some of them consider controversial, and that foreign governments secure approval from their parliaments and constituencies for changes in the texts they considered as final.

The labor provisions in the Panama and South Korea FTAs were left open, but the Peru and Colombia pacts already have been signed in their current form and Peru’s legislature has ratified its agreement.

President Bush, in May 10 remarks, described the accord as “a clear path for advancing our proposed free trade agreements with Peru, Colombia, Panama, and South Korea.” And he pledged that his administration will work with Congress and the governments of the four countries “to secure the approval of each agreement.”

The new trade policy also addresses issues related to intellectual property, port security and government procurement. For example, it aims to ensure that U.S. trading partners in the developing world will be able to sell generic life-saving drugs without breaking patent protections.

Democratic Representative Sander Levin, who was involved in the negotiations, said: “This is a major breakthrough in what we’ve been fighting for … to be sure that globalization opens up for many more people.”

Some officials and lawmakers expressed hope the agreed trade policy will clear the way for more general progress on trade issues, including the Doha round of global trade negotiations being conducted under the auspices of the World Trade Organization (WTO) and the Trade Promotion Authority (TPA) for the president.

Schwab said the agreement will send a message to U.S. trading partners that the United States stands ready to move forward on the Doha round.

U.S. Ambassador to the WTO Peter Allgeier put it even more explicitly when he briefed reporters May 11 in Geneva.

The challenge of producing a global agreement that significantly lowers trade barriers, he said, is “even more important now because of this step forward.”

Whether the tentative deal will sway Congress on TPA remains unclear.

TPA, due to expire in July, allows the president to offer trade agreements to Congress for an “up or down” vote without amendments and on a tight schedule.

Many members of Congress have balked at extending TPA. Some of them view the Doha round and TPA as related issues and have indicated they are willing to consider the TPA renewal only if the WTO negotiations make significant progress.

Giving Congress a “real indication” that the WTO negotiators are able to make such progress “would be most helpful,” Allgeier said.

“That would give Congress even more incentive to move forward” on TPA, he added.

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