CEI Adjunct Fellow Fran Smith, coauthor of the new CEI study “Free Trade without Apology,” talks about the recently passed free trade agreements with Colombia, Panama, and South Korea. The agreements will lower tariffs and other trade barriers between the U.S. and the other countries, and are expected to reap billions of dollars of economic benefits. The agreements also contain a number of trade-unrelated provisions, such as labor and environmental standards. These erode our trading partners’ sovereign lawmaking power, and are best avoided in future agreements.
Panama
President Obama is finally sending three pending trade agreements — with South Korea, Colombia, and Panama — to Congress for a vote. The three trade deals were ready for this moment before Obama entered the White House. So what’s taken so long?
Quite simply, as Michael Barone notes in his Washington Examiner column today, the president wanted to avoid angering his political allies in organized labor.
[Obama] could have sent [the treaties] 985 days earlier; negotiations were completed in 2006 and 2007. Or, if he were concerned they’d be deep-sixed when his fellow Democrats controlled Congress, he could have sent them 274 days earlier when Republicans took over the House.
To be sure, they are opposed by many labor union leaders and congressional Democrats. There is a nostalgia among many union and party old-timers for the days, more than 30 years distant, when the auto and steel workers’ unions had nearly 2 million members.
Now each has less than half a million. But the old-timers seem to feel that somehow something like those olden days can be brought back if they oppose FTAs.
Indeed. In the new CEI OnPoint, “Free Trade without Apology,” CEI Adjunct Fellow Fran Smith and former CEI Research Associate Nick DeLong document how efforts at appeasing organized labor — in the hopes of blunting union opposition to trade deals — have been not only ineffective, but harmful.
Union leaders have taken all concessions they’ve been offered only to ask for more. This has led to trade agreements becoming weighted down with provisions governing labor and environmental issues (to appease environmentalists) which have nothing to do with trade. And those provisions have only gotten longer and more onerous in each subsequent agreement.
Organized labor’s success in getting labor issues included in trade negotiations is a relatively recent phenomenon. The 1985 U.S.-Israel free trade agreement was the last American trade deal that did not include labor and environmental provisions. Since that time, the U.S. has entered into 10 free trade agreements covering 17 countries.
Eight years after the Israel agreement, the Clinton administration, as part of a deal to ratify the North American Free Trade Agreement (NAFTA), pushed Mexico and Canada to sign the North American Agreement on Labor Cooperation (NAALC) and North American Agreement on Environmental Cooperation (NAAEC) as side letters to the trade pact. That was the first time that labor and environmental objectives were directly linked to international trade negotiations. From that point onward, interest groups of various stripes have lobbied hard to include a host of irrelevant political agendas in trade negotiations. Organized labor and environmental groups have been especially active in this effort.
The NAFTA labor provisions were still not enough to satisfy Big Labor. Four years after the labor cooperation agreement was passed, the AFL-CIO stated in a public comment that the agreement had been “ineffective in promoting the concerns of workers beset by stagnant wages and job insecurity.” Rather than appease, the NAFTA labor provisions only whetted the union leaders’ appetites. To this day, unions continue to pressure Congress for more stringent labor obligations in current and future agreements.
It’s time to end this game, which only advantages protectionist lobbies.
Congress is likely to take up stalled free trade agreements with Colombia, Panama, and South Korea when it returns from its August recess. Adjunct Fellow Fran Smith talks about the good and bad parts of the agreements. Billions of dollars of economic benefits are offset by trade-unrelated provisions, such as labor and environmental standards. These erode our trading partners’ lawmaking sovereignty. An increase in trade adjustment assistance also seems likely. This gives money and training to workers who lose their jobs because of international trade.
The new House Republicans are pushing for fast action on the three pending free trade agreements (FTAs) — with South Korea, Colombia, and Panama. In a letter signed by 67 members of the 112th Congress, including freshmen members who had Tea Party support, the representatives said that they want action on the agreements within the next six months.
While the Obama administration has said it wanted to submit the U.S.-South Korea FTA by July of this year, no timetables have been announced for the other two trade pacts that have been stalled for several years. In the case of the Colombia FTA, the AFL-CIO has been the main campaigner against the agreement, charging that the Colombian government is allowing trade union officials to be killed with impunity. Yet research has shown that while Colombia is still a country with a high but declining level of violence, union officials are actually less likely to be crime victims than the average Colombian.
Today’s Washington Times has a lengthy article on the Obama Administration’s trade agenda vis-à-vis the stalled free trade agreements with South Korea, Colombia, and Panama. The article explores the likelihood of President Obama being able to resolve issues with the South Korea FTA before the November summit in that country – a deadline he had earlier announced. The South Korea FTA has some tough opposition from some automakers and labor unions — and little support among Congressional Democrats.
While the U.S. dithers on this agreement, the article notes, the European Union, Canada, and Australia are going full-speed ahead to finalize their own trade pacts with South Korea, which will leave the U.S. in a weakened position regarding some important exports to that country.
The two other languishing deals also face some fierce opposition, especially from labor unions.
To get some movement on these trade pacts, the president will have to do more than make a few public pronouncements expressing his support. He’s going to have to take on the union opposition, get House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid in line, rally his troops by touting the benefits of these agreements, bring together those spurned business groups, and reach out to some Republican supporters of free trade. A likely scenario? Not hardly.
Check out CEI’s publications on the South Korea, and the Colombia and Panama FTAs.
Some politicians haven’t yet abandoned free trade, even in the face of widespread demagoging on the issue. As Scott Lincicome notes, five Republican Members of Congress joined together in a March 22 letter to Majority Leader Steny Hoyer (D-MD) to request that the Administration submit three pending trade agreements to Congress for a vote. The letter points out that the Free Trade Agreements with Panama, Colombia, and South Korea have been languishing for several years since they were signed. The letter offers a strong defense of trade and doesn’t just focus on the benefits of exports:
“Trade agreements bolster American exports, create jobs, and keep the United States competitive in an increasingly global market. In fact, according to the U.S. Trade Representative, ‘U.S. manufacturing exports support nearly six million jobs including one in six manufacturing jobs.’ Furthermore, trade agreements forge alliances in politically important regions, and encourage competition and innovation, which yield higher quality goods at lower prices for consumers. President Obama put it best in his recent State of the Union Address: ‘If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores.’”
The letter was signed by Representatives Tom Price (GA), Charles W. Dent (PA), Wally Herger (CA), Mark Steven Kirk (IL), and Kevin Brady (TX). Now, if only some Dems would join in to make these same arguments.
The pending U.S. Free Trade Agreements with South Korea, Panama, and Colombia are languishing in limbo, despite the fact that all three agreements will improve the flow of goods and services, foster economic growth and create jobs, and enhance the close relationships between the U.S. and those countries. That was the theme of the panel of speakers at The Heritage Foundation’s seminar today, “Getting America’s trade agenda back on track.”
The panel featured H.E. Han Duk-soo, Ambassador of the Republic of Korea; Francisco Álvarez de Soto, Vice Minister for International Trade Negotiations, Republic of Panama; and Ricardo Triana, Director, Colombian Government Trade Bureau. The speakers pointed principally to the FTAs’ benefits to the U.S., not only in economic terms but in its national interests. Ambassador Terry Miller, the moderator, noted that the three countries are entering into trade agreements with other major trading partners, while the U.S. holds up action on their trade pacts. That disadvantages the U.S., which can’t yet take advantage of significantly lower tariffs on exports of numerous goods and services that the FTAs include.
Representative Bob Goodlatte (R-VA) rounded out the presentations by emphasizing the benefits of free trade, especially in the current downturn, when increased trade can lead to more vibrant economic growth and job creation. In his closing remarks, Goodlatte hit the cap-and-trade bills currently being considered for the job losses they will create. He also noted that the proposed sanctions on imports from countries that don’t enact a CO2 repression regime would be a huge mistake and a blow to the world trading system.
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