[Viewpoint] Passing FTA may take longer

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[Viewpoint] Passing FTA may take longer

With the recent announcement that the Obama administration will begin technical discussions on the three pending Free Trade Agreements (FTAs) with Congress, it might be natural to conclude that the United States will approve the Korus FTA in short order.

In fact, some press stories have even speculated that Congress could vote on the Korus FTA as soon as next month. While the beginning of technical discussions to prepare the FTAs for submission is undoubtedly a positive step forward for the long-stalled agreements, continued patience may be required.

As trade politics have become more partisan over the last two decades in the United States, a divided Congress has made it more complex. The issue largely revolves around Trade Adjustment Assistance (TAA). During the financial and economic crisis, the program was expanded to cover service workers as well as workers in manufacturing effected by trade. The portion of the program that covers service workers expired at the beginning of this year, while the main program expires at the end of the year. The Obama administration would like to see discussions on the program’s extension take place in parallel with the talks on the FTAs.

However, Republicans and Democrats share distinctly different views of the role and timing of any vote on TAA in relation to the broader trade agenda. For Republicans, TAA is a price for trade liberalization that they have already paid in the initial negotiating authorization, the May 10, 2007, agreement and the 2009 stimulus bill to expand the program to service workers. In fact, the House leadership tried unsuccessfully to pass an extension of TAA earlier this year and received push back from rank-and-file members.

For Democrats, the idea of passing the FTAs without knowing that TAA will be extended for a significant period of time might be a non-starter. By providing assistance to those who are impacted by trade, the program is one of the ways that the government can help those effected by trade transition into new opportunities.

In essence, the United States might face a situation where Republicans end up calling for a vote on the FTAs prior to any vote on TAA, while Democrats seek a vote on TAA prior to a vote on the FTAs. This could lead to a standoff between the two sides.

Further complicating the picture is the debate over raising the debt ceiling in the United States. Unlike most countries, the United States has a statutory limit on its borrowing and is expected to reach that limit this August. Earlier this year, there were contentious talks over the budget that dominated the time and attention of the administration and Congressional leaders as they worked to avoid a government shutdown. The debt ceiling talks have the potential to do the same.

This could remove much of the capacity available for the White House and the Congressional leadership to hash out their differing positions on timing and sequencing of the FTAs, which is largely tied to continued progress by Colombia on reaching benchmarks set in a recent agreement to address concerns about labor rights and violence against union members in Colombia.

All this means that we should not expect the Korus FTA to be voted on before late summer or the fall. While the recent decision to move forward on the drafting of the legislation for the pending FTAs should be viewed as the positive development that it is, the domestic debates over TAA and the debt ceiling are likely to drag out the process.

There are real differences over how the trade agenda should work that Democrats and Republicans still must resolve and reaching an agreement that is acceptable will take time.

*The writer is the director of Congressional affairs and trade for the Korea Economic Institute of America.

By Troy Stangarone
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