[Viewpoint] Endgame for Korus

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[Viewpoint] Endgame for Korus

Four years after striking an initial deal with Korea, and after a number of significant revisions to that deal, President Barack Obama has finally announced a plan for Congressional consideration of the Korea-U.S. FTA (Korus), and he hopes for ratification prior to the Congressional recess in August. Under his plan, the Senate, controlled by Obama’s Democratic Party, will soon begin consideration of the legislation, with subsequent review by the Republican-controlled House. Prospects for the passage of Korus have never been so good, and there are grounds for optimism.

Obama’s plan for Korus’ ratification, however, is a high-stakes political gamble in an enormously complicated political environment.

After trying for months to forge a bipartisan consensus on the ratification, Obama has changed course and opted to try to push Korus through Congress in tandem with other controversial trade legislation. To succeed in this gamble, Obama must overcome a number of immediate challenges under great time pressure.

The principle challenge is the renewal of Trade Adjustment Assistance (TAA), a program that provides benefits to U.S. industrial workers laid off due to competition from imports. The renewal of the TAA is a must for Democrats, and Obama is attempting to link its renewal with the Korus bill. This linkage will complicate Congressional consideration of Korus, as many Republicans are opposed to the TAA, particularly in the current climate of fiscal austerity. Indeed, Senate Republicans boycotted a hearing organized by Senate Finance Committee Chairman Max Baucus to discuss an initial draft of the combined TAA-Korus bill. Key Republicans in both chambers, including House Speaker John Boehner, are now seeking any means to separate the TAA renewal from Korus in the hope that they can vote down the former while passing the latter. The White House, however, has declared it will not present Korus legislation to Congress without the TAA renewal.

A second challenge is the linkage of Korus to pending FTAs with Colombia and Panama. Under Obama’s plan, and as a concession to the demands of Congressional Republicans, ratification of the three FTAs will move through Congress at the same time. However, many Democrats, including Sander Levin, the top Democrat on the House Committee on Ways & Means, which oversees trade matters, oppose the Colombia FTA because of concerns about Colombia’s treatment of trade union leaders. Levin’s opposition to the Colombia deal should not derail, but may well complicate, consideration of Korus in the House.

Additional challenges relate to the so-called fast-track rules governing the submission of the trade deals to Congress. These rules provide, first, for informal reviews of draft legislation by both houses of Congress and permit members of Congress to propose amendments. While the president does not need to accept the amendments in the final version of the bill presented to Congress for passage, amendments proposed during the informal process signal Congressional concerns.

The many amendments proposed for Korus, or at least those made public to date, indicate a high level of controversy and are previews of the heated debates to be expected in Congress about the legislation. They will also be used by opponents of the president’s strategy as drags on the process. Furthermore, Republicans insist that the pairing of the TAA renewal with the Korus legislation is inconsistent with fast-track rules.

Timing is also a key concern for the White House. The November 2012 presidential election is coming fast, and the democratic base - already wary of trade deals and disappointed with Obama’s inability to revive the U.S. economy - may hold passage of three trade deals against him. The political cost to Obama of attempting to pass new trade deals will increase rapidly after the summer recess and at some point become unbearable. Hence, the Obama administration is now waging an all-out effort to secure passage under the expedited fast-track process before then.

There is little that Korea can do to influence the outcome of the U.S. ratification process at this point. The Obama administration has decided it has obtained the best deal with Korea that it can get, and has launched a high-stakes domestic process to get the deal passed. Obama is personally invested in the success of this process, and we can expect that he will do his utmost to secure passage quickly. Indeed, Obama has repeatedly lauded Korus as a vital part of America’s exports promotion - and job growth from exports - strategy.

The weeks ahead will show whether he can succeed in his audacious gamble.

*The writer is a senior partner at the law firm of Akin Gump Strauss Hauer & Feld LLP in Washington, D.C.

By Sukhan Kim
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