[Viewpoint] Threading the needle in Washington

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[Viewpoint] Threading the needle in Washington

The U.S.-Korea Free Trade Agreement (Korus FTA) is entering the most critical stage in the coming month. In November, President Barack Obama heads to Bali, Indonesia for his first East Asia Summit (EAS) and then to Hawaii, where he will host the Asia-Pacific Economic Cooperation (APEC) summit. The White House needs the Korus FTA to pass in order to convince the rest of the Asia that Obama is serious about economic engagement with the region.

The U.S. government has always negotiated the most substantive trade liberalization pacts - the “gold standard” - but in the wake of the financial crisis, debt ceiling politics and over 100 trade agreements in Asia that do not include the United States, it would be disastrous to American credibility if Obama went to Bali and Hawaii empty-handed on trade.

Moreover, once the pressure of APEC and the EAS pass and the American political calendar focuses on the 2012 election, it will be exponentially more difficult to pass trade agreements in the Congress. After that, internationalists of all political stripes in Washington worry that we will be left behind on trade integration in the region if we do not act soon.

I wrote in a previous column that the main stumbling block to the Korus FTA in the Congress could be the Obama administration’s demand that Trade Adjustment Assistance (TAA) be passed as a precondition for the Korus FTA. TAA is viewed by many free market Republicans as nothing more than a hand out to labor unions and many on the right were threatening to oppose TAA. However, it now looks like the Speaker of the House, Republican Representative John Boehner of Ohio, will be able to muster sufficient Republican votes to pass TAA since many of his new members come from districts like Ohio, Michigan and Pennsylvania with struggling manufacturing industries and no desire to go into the election having voted against assistance to workers.

However, there is still one other serious stumbling block between the House Republicans and the White House. The White House - bowing to the demands of Democratic Minority Leader Nancy Pelosi, representative of California - is demanding that Congress pass only the Korus FTA and not two other pending trade agreements with Columbia and Panama.

Columbia is controversial with the left wing of the Democratic Party because of previous allegations that the Colombian government allowed violent campaigns against labor organizers in that country. An independent task force of the Center for Strategic and International Studies determined that the Colombian government had gone a long way toward cleaning up and accounting for these abuses and this should have cleared the way for the FTA to pass, but among Democrats in the House there is still strong opposition.

The Obama White House, which cares primarily about job creation and credibility in Asia, has thus far sided with the Democrats in the House by holding up the Columbia and Panama FTAs in order to get support in their party for the economically more significant Korus FTA.

Republicans, on the other hand, are equally adamant that Columbia and Panama must be passed jointly with the Korus FTA because they know the White House will not submit them otherwise. For Republicans, the economic impact of the Columbia and Panama FTAs may be small, but these agreements remain strategically important as a symbol of U.S. support for key allies struggling against drug cartels and the destructive foreign policies of Venezuela’s Hugo Chavez.

In short, the Korus FTA is now bound in a national security and ideological battle between the right and the left regarding Latin America. This may seem a bit bizarre and unfair to Korean readers, but such is the nature of the legislative process in a democracy.

Shortly after the 2010 election, Boehner told Obama that Congress will not pass the Korus FTA unless there is one package that also includes the Columbia and Panama agreements. The White House has tried to put pressure on the Republican leadership through the business community, which clearly has greater interest in the huge Korus FTA.

The next wedge that the administration might use against the Republican House is President Lee Myung-bak himself, who may visit Washington in the fall. Accounts of the first Lee-Obama summit in 2009 credit the Korean president with convincing Obama to reverse his earlier hesitation about the Korus FTA. Whether through an address to the Congress or individual meetings with leaders, Lee will receive a warm welcome. But should the Blue House have to carry a burden that really should be borne by the White House?

The Korea, Columbia and Panama agreements will pass in September if the White House is willing to defy part of the Democratic leadership and work with the majority. On the other hand, a Korus FTA-only bill probably will not pass.

The best path forward, therefore, would be a concerted administration effort to build a workable compromise in the coming weeks. This will take presidential leadership in Washington and a spirit of compromise from the Republican side.

It is a messy process, but the Blue House can take some comfort in the words of Winston Churchill, who remarked that the Americans can always be counted on to do the right thing after exhausting all the alternatives.

*The writer is the Japan chair at the Center for Strategic and International Studies in Washington, D.C.


By Michael Green
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