Political opposition to free trade is a given, and can take many forms: Fears over the competitive impact on markets ranging from agriculture to automaking, fears over the environmental impact, fears over the loss of jobs.
Free trade has been a polarizing issue, from the North American Free Trade Agreement in the early 1990s to South Korea and Colombia today. Through it all, there has been at least one guarantee: Labor unions and many Democrats typically oppose the very concept of free trade as a jobs killer, and Republicans are its staunchest proponents. But now it’s a segment of the GOP that is the biggest threat to the pending agreements with South Korea, Colombia and Panama.
The latest debate revolves around the Obama administration’s intention to include an extension of Trade Adjustment Assistance, a Labor Department program that provides training and other assistance to workers who lose their jobs because of foreign competition, in legislation implementing the U.S.-Korea FTA.
“Using grossly outdated information, critics have questioned the value of TAA, and, using a highly selective reading of history, the appropriateness of attaching its reauthorization to the FTA,” Greg Mastel, of government affairs management firm Dutko Worldwide, and Howard F. Rosen, of the Peterson Institute for International Economics, argued in a recent study of TAA.
When Democratic support for the U.S.-Korea agreement failed to extend to the other two pacts, Republican leaders in Congress called for votes on all three agreements as a single package to ensure the Democrats wouldn’t delay implementation of the Colombia and Panama accords. The Obama administration soon concluded supplementary deals with the two Latin countries, but did not commit to a firm timetable for passing legislation this year. The Republicans raised the stakes by refusing to reauthorize funding for the TAA program.
The TAA-related expenditures are insignificant compared to the more than $10 billion in gains the Korea pact alone is expected to generate for the U.S. economy, Mastel and Rosen argue. “Viewed another way,” they said in their report, “if the United States cannot afford to invest in helping those harmed by trade, how can it afford to forgo the $7.3 billion in lost tariff revenue that the CBO (Congressional Budget Office) estimates will result from the U.S.-Korea FTA over the next decade?
Congress and the administration are right to press forward immediately on approving the FTAs, they added. But it’s also “necessary and appropriate” to extend TAA to ensure that those who lose from increased import competition have the opportunity to find new jobs and restore order to their lives.
“The marriage between TAA and opening U.S. markets to trade has allowed the United States to pursue a mostly free trade policy throughout the post-WWII era. Breaking that linkage now threatens the current FTAs and all future trade agreements,” Mastel and Rosen conclude.
Adds Jeffrey Schott, a senior fellow at the Peterson Institute, “Such ‘hostage taking’ has become part and parcel of the U.S. legislative process over the past two decades, but in this case, no one wants to harm the hostages (the FTAs and TAA) held by the other side.”
He expects a deal to come together in late summer or early fall that will ratify the FTAs and restore most of the funding for the TAA program.
“After a wait of more than 50 months,” he said, the Korea-U.S. FTA “will finally receive the recognition in Congress that it deserves.”
Contact Alan M. Field at email@example.com.