Left Behind on Trade

If the new Canada-Colombia trade deal can't get Washington moving on its own stalled agreements, what will?Two weeks ago, while the United States dragged its feet on three pending trade deals, neighboring Canada jumped ahead and locked down a major trade deal with Colombia, spurring an avalanche of reactions in Washington.Canada had initiated negotiations last year and scored a deal to export duty-free to a major Latin American country. In the meantime, the U.S. Congress has been stalling several trade agreements for five years―with Colombia since 2006, Panama and South Korea since 2007―resulting in a loss of market share for the country. Suddenly, conversations about these pending agreements regained momentum and returned to the top of the list of priorities for the Obama Administration and Congress.Rep. Dave Camp, chairman of the House Ways and Means Committee and part of the powerful new debt-reduction “super committee”, along with Rep. Kevin Brady, chairman of the Ways and Means Subcommittee on Trade, and Sen. Max Baucus, the Senate Finance Committee Chairman and also part of the super committee, were quick to respond. Almost immediately after the announcement of the agreement, they sent a clear message to Congress, emphasizing that the Canadian deal would put U.S. workers and companies at a further disadvantage in exporting their products to Colombia, one of South America’s fastest growing economies. “Canada’s trade agreement with Colombia gives our competitors a leg up and shows the importance of coming together quickly to pass America’s pending trade agreements,” Baucus said in a statement.Camp reinforced this message by issuing a press release which focused on how U.S. workers and exporters were now disadvantaged by this Canadian deal and that the U.S. “trade agreement with Colombia was signed in 2006, years before Canada and Colombia even began their negotiations. In the meantime, our share of Colombia’s imports of key grains fell, and the trend will only accelerate as Canada and other countries deepen their trade ties with Colombia.” Last year, the European Union signed a deal with South Korea, Colombia, and Peru.There’s the recent case of Colombia’s largest cookie and cracker company, which accounts for more than 50 percent of the country’s wheat imports, announcing it will switch from U.S. to Canadian wheat. “We must get back in the game immediately by passing all three of our trade agreements before we lose any more jobs,” said Brady. As of last week, Canadian wheat and flour will enter the Colombian market duty free, while U.S. exports will pay a 13 percent tariff. According to the U.S. Wheat Associates, this tariff disadvantage will cost more than $100 million per year in damage to local farmers.It’s not just Colombia―all three pending markets are important for U.S. wheat producers. For example, in 2010 the United States exported 645,000 metric tons (MT) of wheat to Colombia, 123,000 MT to Panama and 1.1 million MT to South Korea. This represents approximately $650 million in export sales.After Congress returns from its August recess, voting on pending free trade agreements should be a priority. President Barack Obama reinforced the message during his three-state tour in the Midwest by saying that “the only thing preventing us from passing these bills is the refusal by some in Congress to put country ahead of party.”However, the president forgot to mention one small detail, which senior Republicans were quick to note: none of these three agreements have even left Obama’s desk to move to the Hill for a vote. Last week, in the middle of a press conference, White House deputy press secretary Josh Earnest surprised journalists by asking, “Have we not sent them over?”.But as The Washington Post clearly stated, this is a chicken-or-egg question. What’s been holding these agreements from being signed is the Administration’s decision to tie these trade deals with the Trade Adjustment Assistance (TAA), a program to assist workers and companies affected by the fallout from greater free trade. Republicans refuse to extend TAA due to its cost, especially during a time of budget-slashing. “We made it clear time and time again that we would not stomach attaching a big government spending program onto these agreements,” said Sen. Orrin Hatch. What came first? It is hard to tell, but one thing is for sure: each side is blaming the other for stalling the agreements.Bottom line: Besides the partisan bickering, free traders continue to say that these trade agreements would boost U.S. competitiveness and create jobs―the U.S. Chamber of Commerce asserts that 380,000 American jobs at risk due to the delay of the Colombia and South Korea deals alone―while opponents dispute these numbers and point out human rights violations among foreign workers, especially in Colombia.The Canadian deal has spurred dialogue in Washington, which is always positive. Hopefully, this pushes the issue forward in the nation’s capital. If not, it makes one wonder what will, in fact, change the status quo of these ever-pending agreements.