Three bilateral trade agreements have passed the US House of Representatives and Senate. But the votes came with a sense of relief rather than celebration from their supporters, and resignation rather than anger from their opponents.
A serious lobbying effort for the pacts with South Korea, Panama and Colombia, formally called “free trade agreements” (FTAs), has been mounted over the years by business organisations, particularly those representing multinational firms, who professed themselves delighted.
But by the time the congressional votes finally came on Wednesday, they had been overshadowed in the eyes of many trading partners by the currency legislation aimed at China that passed the Senate on Tuesday. And in the US, where reducing unemployment is the top priority, the failure of Barack Obama’s $447bn stimulus “jobs bill” in the Senate the same day is likely to have far more political impact.
Mr Obama played down the job-creating importance of the deals in a press conference last week. “I’m in favour of those trade bills and I’m glad they’re passing,” he told reporters. “But that’s not going to do enough to deal with the huge problems we have right now with respect to unemployment.”
The muted response may reflect the fact that industries and their lobbyists, including the auto lobby – cars were one of the main sticking points in the South Korea deal – have been ambivalent about the pacts. The increasing complexity of global supply chains means that the concept of US companies competing with, say, Korean companies has become blurred.
Whereas the US car industry and its trade unions united ferociously to oppose Japanese car imports in earlier decades, the Big Three automakers were initially divided on the Korea pact. General Motors’s link-up with Daewoo made it an early supporter of the agreement, while Ford and Chrysler were previously opposed – Ford ran aggressive newspaper ads against the deal in November – and only became supportive when aspects of the deal were revised in December.
Similarly, the United Auto Workers’ union broke ranks with most of the rest of the labour movement last year, including the umbrella AFL-CIO organisation, to back the pact. But the UAW, aware that trade in general is not popular within the union movement, where it is blamed for sending jobs abroad, has not campaigned aggressively for the deal.
In the governments of the partner countries, the general attitude is one of relief in Colombia and Panama, which have looked on in increasing frustration at the policy paralysis in their traditional trading partner.
But in South Korea, where the legislative wrangling has been as intense as in the US, the bill could still face a bumpy ride through parliament. While Lee Myung-bak, president, urged South Korea’s parliament to ratify the deal as soon as possible, Sohn Hak-kyu, leader of the opposition, called the bill an “unfair contract with too many benefits for the United States”.
“The more the US speeds things up with this ratification, the more we need to be prudent,” he said. His Democratic party, which is seeking to build support before next year’s presidential election, argues that 10 clauses in the trade deal need to be revised. This poses a challenge for the ruling conservative party because South Korean lawmakers traditionally seek to forge a consensus with the opposition rather than ramming legislation through by using their majority.
In any case, experts said, in the US the immediate prospects for the passage of the three deals changing the charged and polarised political atmosphere on Capitol Hill around the trade issue are low.
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