On Monday, the White House submitted a trio of Free Trade Agreements (FTAs) to Congress for approval. In the works for years, the agreements – with Colombia, Panama and South Korea – have faced a bumpy ride on the way to ratification.
Following the submission, a long list of farm advocates and commodity organizations lined up to support passage of the FTAs. Approval of the Colombia FTA “will enhance U.S. competitiveness and benefit farmers and manufacturers by removing the tariffs which are currently applied to U.S. products,” said a statement by the National Cotton Council.
For more commodity group reactions, see here.
The FTAs “will support tens of thousands of jobs and add billions of dollars in economic activity to our economy,” said Agriculture Secretary Tom Vilsack during a Tuesday morning press conference.
“When they’re approved, these agreements will clear the way for new American exports around the world. (This will) create jobs and provide new income opportunities for (U.S.) agricultural producers, the small businesses that will assist in the export of those agricultural products, and rural communities from whence they come.
“American agriculture will benefit to the extent of $2.3 billion in additional exports. That will support nearly 20,000 jobs” in the United States.
One major sticking point for the deals was the insistence of the Obama administration to tie them to an extension of the Trade Adjustment Assistance (TAA) program. House Republicans were opposed to extending the TAA, which would assist U.S. workers who lose their jobs in the wake of the trade deals.
Vilsack said the White House had reached “an agreement on the terms of meaningfully strengthening and renewing the (TAA program). The agreement reached preserves the key goals of the 2009 program. That means it will provide covered service for workers whose jobs have shifted to China, India or other countries.
“That’s important, but it was also reformed and improved and we believe the changes will save approximately $733 million when compared to a straight extension of the full program.”
What assurances does Vilsack have that the House will pass it?
“We have the commitment of (Ohio Rep. John Boehner) the Speaker of the House. The speaker (has) indicated a strong desire to move the trade agreements and TAA. I take him at his word and we all should.”
Vilsack expects Congress will now “work swiftly to pass these FTAs. Korea, Colombia Panama have approved, or negotiated, trade agreements with a host of other nations. So, we need these agreements to be completed quickly to level the playing and secure markets for American products.”
Vilsack had the following to say about each deal:
- South Korea.
“While the United States used to be Korea’s largest trading partner, over the last decade we’ve fallen to fourth place behind China, the European Union and Japan. In that decade, our share of Korea’s import market has fallen from 21 percent to 9 percent.”
The FTA “will immediately eliminate duties on a majority of U.S. farm products exported to Korea.”
It should be noted that U.S. rice is not part of the Korean trade deal.
“Two objectives were reached (under the FTA). It immediately provides vastly improved access to Colombia’s markets and really levels the playing field with respect to third-country competitors in the Colombian market.
“Colombia is already an important market for (U.S.) farmers and ranchers. But in 2010, we did almost $832 million in exports. We anticipate an increase of several hundred million dollars to that number.”
“This basically acknowledges that duty-free trade must be a two-way street. (The FTA) is an important building block for our strategy to advance free trade not just to Panama, but the entire western hemisphere.
“In 2010, we did about $450 million worth of agriculture exports to Panama. … We expect to see that increase by, hopefully, several hundred million dollars.”
Asked why the Colombian deal took so long, Vilsack pointed to several things.
“First, President Obama decided there was a need to strengthen the nature of the (FTAs). When he came into office, he (made) an aggressive effort to renegotiate portions of each agreement to make them better.
“There were some serious concerns about violence against labor leaders and lack of prosecution of such violence. We wanted to make sure the agreement provided basic protections.
“Once that was done, we were then faced with the dilemma of the House of Representatives essentially telling us they weren’t interested in dealing with individual trade agreements. They wanted all the agreements as a package…
“When we were prepared to submit these as a package, it was pointed out that there would need to be commitment from Congress that there would be appropriate action on both the TAA and the Generalized System of Preferences (which provides preferential duty-free entry to the United States for up to 4,800 products from 129 beneficiary countries and territories). The GSP system, according to the U.S. Chamber of Commerce, helps to support about 80,000 jobs in this country – so, it was important that be extended.
“We finally got commitments from the House very recently that they were willing to move those in conjunction with the FTAs. That allowed (Obama) to submit the FTAs to Congress.”
Once Congress passes the FTAs the focus will shift to ratification by governments in the three countries. Vilsack was unsure how long that might take, “but I’m heartened by the fact that the president of South Korea will visit the United States in the next week, or so. It’s anticipated and expected that such a visit wouldn’t take place if … there isn’t going to be ratification.”