U.S.-Colombia Free Trade Foot-Dragging: Will Washington Welch On the Deal?

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Today, June 15, marks Colombia’s deadline to pass Washington’s free-trade test, and it made the grade. To assuage well-founded U.S. concerns about workers’ rights and anti-labor union violence in Colombia, President Juan Manuel Santos agreed to undertake a raft of reforms. They include a major increase in labor inspectors; new rules that make it tougher for companies to circumvent unionization; protection for labor leaders and stepped-up prosecution of cops and other goons accused of beating and killing labor organizers. So now President Obama will send the long-awaited free trade agreement with Colombia, as well as the Panama and South Korea pacts that are tied to it as a package, to Congress, right? And Congress will now ratify them. Right?

Not so fast. Just because Bogotá has gotten its act together doesn’t mean Washington has. Although both the Obama Administration and congressional Republicans favor the three agreements, which together could increase U.S. exports by more than $10 billion, there is still a monkey wrench in the works: Trade Adjustment Assistance, a Kennedy-era program that aids hundreds of thousands of U.S. workers adversely affected by global trade each year, and which needs to be renewed. Democrats insist that should precede a vote on the Colombia, Panama and South Korea pacts; Republicans want to ratify the agreements now and tend to the renewal of TAA, whose billion-dollar annual cost they’d love to chop, later.

That could be a serious enough roadblock to scuttle a vote on the agreements this summer – which would then most likely force a delay until after the 2012 elections, since politicians are loath to wave free trade pacts in American workers’ faces during an election year. Each party of course accuses the other for the wait – the Democrats say the GOP wants to push the agreements through without ensuring proper protections for U.S. laborers; Republicans say the Dems are holding the agreements hostage by making TAA renewal a condition – and since partisan deadlock is the favorite sport on Capitol Hill these days, there’s a real chance we won’t see a vote this year.

I’m not a knee-jerk booster of free trade agreements, especially after watching what NAFTA did to Mexican farmers. But in this case, at this point, congressional inaction would be a shame, given the good will Santos has displayed compared to his churlish predecessor, Alvaro Uribe. And though Panama’s judicial system is still a corrupt and incompetent mess – what else do you call a high court that last year ruled in favor of one of Panama’s most powerful families, who sought to nullify a relative’s will leaving $50 million to poor children, so that the family could inherit the money instead? – the country at least recently approved a tax-information exchange agreement with the U.S. to help make financial data more transparent. And officials in Seoul, according to U.S. diplomats, have finally made concessions on U.S. car and beef exports to South Korea.

Obama sees the trio of trade treaties as a showcase for his new National Export Initiative, which hopes to double U.S. exports by 2015. “They reflect the fact that the expansion of U.S. exports is a big priority for this Administration,” Kevin Sullivan, the State Department’s economic policy director for the Americas, told me. Problem is, if Congress doesn’t ratify the agreements this year, the pacts could instead end up being a showcase of American dysfunction. Colombia, Washington’s chief ally in South America and one of the continent’s most dynamic economies today, seems particularly exasperated with the yanqui dithering. And it’s responding, as so many other Latin American countries are today, by building closer ties with China, whose bilateral trade with the region has gone from negligible a decade ago to $180 billion last year. This week Colombia, which in February announced it was in discussions with China to build a railroad connecting its Caribbean and Pacific coasts, passed legislation that would open the door to a far wider array of Chinese commerce and investment.

Not that the invasion of the Chinese yuan in America’s backyard is all joy for Latin America. Even powerhouse economies like Chile and Brazil now realize China is far more interested in their raw materials than in manufactured products like Brazil’s jets. During Chinese Vice President Xi Jinping’s visit to Latin America this week, Alicia Barcena, head of the U.N.’s Economic Commission on Latin America & the Caribbean, wrote in the Miami Herald of “the urgent need to rethink the strategic link between Latin America and the Asian giant.”

Washington shouldn’t take too much comfort in that, however, especially if it fails to pass the three awaiting free trade agreements. As far as countries like Colombia are concerned, when the U.S. requires them to pass its tests, we should at least be ready to do more than welch on the deal.