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Showdown on Trade

Author: Lee Hudson Teslik
April 11, 2008

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Free trade has emerged as a political football in the U.S. presidential campaign, and a proposed treaty with Colombia, recently sent to Congress by President Bush, now seems up for grabs. The deal, agreed on in 2006, aims to lift tariffs on the vast majority of goods traded between the United States and Colombia, one of the strongest U.S. allies in Latin America and a major recipient of U.S. aid. Congressional Democrats immediately moved to sideline the deal (WashPost). House Speaker Nancy Pelosi said she won’t bring it to the House floor unless Bush meets Democratic demands for greater relief for victims of the current mortgage and credit crises, adding that without further concessions the deal would be voted down in the House either way. The move drew ire from the administration—and Colombia—and spotlights deep discontentment about trade that promises to reverberate through the November presidential vote and beyond.

The Colombia free trade agreement isn’t the only such deal pending congressional approval. Trade pacts with Panama and South Korea also hang in the wings, and economists have long hoped for a multilateral deal through the Doha round of World Trade Organization talks. But recent economic turmoil and job losses in the United States (Bloomberg) have led many politicians and voters to raise questions about free trade pacts. NAFTA, the North American trade bloc, has come in for particular criticism. The Colombia, Panama, and South Korea deals—which are negotiated but awaiting ratification debates—appear under threat. While Democrats agreed to ratify a trade promotion deal with Peru in 2007, election-year concerns and a bad economy have led to demands for heightened assurances on labor and environmental standards, as well as domestic economic-stimulus measures. On the presidential hustings, CFR.org’s candidate issue tracker on trade shows Sens. Hillary Clinton (D-NY) and Barack Obama (D-IL) vying to ride the anti-free trade wave.

The Wall Street Journal, generally a free trade advocate, argues in an editorial that U.S. trade unions rely on flawed logic when they say killing the deal would protect U.S. workers. The Journal contends the deal would weaken the competitiveness of U.S. manufacturers and put some of the best-paying union jobs at risk. Duties on Colombian goods coming into the United States are already quite low, so the main upshot of killing the Colombia agreement would be to limit U.S. exports. But among the U.S. electorate, polls show anti-free trade arguments gaining credence. One analyst argues in Foreign Policy in Focus that this sentiment may stem from U.S. concerns about losing the global economic preeminence it has enjoyed since World War II.

Experts say domestic trade politics could bring very real diplomatic consequences. Colombia’s President Alvaro Uribe recently lashed out at Barack Obama (AP) for his statements on the Colombia deal. Nor has Washington ’s skittishness about the Colombia deal been lost on other potential trade partners. South Korea’s Chosun Ilbo comments that unfriendly U.S. trade winds could derail the pending deal between Washington and Seoul, frustrating South Korean President Lee Myung-bak, who is intently focused on expanding trade. In a CFR Critical Policy Choices report, trade expert Daniel W. Drezner notes every time the United States has signed a bilateral free trade agreement, its relations with that country have improved markedly.

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