Bill removes obstacle to trade pacts

UPDATED:

President Obama’s signing of the stimulus bill this week removes one of Democrats’ longstanding objections to passage of long-sought-after free trade agreements with Colombia, Panama and South Korea, but party leaders said that they are not necessarily any closer to holding a vote on the deals.

A little-noticed portion of the $787 billion stimulus adds service workers to the Trade Adjustment Assistance (TAA), which provides unemployment insurance, job retraining and health care subsidies to workers who lose jobs to foreign competition. It had previously covered only the manufacturing sector.

“This is a major breakthrough,” said Howard Rosen, a longtime trade specialist at the Washington-based Peterson Institute who helped draft the legislation.

Mr. Rosen was one of several trade specialists to praise the move. It is expected to double the program from about 50,000 enrollees to nearly 100,000. Funding for the program, which is currently around $900 million, will also likely double, and money for training will nearly triple, from $220 million to $575 million annually.

Democratic congressional leaders say the expansion doesn’t pave the way for the trade deals that have been pending for more than a year.

Senate Finance Committee Chairman Max Baucus, Montana Democrat, has been saying “for the past year, and longer, that TAA was his No. 1 trade priority, and that it must move independently of pending free trade agreements,” said spokeswoman Carol Guthrie.

“He has also said that he supports proceeding on agreements on their own merits when the time is right,” she said. “There’s not a procedural link between TAA and Colombia or the other FTAs.”

Brendan Daly, a spokesman for House Speaker Nancy Pelosi, California Democrat, conceded that TAA was “definitely an obstacle” to moving forward with the trade deals.

Mr. Baucus and others resisted calls from the Bush administration last year to pass the Colombia deal, citing the need to do more for U.S. workers first.

“As the speaker has said, we have to address the concerns in our domestic economy first, and TAA was part of that, and the recovery package is part of that, as well as housing,” he said.

Analysts say Democrats risk contributing to an already toxic global trade environment in which the economic crisis is increasing pressure on politicians to erect trade barriers that most experts agree would prolong any economic slump.

Congress has already sent a protectionist message, however, with the “Buy American” clause it inserted into the stimulus. Despite its conditionality - projects funded through the stimulus must use U.S.-made materials, but only as long as they are “applied in a manner consistent with United States obligations under international agreements” - experts said the measure was bad mostly for symbolic and psychological reasons.

“It’s an unfortunate signal mainly,” said Kimberly Elliott, a senior fellow at the Center for Global Development, though she said that while the measure is protectionist, “the U.S. is by no means the worst player on this.”

“In terms of job creation, if in fact it does set off a spiral of others pushing their policies further, and then cutting off our exports, then it doesn’t gain anything on the job front anyway,” she said.

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