News and Analysis • Volume 11 • Number 6 • October 2007
Peru FTA Approval Moves to Congress
The clock for congressional consideration of the US-Peru free trade agreement started ticking in late September, but Democrats still have concerns.
President Bush submitted implementing legislation on the treaty to Congress on 27 September. The House Ways and Means Committee and the Senate Finance Committee have 45 days to consider the proposal. The House then has 15 days for a full floor vote, with a Senate floor vote to follow within two weeks of the House decision.
Link to Trade Adjustment Assistance May Cause Delay
While US-Peru agreement appears to have enough bi-partisan support to secure passage, House Speaker Nancy Pelosi announced on 26 September that she would hold off a floor vote until a revamped trade adjustment assistance (TAA) bill had been developed and approved. Meanwhile, Senator Max Baucus predicted that the Finance Committee would pass the Peru- US pact with a comfortable majority, and said he was consulting with Ways and Means chair Charles Rangel on the elements of a new TAA bill.
Democrats in general consider that an expanded trade adjustment assistance programme is essential to ensure that US workers affected by free trade deals have adequate access to retraining and health benefits. Ways and Means trade subcommittee chair Sander Levin has said the new TAA programme would extend to services workers (in addition to those employed in manufacturing), and could cover jobs displaced due to technological advances.
Although the Democratic leadership rallied around the Peru agreement after extensive changes were approved on its labour and environmental provisions (Bridges Year 11 No.5 page 14), some freshman legislators have vowed to oppose even if an expanded TAA bill is approved.
The China Connection
Representatives Betty Sutton and Bill Hare, who lead the ‘no’ vote campaign, maintain, inter alia, that the Peru FTA lacks teeth to enforce the new labour and environmental obligations. More generally, they have criticised the Democratic leadership for consenting to consider a trade deal promoted by the Bush administration before tackling more pressing priorities, such as legislation on China’s exchange rate.
In July, competing currency bills were approved in two different Senate committees. While their details differ, both would require the administration to take action at the International Monetary Fund and, ultimately, at the WTO against countries that refuse to reform their exchange rate policies after US authorities have found their currencies to be ‘fundamentally misaligned.’ One of bills also mandates the Commerce Department to take ‘currency undervaluation’ into account when calculating anti-dumping duties on foreign goods (see page 19). No similar legislation has yet been submitted to the House Ways and Means Committee.
KORUS Update
Faced with strong opposition from Democrats demanding more access for US automobiles and beef, the Bush administration appears to be in no hurry to start congressional consideration of the Korea-US FTA signed last June. Korea, on the other hand, is no mood to take up the Democratic challenge. Seok-young Choi of the Korean Embassy in Washington said on 26 September that his government “could not see any further concessions on the automotive agreement. […] It has no intention to change the agreement at all.” Mr Choi nevertheless expressed confidence that Congress would eventually approve the FTA. The Korean government, he said, was hoping that the National Assembly would pass the agreement before the end of Roh Moo-hyun’s presidency on 20 February 2008.
Also on the bilateral front, China and Peru have announced the launch of FTA negotiations, most likely before the end of the year. Although there is no official timeline, Peru’s foreign affairs minister José Antonio García Belaunde predicted that the deal would be signed in 2008.