The KORUS FTA took shape under the administrations of South Korean President Lee Myung-bak and President Obama. Image: Flickr user US Embassy Jakarta.

KORUS Trade Agreement Poised For Congressional Approval

Korea

by Barbara Wanner

Supporters of the Korea-United States Free Trade Agreement (KORUS FTA) have their fingers crossed that Members of Congress finally will approve legislation to implement the accord shortly after returning from their August recess. Senate Republican and Democratic leaders appeared to set the stage for such action on August 3 when they agreed on a “path forward” that will enable votes on the US free trade agreements with Korea, Colombia, and Panama as well as a separate bill to renew an expanded Trade Adjustment Assistance Program (TAA).

Despite some sparring in late August between the White House and Republicans about obstructionist tactics employed by the other, insiders are hopeful that a mutually agreed upon legislative mechanism will ensure that proponents of the FTAs and advocates of an expanded TAA program ultimately will get what they want. The only obstacle may be a crowded legislative calendar.

Linkage Logjam — Although all three of the FTAs were concluded during the previous administration, the Obama White House has refused to submit the requisite implementing legislation to Congress unless it was assured that Congress would pass a bill to extend expanded benefits for the TAA program. The latter provides welfare and re-training assistance to US workers who lose their jobs owing to increased import competition. Although the TAA program is authorized through February 12, 2012, Congress significantly expanded it as part of the post-financial crisis stimulus package — the American Recovery and Reinvestment Act of 2009.

Composition of US Exports to Korea (Merchandise), Source: KoreaMattersforAmerica.org

This included extending benefits eligibility to service sector workers and nearly tripling the funding for re-training services. Those expanded features lapsed earlier this year. The Obama administration and its Democratic allies in Congress have argued that fairness — particularly in a still uncertain economy — warranted that a “robust renewal of TAA consistent with the goals of the 2009 law” accompany “forward movement” on the three FTAs.

Republican Response — Republican leaders on trade policy objected to the TAA/FTA linkage. They evidently were concerned that any “packaging” of the TAA and FTA bills risked sinking the much-desired trade accords — particularly in the Republican-controlled House — because of the objections of many Republican members to the costs of the worker assistance program.

In late July, however, Sen. Rob Portman (R., Ohio), a former US Trade Representative, helped to nudge both sides toward compromise. Portman and eleven of his Senate Republican colleagues sent a letter to President Obama in which they urged him to send the three FTAs to Capitol Hill as soon as possible. Importantly, they pledged to support a separate TAA bill that incorporated reforms aimed at limiting certain aspects of the program and reining in overall costs. These changes were negotiated by the White House, Senate Finance Committee Chairman Max Baucus (D., Montana), and House Ways and Means Committee Chairman Dave Camp (R., Michigan) in late June.

Legislative Vehicle — In early August, Senate Majority Leader Harry Reid (D., Nevada) and Senate Minority Leader Mitch McConnell (R., Kentucky) hammered out a deal that will enable the Senate to first take up a separate TAA bill. Experts say Senate lawmakers likely will use a House-passed trade measure as a vehicle for language extending TAA benefits in line with the June compromise. The Senate-amended bill then would be sent back to the House.

House Ways and Means Chairman Dave Camp (R., Michigan) has suggested that the lower chamber, in turn, would vote on four separate bills — the KORUS, Columbia, and Panama FTAs plus the TAA extension — in quick succession. The House-passed FTAs then would go before the Senate, where experts expect their timely approval.

Scheduling Uncertainties — House Speaker John Boehner (R., Ohio) praised the deal, saying the Senate leaders had “cleared an important hurdle.” He said he looked forward to the House “passing the FTAs in tandem with separate consideration of the TAA legislation as soon as possible.”

Some Congress-watchers offer a more cautious outlook, however. They suggest that the Senate-House-Senate legislative procedure may be delayed or otherwise complicated by budget exigencies. The current fiscal year ends on September 30, so Congress will have to approve a Continuing Resolution (CR) that would keep the government running beyond October 1. (None of the twelve FY2012 appropriations bills have been enacted yet.) Thus, the “floor time” required to consider the FY2012 CR — particularly in view of the paralyzing nature of the budget debates to date — may not allow for timely action on the FTAs and TAA legislation at least in September.