Obama Makes a Positive Move On Trade

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Politics: Has America's bleak economy finally caught President Obama's attention? How else to explain the sudden movement on three free-trade pacts that have been gathering dust in a White House desk drawer for five years?

It certainly has caught Congress' attention. Fresh from forging a compromise on the debt ceiling with Senate Minority Leader Mitch McConnell, R-Ky., Senate Majority Leader Harry Reid, D-Nev., announced that free-trade agreements with Colombia, Panama and South Korea would move forward in September. A bill on trade adjustment assistance (TAA) for the unemployed will be taken up separately.

It was a dramatic moment, because Reid has never met a free-trade agreement he liked. In his statement, he hastened to add that he wouldn't vote for the pacts himself. But there's no way he would have presented them if they would not be capable of passage, a Senate GOP staffer told IBD.

It shows that a reality check has come over the worst opponents of free trade, from Reid to the president, based on the fact that the economy is in trouble, and the 9.1% unemployment rate is a disaster for them. Even the AFL-CIO, which is loudly opposing the pacts, is unlikely to have the clout it once did, a House Democratic staffer told IBD.

"Let 'em complain," he said.

Separating the trade pacts from the unrelated TAA issue cleared the path. Last May, President Obama announced movement on the pacts, but soon threw a monkey wrench into the process by insisting that the now-$1.5 billion TAA program be attached to the South Korean pact, appalling fiscal conservatives in Congress.

It was a bad decision because TAA should not be affixed to a permanent treaty that deserves a vote on its own merits.

Worse still, TAA was a porky program that study after study showed to be ineffective and gave workers reason to blame all job losses on free trade. It was bad enough that it might have been better for the treaties to wait until 2013, a different Senate GOP source told IBD.

With the TAA monkey off the pacts' backs, GOP sources say they can attach amendments to TAA to clean it up so that it doesn't end up just another payoff to Big Labor, whose members use half the program's resources.

As for House Democrats such as Ways and Means ranking member Sander Levin of Michigan and Jim McDermott of Washington, they think the program is reasonably bipartisan and if the Tea Party-heavy House rejects TAA, they can go back to attaching it to the Korea pact that would be voted on after TAA.

That's seen as an acceptable risk for all sides. "This agreement between the leaders reflects strong bipartisan commitment to pass these agreements into law as soon as the president sends them up," said Michael Brumas, spokesman for McConnell, who is a strong proponent of free trade.

Congress thinks the president will send them up. If so, it means he has finally accepted that free trade is about jobs and economic growth.

It doesn't come a moment too soon. As the U.S. stares at a double-dip recession ahead, Europe and Canada are eating our lunch overseas, which is a huge source of economic growth, snapping up America's market share with pacts of their own.

On July 1, South Korea and the European Union put their free-trade agreement (worth at least $10 billion)in force, supercharging already high commerce between Asia's fourth biggest economy and the 27-member European Union, paying zero tariffs on pork, cars and luxury goods while U.S. firms remain stuck paying Korean tariffs.

On Aug. 15, the picture duplicates as the Canada-Colombia free trade pact starts, dropping tariffs on Canadian wheat, chemicals, machine tools and other products to zero while Americans continue to pay and watch their market share go to zero.

The best that can be done in the U.S. is a September vote, but if it's real, it's good enough, given the bleak lack of progress on any other prospect of boosting our economy and creating jobs. Given the success of the debt-ceiling compromise, trade may be headed for a finale too. It's long past time for Obama and the Democrats to take that opportunity.

 

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