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Issue #584 | Breakbulk Quarterly

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2014 Media Kit
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LatAm trade deals face uphill climb in Democratic House

By: | at 07:00 PM | Channel(s): International Trade  

The prospect of Democratic control of at least one chamber of the US Congress has thrown Peru and Colombia’s free trade agreements with the US into greater uncertainty.

Democrats appeared poised to gain a majority in the House of Representatives in midterm elections. Though both Peruvian and Colombian authorities have been lobbying hard for US ratification of their trade pacts, the Andean nations will face greater resistance with a Democratic-controlled House. A larger Democratic presence in the Congress might also stall major advances in international trade policy issues for the years ahead.

“If Democrats take control of the House, passage of both the Peru and Colombia free trade agreements is going to be in jeopardy,” said Dan Griswold, director of the Center for Trade Policy Studies at the Cato Institute. “Democratic leaders have made it clear they’re unhappy with the agreements as they exist. They are definitely sounding the organized labor line that labor and environmental requirements need to be beefed up.”

Peru’s legislature ratified the agreement in June. Colombia and the US are very advanced but haven’t yet signed an FTA. There’s a possibility that the US Congress could still tackle approval for the Peru deal during its lame-duck session between the Nov. 7 elections and year-end. But few experts are pegging that as a strong prospect.

What’s more likely is that the push for ratification takes place in the first half of 2007, before the expiration of the Trade Promotion Authority, under which lawmakers can vote-up-or-down on agreements but not amend them. This fast-track authority passed the House by just three votes when it last came up for renewal in 2002.

Eric Farnsworth, vice president for policy at the Council of the Americas, and CoA Senior Director Christopher Sabatini wrote in a report last month, “It is virtually inconceivable (fast track) authority would be granted to the White House” next year. The authors added that “time is painfully short” for Congress to move on the FTAs before the Trade Promotion Authority expires.

One problem is that “a lot of the Democrats will have won on anti-trade positions if they make it,” said Sidney Weintraub, a Latin America scholar at the Center for Strategic and International Studies in Washington.

A further complication under a Democrat-controlled House is that US lawmakers will ask for changes to the agreements. The modifications could meet with resistance from the Latin American countries. In the case of Peru, for example, the legislature passed the FTA with a healthy margin and could be unwilling to make many concessions after such a strong, initial showing of support for the deal.

The murky outlook for Peru and Colombia’s FTAs underscores the general uncertainty over international trade policy that will accompany a stronger Democratic presence in Congress. Charles Rangel, D-NY, would become the chairman of the House Ways & Means Committee if the Democrats were to be the majority party. Rangel has a “mixed record” on trade, whereas outgoing Chairman Bill Thomas, R-CA, “was a champion on free trade issues,” said Griswold of the Cato Institute.

A Democratic-controlled House would mean “two years of confrontation and stalemate with the White House over trade policy,” marked by floundering World Trade Organization negotiations and a proliferation of bilateral and regional agreements outside of the US, Griswold added.

Just last month, Uruguayan President Tabare Vazquez said he would pursue a “framework accord” for a free trade deal instead of a full FTA.

Outside of Latin America, the US is negotiating FTAs with Malaysia and South Korea, among others.

For Peru and Colombia, a stop-gap measure would be renewal of the Andean Trade Preferences Act and Drug Eradication Act. ATPDEA is slated to expire at year-end. Last week, 28 US lawmakers sent a letter to House Speaker Dennis Hastert, R-IL, and House Majority Leader John Boehner, R-Ohio, asking them to move on legislation that would extend ATPDEA until Peru and Colombia’s FTAs