Politics trap trade pacts

  • Article by: JIM SPENCER , Star Tribune
  • Updated: September 7, 2011 - 7:44 AM

Congress has been slow to enact deals that Minnesota companies say would create tens of thousands of jobs.

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Dock hand Shawn Boesen walked along a barge as it was being filled with corn at Cargill's loading area along the Minnesota River in Savage. At left is barge loader Jeff Simon, who was using a large shoot to pour corn inside the barge. More grain will now be exported to Korea, Columbia and Panama under free trade agreements.

Photo: Jim Gehrz, Star Tribune

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WASHINGTON

Major trade agreements with South Korea, Colombia and Panama appear harder to enact than they were to negotiate, even though many corporate executives and economists insist they provide just what the U.S. economy needs: jobs.

In Minnesota, the trade agreements offer expanded opportunities for more than 6,000 businesses that sell products in foreign markets. The deals will kill or cut tariffs those countries pay when they purchase American goods, increasing U.S. exports by more than $12 billion a year.

The White House and the U.S. Chamber of Commerce agree the trade deals will create tens of thousands of new jobs as American businesses hire to meet increased demand.

Yet as they did in fights over the budget and the debt ceiling, Congress and the White House have yet to show they can reach a consensus. And they are running out of time. If Congress does not act soon, experts warn that the trade agreements could be pushed aside by the need to fashion and approve $1.2 trillion to $1.5 trillion in additional federal deficit reduction before year's end.

"Timing is critical," said Devry Boughner, director of international business relations at Minnetonka-based Cargill, which has lobbied aggressively for the trade measures. "If we don't pass these agreements, other countries get the deals and other countries get the jobs."

Should that happen, the trade deals' supporters say Washington's dysfunctional politics will have turned self-destructive for everyone.

"These agreements have been sitting around for three or four years," said Rep. Erik Paulsen, a Republican serving Minnesota's Third Congressional District. "We can't let this slip by. This is a no-cost job creator."

U.S. Trade Representative Ron Kirk hopes to submit the trade deals to Congress within the next week or two. But he's still waiting for assurances that leaders of both parties in the House and Senate can guarantee votes on all three trade deals, plus the Trade Adjustment Assistance Act to retrain American workers whose jobs are displaced by opening foreign markets.

Paulsen said GOP leaders have told House Republicans to expect trade deal votes the week of Sept. 19.

Years of delay

The trade agreements were negotiated during the George W. Bush administration, but never passed by Congress. The Obama administration renegotiated part of the South Korea deal in 2010. For the past six months, the trade agreements languished in limbo while the budget and debt debates overwhelmed most other policy matters.

"Canada started later than the U.S. negotiating with Panama and Colombia, but passed agreements sooner," said Cargill's Boughner.

The first countries to strike trade deals often enjoy lasting competitive advantages over those that linger or malinger, Kirk said. "Korea completed a trade agreement with the European Union that went into effect July 1," Kirk told the Star Tribune. "Some anecdotal evidence suggests that Europe's exports are already up 16 percent."

Before the August recess, Republicans rejected a plan to attach the Trade Adjustment Assistance Act to the pending South Korea trade agreement. Now, the retraining bill will be voted up or down as a separate measure. But the Obama administration remains adamant that it must be part of any package the president signs into law. So sticking points remain.

"I don't need to tell you how challenged the environment is in Congress," Kirk said.

Tom Donohue, president of the U.S. Chamber of Commerce, says approving the trade agreements and trade adjustment assistance should be among the first things the United States does to create jobs. Minnesota businesses, which exported $18.9 billion worth of products in 2010, share the urgency.

"In 2011, Land O' Lakes has already sold $24 million in products to South Korea," said Carol Kitchen, a senior vice president. Passing the trade agreements is "an important step in supporting the growth and prosperity of American companies and, in our case, American farmers."

Three of the state's biggest companies -- 3M, Cargill and Medtronic -- have lobbied for the agreements. Cargill has invited employees to contact their representatives and senators personally.

"For our company to add jobs, we've got to have access to these markets," Cargill's Boughner said.

South Korea is the fourth-largest export market for St. Paul-based 3M. The company believes the trade agreements there and in Colombia and Panama will expand its sales.

"In 2010, we exported $650 million worth of products from Minnesota," said 3M spokeswoman Jacqueline Berry. "It's safe to say thousands of 3M jobs are tied to those."

Among Minnesota's congressional delegation, the reviews are mixed for the trade deals.

Paulsen predicted bipartisan House passage of the agreements. He was less sure about the retraining bill. Sen. Al Franken, a Democrat, voiced strong support for retraining money, but opposes the agreement wih Colombia.

"There are just too many troubling questions about the government's treatment of workers," Franken said. "I'm still carefully considering the Korea and Panama trade agreements, and I will continue to travel the state listening to Minnesotans and learning about the agreements' potential impact on Minnesota."

Sen. Amy Klobuchar, D-Minn., also backs the retraining bill and will probably support the South Korea and Panama pacts, but shares Franken's concerns about Colombia.

Rep. Tim Walz, a Democrat who represents Minnesota's rural First Congressional District, believes the Korean trade deal "would be a net win for Minnesota." But he likely won't vote for the Colombia Trade Promotion Agreement without a new commitment to human rights or for the Panama pact without a "tougher crackdown" on corrupt banks. Walz supports funding the retraining of displaced workers.

Presidential candidate and Sixth District Rep. Michele Bachmann, R-Minn., strongly supports all three trade agreements, a spokeswoman said, but will not express an opinion on retraining funds.

Rep. Betty McCollum, a Democrat from St. Paul's Fourth District, meanwhile, will vote against all the trade agreements but for the Trade Adjustment Assistance Act.

Other Minnesota delegation members did not respond to requests for comment or refused to comment.

Will jobs be lost?

Outside Congress, a battle continues over whether the trade agreements will cost more American jobs than they produce. Groups like the Minnesota AFL-CIO and the Minnesota Fair Trade Coalition believe there will be a net job loss.

"They protect capital, but not labor," said Steve Hunter, who serves as the Minnesota AFL-CIO's representative on the fair trade coalition. He criticized measures that let foreign-made parts be used for up to 65 percent of an "American product." Hunter also complained about human rights in Colombia and corruption in Panama.

Trade representative Kirk traveled to more than 50 cities in 21 states this past year to dispel the idea of net job losses.

"There is plenty of economic modeling that will show that the overwhelming majority of jobs lost in manufacturing in this country over the last 20 years has been due to increases in automation and innovation, not trade," he said.

In July, the nonpartisan Brookings Institution decided that all three trade agreements are in the national interest. Congress will prove soon if such nonpartisan endorsements can lead to consensus.

"The only people who are happy that the United States is in this impasse are our competitors," Kirk said. "They would love nothing more than to have the United States sit on the sidelines."

Jim Spencer • 202-408-2752

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