As Washington dithers, Europe races ahead on trade
AMERICA DESPERATELY needs jobs. Republicans and many Democrats in Congress, along with President Obama, say that the pending trade promotion agreements between the United States and South Korea, Colombia and Panama will help create employment in this country. All that’s left to do is have the president submit the deals for approval in the House and Senate, stage a signing ceremony in the Rose Garden, and go off for a nice summer barbecue — right?
Actually, no. The trade pacts remain stalled, with Congress’s August recess looming. As far as we can see, the only work they’re creating is for political scientists who study polarization and legislative dysfunction.
The latest kerfuffle revolves around the White House-backed effort by Senate Finance Committee Chairman Max Baucus (D-Mont.) to tie about $900 million in aid over the next three years for trade-displaced workers to the South Korea deal, by far the largest and economically most important of the three. This prompted a walkout from the hearing by Republicans, who protested that the administration was using free trade as a vehicle for more spending.
What’s really going on? Basically, each party is playing some last-minute hardball on behalf of its respective ideological bases. On the Democratic side, labor unions have been unable to prevent Mr. Obama’s belated conversion to the cause of the free-trade agreements. Trade adjustment assistance (TAA) money is the consolation prize labor demands — and the White House is determined to let the unions have it. On the Republican side, the anti-spending Club for Growth and affiliated back-benchers in Congress see TAA as yet another failed, expensive bureaucracy and want to kill it. GOP leaders on the Hill are committed to giving them at least a chance to vote “no” on TAA.
The White House says that tying TAA to the South Korea deal helps guarantee that both the trade deal and TAA make it past Republican opposition. Perhaps, but it’s a risky gambit: What happens if Republicans refuse to vote for free-trade-plus-TAA? We could end up with nothing.
TAA is an expensive program whose practical impact has been questioned by independent audits. But, as Republicans have acknowledged in the past, it is useful as a sop to American workers who are understandably nervous about trade’s impact. In our view, the projected benefits of the trade agreements are so large — $13 billion in additional exports per year, according to the International Trade Commission — that a reauthorization of trade adjustment assistance is a price worth paying to secure them. Indeed, the administration and Rep. Dave Camp (R-Mich.), the chairman of the House Ways and Means Committee, have agreed to reduce its price tag.
The Republicans have a valid complaint when they say that this entire mess could have been avoided if President Obama had long ago embraced the three trade agreements, which were negotiated by the Bush administration in 2007, instead of delaying and rejiggering them to appease labor over the last 21 / 2 years.
But that’s water over the dam. Both sides need to focus less on pleasing their bases and more on figuring out a politically realistic plan for passing both the free-trade agreements and trade adjustment assistance — ASAP. On Friday, as Washington dithered, a free-trade agreement between the European Union and South Korea took effect. In other words, German, French and Italian workers got a head start in the race for those jobs you’ve been hearing so much about.