Sides Get Closer to A Deal On Trade

Democrats Win Labor Concession, Sources Say

The Bush administration and Democratic leaders have struck a compromise that would insert stricter labor rules into future trade treaties, potentially lending fresh momentum to the global effort to promote free trade, sources briefed on the talks said yesterday.

The agreement would remove the primary obstacle to congressional approval of pending trade deals with Peru and Panama, while enhancing prospects for a more controversial agreement with Colombia, the sources said. It generates momentum for the possible revival of the long-stalled Doha round of trade talks, aimed at aiding poor countries by rolling back tariffs worldwide.

Two sources who described the compromise would speak only on condition of anonymity because it has not been approved at the White House or publicly disclosed. They cautioned that the agreement negotiated in recent days between U.S. Trade Representative Susan C. Schwab and Rep. Charles B. Rangel (D-N.Y.), chairman of the House Ways and Means Committee, could still unravel, with many outstanding issues left to be resolved. Labor unions have not yet reviewed the terms, the sources said, and the deal does not have President Bush's final blessing.

Under the plan, the trade deals signed with Peru, Panama and Colombia would have to be renegotiated with their governments before they can be revised and submitted to Congress for a vote, raising the possibility they could be killed by opposition in those countries.

But sources familiar with the negotiations said the agreement sharply increases the prospects that the deals will be approved.

The compromise has been engineered to deliver substantive benefits and political cover to key interest groups. Democrats and labor would get standards barring forced labor and child labor in other countries, while elevating the rights of workers to organize unions. American industry would gain assurances that such provisions would not influence U.S. laws. The Bush administration, under fire at home and abroad for the war in Iraq, could claim a legacy of expanding a decades-old American mission to increase world trade.

One source briefed on the talks said the administration hopes to use the compromise language to conclude deals with Panama and Peru, then apply it as a template for subsequent pacts with Colombia and South Korea, and in the pursuit of a breakthrough in the Doha talks.

"We continue to have productive discussions with the Congress and remain optimistic that we can get an agreement that will create a new bipartisan majority in the Congress for the pending free trade agreements," Schwab said through a spokesman last night.

But significant impediments confront the deals. Democrats and administration officials alike say the South Korea pact is inadequate because it does not sufficiently open the country to U.S. cars and meat. The Colombia deal is the hardest sell on Capitol Hill, because labor union members are frequently murdered in that country. One source said the administration still hopes to win Democrats and labor with provisions to significantly strengthen Colombia's laws.

The compromise does not apply to the president's quest for an extension of his so-called fast-track authority -- his right to negotiate trade pacts and submit them to Congress for simple up-or-down votes, without amendments. His authority expires at the end of June. Without an extension, the administration will be hamstrung in its efforts to jump-start the Doha talks. Democrats are reluctant to give an unpopular president new trade powers, particularly in a time of public disenchantment with globalization.

The deal would be the culmination of six months of negotiations between House leaders and the U.S. trade representative over a divisive issue: what rules should apply to labor when the United States expands commerce with a poor country.

In previous pacts negotiated by the Bush administration such as the Central America Free Trade Agreement, the only labor provision subject to enforcement requires that countries apply their own labor laws, even if those laws are weak.