Path Is Cleared For Trade Deals

Treasury Secretary Henry M. Paulson Jr. hopes for more cooperation.
Treasury Secretary Henry M. Paulson Jr. hopes for more cooperation. (By Stephanie Kuykendal -- Bloomberg News)
By Peter S. Goodman and Lori Montgomery
Washington Post Staff Writers
Friday, May 11, 2007

Congressional Democrats, who only six months ago struck a combative stance with the Bush administration on trade policy, reached a deal with the White House yesterday, clearing the way for approval of trade pacts with Peru and Panama.

"Today marks a new day," House Speaker Nancy Pelosi (D-Calif.) said as she stood beside the Bush administration's Treasury secretary, Henry M. Paulson Jr., to announce the deal. She expressed gratitude to Republicans as well as Democrats.

"With their help, we have been able to agree to this new trade policy so that we can raise the living standards in the United States and abroad, expand our markets and spur economic growth," Pelosi said.

Participants said they hoped the deal would open the door to broader movement on trade issues in Washington, perhaps jump-starting other stalled talks or leading to more protection for American workers.

The key to the agreement, said those involved, was the Bush administration's reluctant assent to Democratic demands for more stringent labor rules. Under the new policy, enforceable labor provisions will be written into the texts of trade deals to protect the rights of workers abroad to organize unions and bargain collectively, while banning forced labor, child labor and workplace discrimination.

The Bush administration resisted such rules, reflecting the fears of business interests that they could boost the power of U.S. labor unions, opening a backdoor for them to rewrite U.S. law to their advantage. But the administration concluded that it had to swallow the labor rules lest its trade deals die in a Congress controlled by the other party.

The deal also includes an agreement between the White House and Congress to develop a "strategic worker assistance and training initiative" that would increase job training and financial assistance for communities that suffer job losses to overseas competition and automation. Democrats said those programs would go beyond existing benefits, but they provided few details.

Analysts said the compromise essentially ensures congressional passage for the pending trade deals with Peru and Panama. Less certain is the fate of two controversial pacts, with South Korea and Colombia.

The Bush administration hopes it can eventually craft a compromise that would win Democratic support for those agreements. The administration is also seeking an extension of the president's trade promotion, or fast track, authority, which gives him the right to negotiate trade deals and then submit them to Congress for up-or-down votes. The goal is to use yesterday's compromise as a template for future deals.

"I'm very much hoping this will lead to other areas of cooperation," Paulson said.

After Peru and Panama, however, prospects for other deals are considerably dicier, analysts said. The South Korea pact would need to be renegotiated to assuage complaints that it sufficiently opens that country to U.S.-made automobiles and meat. Colombia is even tougher, because about 400 labor union members have been murdered there in recent years, labor groups contend.

Thea M. Lee, the legislative policy director for the nation's largest confederation of labor unions, the AFL-CIO, said last night she could envision no scenario that would win labor's approval for a trade deal with Colombia.

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