Greg Ip

Articles by The Economist’s U.S. Economics Editor

Trade pacts: Progress, of a sort

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Coupling trade with worker aid

Jun 30th 2011 | WASHINGTON, DC | from the print edition

[Greg Ip] BARACK OBAMA is a late and reluctant convert to free trade. As a senator he opposed many trade agreements negotiated by George Bush—among them deals with Korea, Colombia and, for a time, Panama. As president he has given his backing to those deals, provided Korea did more to admit American cars, Colombia made greater efforts to prevent the murder of union activists, and Panama tried harder to crack down on tax cheats. Satisfied on those fronts, he then insisted that Congress should also reauthorise Trade Adjustment Assistance, or TAA, which provides American workers who lose their jobs to foreign competition with training, income support and subsidised health insurance.

He appears to have won that as well. On June 28th the White House said it had a deal with Max Baucus and Dave Camp, the Democratic and Republican chairmen of the trade committees in the Senate and House respectively, to bundle reauthorisation of TAA in with the Korean deal. Mr Obama would then submit all three pacts to Congress for ratification, along with renewal of preferential tariffs for poor countries.

The deal is a fragile one. Republicans have been clamouring to ratify the trade pacts, but not necessarily with TAA attached. Serious fraying has occurred of the consensus that trade liberalisation’s benefits for the many should be coupled with aid for the few. John Kennedy signed TAA into law in 1962 as part of the inauguration of global trade negotiations so that “those injured by that competition should not be required to bear the full brunt of the impact.”

Eligibility for TAA has been expanded several times; by 2010 it went to 234,949 people. Howard Rosen, a proponent of TAA and a scholar at the Peterson Institute, notes that key Republicans, including Mr Camp, supported its last expansion in 2009. (That expansion has expired, and the latest deal would restore it.) Mr Camp still supports TAA, but many of his fellow Republicans consider it just a waste of money.

If Republicans strip TAA from the deal, Mr Obama may abandon the trade deals altogether. That might destroy the prospect of any trade liberalisation during his presidency. But many Americans won’t care. Pew, a pollster, finds that 44% of them, a plurality, think trade agreements are bad for America, the highest percentage in 13 years.

Clarification: Dave Camp

Jul 14th 2011 | from the print editionWe reported in our July 2nd issue that Dave Camp, chairman of the House’s trade oversight committee, had agreed to bundle reauthorisation of a worker assistance programme with approval of a Korea trade agreement. Mr Camp disputes this characterisation, because he did not agree to a legislative process by which the two items would proceed.

The original article is linked here.

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Written by gregip

June 30, 2011 at 12:15 pm

Posted in Uncategorized

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