The U.S. Congress has approved free-trade agreements with South Korea, Colombia, and Panama in the biggest trade deal for the U.S. since the North American Free Trade Agreement in 1994.
The bills now go to President Barack Obama, who has spent the last two years garnering Democratic support for the pacts revised from initial agreements reached by the George W. Bush administration. The South Korea deal, the largest of the three, removes duties an almost two-thirds of all American farm exports, and phases out tariffs on more than 95% of industrial and consumer exports within the next five years.
The South Korea deal is expected to boost American exports by as much as $10.9 billion in the first year, according to the U.S. International Trade Commission, while the accord with Colombia is expected to increase exports by as much as $1.1 billion a year. The accords are also expected to prevent the loss of 380,000 jobs in the U.S., according to the Chamber of Commerce.
President Obama submitted the measures, first reached under President Bush more than four years ago, to Congress after House Speaker John Boehner, an Ohio Republican, said he would consider aid for workers losing their jobs to foreign competition. Negotiations first came to a stalemate over the issue when Republicans refused worker assistance.
“American automakers, farmers, ranchers and manufacturers, including many small businesses, will be able to compete and win in new markets,” said President Obama in an e-mailed statement. Earlier this week, the Senate rejected the president’s $447 billion plan to create jobs.
In a year when many advanced economies are experiencing an economic slowdown, many developed nations are turning to emerging markets as sources of growth. While the U.S. economy grew at a 1.3% annualized rate during the second quarter, Colombia’s gross domestic product rose 5.2% in the year through June, while South Korea’s GDP increased 3.4%.
Obama hopes to double American exports by 2015, in part by boosting shipments to Asia. Nine nations are currently involved in negotiations over the Trans-Pacific Partnership trade accord being led by the U.S. Obama’s administration negotiated terms for auto tariffs in the South Korea agreement, winning over the United Auto Workers union, while exchanging tax information with Panama and making labor-rights assurances to Colombia.
The new accords put Japanese companies “in a further disadvantageous position with South Korean competitors in the U.S.,” according to Yoichi Kaneko, a ruling member of the Democratic Party of Japan. “There is still an opposition within the DPJ but I think it’s important for Japan to join the TPP and free trade agreements.”
The South Korean tariff phase-out increases market access for U.S.-based chemical, automobile, medical device, and drug companies, while the end of duties on a range of agricultural exports — including meat, dairy, vegetables, fruits, and nuts — benefits farmers.
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While the bills may be good for American companies, America’s largest federation of labor unions, the AFL-CIO, opposed the trade deals, saying they would destroy 159,000 jobs by encouraging companies to send work overseas. “These flawed trade deals are the wrong medicine at the wrong time,” said Richard Trumka, the organization’s president. “Working people know what too many politicians apparently do not: These deals will be bad for jobs, workers’ rights and our economy.”
Senate Democrats Robert Casey of Pennsylvania and Sherrod Brown of Ohio also opposed the bills. “They will in fact lead to job losses, especially in manufacturing,” Casey said before the vote.