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U.S.: Congress Passes Controversial Free Trade Agreements

WASHINGTON, Oct 13 2011 (IPS) - The three landmark deals between the United States and trading partners South Korea, Colombia and Panama approved by the U.S. Congress late Wednesday represented the largest free trade agreements in the U.S. since 1994 and the first free trade agreement made by the U.S. since 2007.

A milestone for the U.S. economy, the agreements have been the subject of a tortuous debate over trade liberalisation since 2006, when they were first proposed by the Bush administration. They had bipartisan support during this round of negotiations, following efforts by the Obama administration.

The free trade agreements (FTAs) could generate more than 13 billion dollars in export revenue and hundreds of thousands of jobs for the U.S. by removing trade limitations in favour of U.S. manufacturers and agricultural producers, as well as banking and insurance service industries, according to the Office of the U.S. Trade Representative.

The largest component of the deals approved Wednesday is the agreement between the U.S. and South Korea, the world’s 15th largest economy, in what some call the biggest trade deal for the U.S. since the ratification of the North American Free Trade Agreement (NAFTA) in 1994.

Arguments in favour of the deal urged the passage of the FTAs to help revive the U.S.’s stalling economy by increasing exports, thus creating jobs both at home and abroad.

But prior to the deal’s passage, labour unions like the AFL-CIO and the Teamsters argued that the agreements could actually do more damage.

They could lead to layoffs of potentially hundreds of thousands of U.S. workers and contribute to continued abuse of workers in Colombia and Panama, some said. Others argued that the new trade agreements are mere continuations of old policies that have run economies into the ground.

“The United States has lost five million jobs since NAFTA, and the last thing America’s middle class needs right now is ‘Son of NAFTA,'” Teamsters General President Jim Hoffa said before Congress passed the deal. “We desperately need to reverse direction and protect our economy, instead of giving it away to our diplomatic partners.”

Nevertheless, U.S. President Barack Obama called the FTAs a “major win” for U.S. workers. The deal is seen as a major political victory as part of a plan to double U.S. exports during his tenure as president.

“I’ve fought to make sure that these trade agreements with South Korea, Colombia and Panama deliver the best possible deal for our country, and I’ve insisted that we do more to help American workers who have been affected by global competition,” Obama said in a statement released Wednesday night.

The agreement could generate 10 billion dollars from U.S. exports to South Korea by gradually removing tariffs on more than 95 percent of industrial and consumer exports over the next five years and slashing the majority of duties on U.S. farm exports.

The deal is expected to be especially significant for U.S. automakers trying to enter the South Korean market. Ultimately, it could serve as precedent for more U.S. goods to enter other Asian markets.

The President of South Korea, Lee Myung-Bak, in Washington this week, called the deal a “win-win” that marked a new era of relations with the U.S. and would increase two-way trade by more than 50 percent by 2015.

“The Korea-U.S. Free Trade Agreement will demonstrate to the world that we can create good-quality jobs and stimulate growth through open and fair trade,” Lee said at a press briefing at the White House on Thursday.

“The passage of the KORUS FTA has opened up a new chapter in our partnership, in our alliance.”

South Korea’s minority Democratic Party has contested the FTA’s passage, which received overwhelming support from the leading Grand National Party, arguing that the deal primarily favors the U.S., the nation’s third-largest trading partner.

Although the deals with Colombia and Panama are expected to result in fewer economic gains, each generating a little more than one billion dollars in export revenue for the U.S., they are by no means less important in the scale of their impact on the Latin American region.

Some are warning that the history of liberalised trade agreements has led to greater economic inequalities, and that the results of this deal will be no different, particularly in Latin America.

“With every trade agreement there are winners and losers,” Joy Olson, executive director at the Washington Office on Latin America (WOLA), said in a statement. “The experience with similar agreements has taught us who the losers will be – those least able to bear the cost.”

Although labour rights were a significant component of the legislation that was finally approved after a five-year debate, WOLA cited concerns about ensuring the protection of workers, an argument at the core of the case against this and other free trade agreements.

“Supporters of this agreement can’t just say ‘hooray’ and move on,” Olson said, adding that in places like Colombia, where an ongoing armed conflict has made the political and economic situation ripe for exploitation of the poorest sections of society, liberalising trade poses significant risks.

“They will have to deal with the consequences of this vote in Colombia,” she continued. These consequences include “continued labour violations and assassinations, people moving into the illicit drug trade, greater internal displacement, and out-migration.”