May 21 (Bloomberg) -- A U.S. trade accord with Panama, which is opposed by labor unions, won’t be submitted to Congress for approval until President Barack Obama offers a new “framework” for trade, an administration official said.

The decision, announced by Assistant U.S. Trade Representative Everett Eissenstat at a Senate Finance Committee hearing today, is a reversal from statements in March that the U.S. wanted to pass the accord soon. Eissenstat said today the administration wants to outline how trade fits with other priorities such as assistance for unemployed workers and health care.

“It’s clear that trade agreements in the last few years have been much too divisive,” Eissenstat told the panel. “We want to make sure that Panama doesn’t contribute to that divisiveness.”

Trade accords with Panama, Columbia and South Korea were reached by President George W. Bush and are awaiting congressional approval. Unlike the other two deals, Panama is “relatively non-controversial,” House Majority Leader Steny Hoyer said April 22.

Both chambers of Congress must approve legislation implementing the tariff cuts and investment rules before the accords can take effect. A delay for Panama may also postpone accords with Colombia and South Korea.

Eissenstat’s comments follow remarks by John Sweeney, the head of the AFL-CIO labor federation, that unions would oppose a rush to ratify the deal. Also today, 55 House Democrats told House Speaker Nancy Pelosi to reject the Panama accord unless it is renegotiated.

‘The Trade Model’

“The Panama agreement reflects the trade model pursued by the Bush administration, not the change President Obama campaigned on,” Representative Bruce Braley, an Iowa Democrat, said in a written statement.

Supporters such as the National Association of Manufacturers and Peoria, Illinois-based Caterpillar Inc. say the agreement will boost U.S. manufacturing exports and provide an inroad for American companies to supply machinery to expand the Panama Canal.

Trade between the U.S. and Panama was $5.5 billion in 2008. The U.S. is Panama’s largest trading partner, while Panama, the world’s 93rd largest economy, sends the U.S. fewer imported goods in a year than China sends in half a day.

Senate Finance Committee Chairman Max Baucus said that Panamanian President Martin Torrijos has agreed to change labor laws and regulations and to consider sharing tax information. Ratifying the deal now would lock in those pledges before his administration leaves office July 1.

‘Lose This’

“I’m concerned that we are going to lose this agreement if we delay,” Baucus told reporters after the hearing. “The Panamanians may back out.”

While the two sides are close to a deal on labor changes Panama must take to get complete the accord, tax issues continue to be a point of contention.

Critics such as Senator Carl Levin, a Michigan Democrat, say Panama’s bank secrecy rules are used to hide assets from U.S. taxes. The rules were cited by the Organization for Economic Cooperation and Development, which lists Panama as one of 38 countries that “have not yet substantially implemented” tax standards.

Before agreeing to a trade pact, Panama needs to complete a treaty giving U.S. investigators the ability to track down tax cheats in Panama, Levin wrote in a letter to Obama yesterday.

Panama’s President-elect Ricardo Martinelli will follow through on campaign promises to approve the stalled trade agreement, economic advisor Frank de Lima said today. Martinelli is willing to share tax information as long as it doesn’t harm the banking industry, he added.

“If Switzerland is willing to negotiate sharing tax information, who are we not to?” de Lima said in an interview.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net.; Eric Sabo in Panama City at esabo1@bloomberg.net.

Last Updated: May 21, 2009 16:29 EDT