Republican Trade-Deal Boycott Derails Obama Push for Swift Senate Vote

A Republican boycott of a Senate hearing on three free-trade agreements set back efforts by President Barack Obama and business groups to get the long- delayed accords completed before a recess in August.

The Senate Finance Committee was unable to consider trade pacts with South Korea, Colombia and Panama yesterday because no Republicans showed up, denying Democrats a quorum to advance measures that have languished since 2007. Republicans balked at including aid for displaced workers in the trade package.

“I don’t understand why the Republicans are playing it out like this,” William Reinsch, president of the National Foreign Trade Council, a Washington-based group that represents companies such as Boeing Co. (BA), said in an interview. “They spent 2 1/2 years waiting for Obama to send these up. He basically folded, and as these things go the price was cheap.”

The additional worker-aid programs are estimated to cost $320 million annually for the next two years, according to the Senate committee.

The blow-up denied both sides a bipartisan victory they said they wanted on deals supporters say may increase exports by $12 billion a year and boost the still-struggling U.S. economy. A separate South Korean free-trade deal with the European Union goes into effect today, which would put U.S. producers of autos, pharmaceuticals and scientific equipment at a disadvantage in the Asian economy.

Senator Max Baucus, a Democrat from Montana, speaks after Republicans boycotted a Senate hearing on three free-trade agreements in Washington, D.C. on Thursday. Photo: David Rogowski/Bloomberg Close

Senator Max Baucus, a Democrat from Montana, speaks after Republicans boycotted a... Read More

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Senator Max Baucus, a Democrat from Montana, speaks after Republicans boycotted a Senate hearing on three free-trade agreements in Washington, D.C. on Thursday. Photo: David Rogowski/Bloomberg

Democrats said yesterday’s dispute was also a portent for debt-ceiling talks between Republicans and Obama.

“It’s a big question mark as to where this goes,” Greg Mastel, a lobbyist and former chief of staff to Senate Finance Committee Chairman Max Baucus, said in an interview. “Trade has traditionally been one of the more bipartisan areas Congress has worked on. If they can’t work out the FTAs, the debt limit could be pretty difficult.”

Reworked Deals

After pressure from Republicans to move ahead on trade, Obama reworked agreements that his predecessor, George W. Bush, made with South Korea, Panama and Colombia. The administration won backing from major business groups such as the U.S. Chamber of Commerce for the trade deals, support it has been unable to win on health-care and environmental regulations.

Baucus, a Montana Democrat, said the Republican protest put Congress “farther away” from approving the agreements. After the hearing, he pledged to try to find a way to pass both the trade deals and worker aid, and the House of Representatives may take up the accords as soon as next week.

Legislation to implement the three trade bills is covered by fast-track protection, which guarantees that once the bills are submitted to Congress by the president they can’t be amended and must receive up-or-down votes.

Mock Markups

Before the administration submits legislation, committees in the House and Senate conduct “mock markups,” which let lawmakers seek to amend provisions in the bill. The Senate hearing yesterday was intended to be the first such session.

Republicans made two objections in announcing their boycott of the hearing. First, they said Baucus was rushing to move the deals just as they were preparing to leave for a holiday-weekend break.

“This thing was sprung on us two days ago and we got all these amendments,” Senator John Thune, a South Dakota Republican, said in an interview. “They schedule it at 3 o’clock on a Thursday afternoon. Everybody’s getting out of town.”

They also said they object to inclusion of the worker aid program in the South Korea legislation, which they said amounts to reckless spending and a violation of fast-track procedures. Utah Senator Orrin Hatch, the top Republican on the panel, has led the charge against the expanded worker aid.

‘Jam Us’

“The White House wanted to jam us, and we’re not going to put up with being jammed,” Hatch said at a news conference. “We’re not going to get shoved around like this.”

The Trade Adjustment Assistance program augments health and unemployment benefits to workers who lose their jobs because of overseas competition. As part of the stimulus bill in 2009, it was expanded to include service workers such as call-center employees. Those added benefits expired in February.

The compromise announced by the White House on June 28 would preserve those benefits for service workers while trimming the length of funding for training and health care.

“It doesn’t look unreasonable, but it’s not clear why they would stick it into the” Korea legislation, said Philip Levy, a fellow at the American Enterprise Institute in Washington and former Bush administration trade official. “The fact that this is such as problem shows that this hasn’t been handled well at all.”

To contact the reporters on this story: Mark Drajem in Washington at mdrajem@bloomberg.net; Eric Martin in Washington at emartin21@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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