U.S. Senate Leaders End Impasse on Three Trade Deals, Worker Aid

U.S. Senate leaders ended an impasse over stalled free-trade agreements, agreeing to vote after the August recess on benefits for workers who lose their jobs because of overseas competition, then take up the trade deals.

Senate Majority Leader Harry Reid, a Nevada Democrat, and Republican leader Mitch McConnell of Kentucky pledged action yesterday to pass the agreements with Colombia, Panama and South Korea. The U.S. Trade Representative’s Office and Republican House Speaker John Boehner praised the compromise, signaling all sides concur on the process.

The Senate leaders agreed that after Congress returns to work, lawmakers will consider “a bipartisan compromise on the Trade Adjustment Assistance program, followed by passage of the three FTAs,” Reid said in a statement on his website. Boehner of Ohio also pledged to move ahead with trade and worker-aid bills. Republicans had balked at the administration’s plan to combine worker aid and the Korea trade deal into a single bill, and that plan was dropped.

Business groups, including the U.S. Chamber of Commerce, have pressed lawmakers to reach a compromise to end the stalemate on trade deal-worker aid amid concern companies will fall behind competitors as the nations strike deals with other governments.

A separate South Korean free-trade agreement with the European Union has been in place since July 1, putting U.S. producers of autos, pharmaceuticals and scientific equipment at a disadvantage in the Asian economy. A deal between Colombia and Canada is scheduled to take effect Aug. 15.

$12 Billion

The three U.S. agreements may increase exports by $12 billion a year and boost the still-struggling U.S. economy, supporters say. After Congress agreed to raise the debt ceiling this week, the White House urged action on the trade deals as a means to spur hiring in the U.S. amid 9.2 percent unemployment.

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 legislation in 2009, it was expanded to include service workers such as call- center employees. The added benefits expired in February.

The proposal from the White House, which Reid committed to consider, would continue most of those benefits through 2013, and provide retroactive assistance to those left out so far this year. It’s forecast to cost $320 million in each of the next two years.

Separate Measures

President Barack Obama wanted to have Congress consider the worker-aid program as part of the South Korea deal, the biggest of the three accords. With the deal between Reid and McConnell, trade adjustment assistance will be considered separately and before the vote on the agreements, according to the statement.

“I have long supported passage of the long-delayed FTAs, and I know that I speak for many on my side of the aisle that we are eager to get moving and finally pass them,” McConnell said in the statement. “Although I do not personally support TAA, I know there is bipartisan support for this program.”

Supporters praised the agreement, while cautioning that the process of gaining approval could again slow the pacts, which were completed in 2006 for Colombia and 2007 for South Korea and Panama.

“We must not see any more roadblocks thrown in front of these deals during the short legislative session that remains,” U.S. Chamber President Tom Donohue said in a statement.

Hurdles Ahead

The Reid-McConnell compromise has two potential hurdles. Senator Ron Wyden, an Oregon Democrat and chairman of the trade subcommittee in the Senate, has said the worker-aid measure must pass Congress before the free-trade deals are considered; Boehner said the trade deals will move together with the assistance bill.

In the Senate, the worker-aid bill won’t be considered under rules for trade agreements that limit amendments and require a simple majority for approval. That may leave the legislation open to revision, such as adding a measure making it possible for companies to petition for duties on imports from China to compensate for its weak currency.

“Extending Trade Adjustment Assistance is an important step to respond to job loss caused by foreign competition,” Senator Sherrod Brown, an Ohio Democrat, said in a statement. “But addressing unfair trade practices like Chinese currency manipulation can prevent job loss by ensuring a level playing field for American manufacturers.”

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.