The Odd Bargains Behind Trade Deals

When Congress voted this month to approve long-lingering free-trade agreements with South Korea, Colombia, and Panama, perhaps no one in Washington was more relieved than Jay L. Eizenstat. As customs affairs director for the Office of the U.S. Trade Representative through 2008, Eizenstat spent years negotiating the thorny $10.9 billion Korea deal—by far the largest of the three—which had stalled again and again over a thousand picky details. How much of the sugar in a packet of Hershey’s instant hot cocoa must be from American growers to qualify as a U.S.-made product? What percentage of the fake leather on a New Balance sneaker has to be manufactured in the U.S. for the whole shoe to be considered American-made? What would it take for Caterpillar earth mover engines to meet noise restrictions in Seoul? “You just sort of get used to it,” says Eizenstat, now a lawyer with Miller & Chevalier in Washington, of the endless bickering and arcane jargon of trade negotiations. “It’s a discipline that not a lot of people know about.”

The three pacts were largely wrapped up in 2007 before languishing in Congress as health-care reform, the debt ceiling debacle, and other political skirmishes took priority in Washington. The expectation is that they will open new markets to American businesses. The Korea deal will make it simpler for American insurers and banks to set up shop in Seoul. It will open Korean grocery stores to American beef exports that were shunned after a 2003 mad cow scare and remove tariffs on U.S.-made cars that were as high as 8 percent. The biggest winners in the Colombia and Panama Free Trade Agreements are American manufacturers of farm and construction equipment, which get immediate duty-free access to both markets, and exporters of beef, corn, and soy products.