Michigan lawmakers battle free-trade plan

Michigan lawmakers are threatening to block a South Korean trade agreement completed last weekend by the administration because of opposition from the auto industry, which contends the deal will not balance auto trade between the countries.

“We haven’t counted the votes yet, but I can say this will be a very hard fight,” Sen. Debbie StabenowDebbie StabenowSenators hope for deal soon on mental health bill The Hill's 12:30 Report Dems: GOP playing from 'Trump textbook' MORE (D-Mich.) said in an interview with The Hill. In a prepared statement, Stabenow said she would do “everything in my power” to defeat the Korea free-trade agreement (FTA).

Rep. Sandy Levin (D-Mich.), who chairs the Ways and Means trade subcommittee, also said he would oppose the deal unless it is changed in the 90 days before the administration signs it.

The agreement introduces a new battleground for the struggling U.S. auto industry, which is facing calls for increased fuel efficiency standards and attempting to address rising healthcare costs.

The deal could impact presidential politics in Michigan, which is among the states that may move up its primary to Feb. 5. Stabenow told The Hill that trade would be a big issue in the primary, and that candidates will have to demonstrate they understand the impact increased imports will have on the middle class in the state.

Ford and DaimlerChrysler released separate statements objecting to the Korean deal, and Ford Vice President Steve Biegun said Congress should not approve the deal in its current form. The AFL-CIO and the United Auto Workers also called on Congress to reject the deal.

Separately, Automotive Trade Policy Council President Steve Collins criticized the administration for shifting its position in the talks. Specifically, he said the auto industry last week rejected a deal that would have eliminated U.S. tariffs on Korean vehicles within three years. The final deal would eliminate tariffs on most of the cars Korea currently exports to the U.S. immediately, Collins said.

“This is a very discouraging sequence of events,” according to Collins, who said the deal went from disappointing to discouraging and from bad to worse.

The deal also would eliminate the 25 percent truck tariff, although it would be phased out over 10 years. The auto industry and its supporters had called for this tariff to be excluded from the talks, but the only tariff that officials highlighted as being excluded was rice, an important commodity in Korea, which it sought to keep out of the deal.

Stabenow charged that Korea out-negotiated the administration, which she said was too desperate to conclude a deal under fast track, which allows deals to come to Congress for up-or-down votes. “They were playing beat the clock, and the Koreans knew that,” she said.

She also criticized U.S. officials for not paying sufficient attention to the demands of members of Congress. House Speaker Nancy Pelosi (D-Calif.) signed a letter to the administration last week expressing disappointment with the U.S. negotiating position on automobiles.

Deputy U.S. Trade Representative Karan Bhatia in an April 2 conference call emphasized the deal would do much to address non-tariff barriers that hamper U.S. exports. He also highlighted a provision that would allow U.S. tariffs on Korean vehicles to snap back into place if Korea violates the terms of the deal on automobiles.

Korea sold more than 700,000 cars in the U.S. last year, while U.S. auto companies sold about 4,000 vehicles in Korea.
Brian Pomper, a former congressional trade counsel to Senate Finance Committee Chairman Max BaucusMax BaucusWyden unveils business tax proposal College endowments under scrutiny The chaotic fight for ObamaCare MORE (D-Mont.), said it will be tough to move the Korean FTA over auto-industry opposition. While it is essentially a local industry, Parven said the auto sector remains an icon of U.S. manufacturing.

A key will be whether members hear strong calls from other constituents to support the deal. “I expect you’ll have significant businesses pushing for it, and not just because the White House is asking them to,” said Pomper, who is now a partner in the Parven Pomper Schuyler government-relations firm.

Agriculture could be the big winner from the FTA, but the deal will lack the full support of agriculture groups until Korea allows U.S. beef to enter its market. Korea has blocked most U.S. beef exports since the first case of mad-cow disease was found in the U.S., and the issue was left out of the Korean agreement.

However, Bhatia said the Koreans understand this issue will have to be addressed to secure congressional passage. Baucus
in a statement said he would oppose the deal until Korea lifts its restrictions on beef.