By Ian Swanson - 03/10/11 11:04 AM EST
Trade tensions between the White House and Republicans burst into the public on Wednesday as Sen. Orrin Hatch (R-Utah) threatened to hold up an agreement with South Korea.
Hatch said President Obama’s highly touted deal with South Korea, which has won support from both parties, the business community and labor groups, will not win consideration from Republicans unless it is paired with more controversial deals with Colombia and Panama.
Republicans fear the Colombia and Panama agreements will never see the light of day if Congress approves the South Korean deal, which would give the president a victory to tout to business in his 2012 reelection bid.
“I don’t believe the president will ever act on the Colombia and Panama agreements unless these agreements move with Korea,” Hatch, the ranking Republican on the Senate Finance Committee, told Obama’s trade representative during a Wednesday hearing.
Hatch noted the administration has, on several occasions, promised to develop a plan to finish the Colombia and Panama deals, which along with South Korea were negotiated by the George W. Bush administration. Yet they have not followed through, Hatch said.
“If the president will not act, I will,” Hatch warned, saying he would do “everything I can” to make sure Colombia and Panama are considered at the same time as the Korea deal.
But in threatening to hold the Korea deal hostage to Colombia and Panama, Republicans could sour the business community, which sees the South Korean agreement as holding the biggest benefits for U.S. companies.
U.S. Trade Representative Ron Kirk told Hatch and other senators at the hearing that the administration was committed to moving all three agreements.
The stakes for Republicans, Obama and U.S. businesses are high.
The U.S. has not approved a single trade agreement since 2007, even as competitors in Europe have moved to open up markets in Asia. That’s left business groups worried they’re falling behind in the fastest-growing economies in the world, which are increasingly tied to China.
Obama has promised to double exports in five years to help jumpstart the economy and create jobs, but that hope would be nearly impossible to meet without the South Korean agreement.
The decision by Republicans to play hardball will force businesses to decide whether to push the GOP to allow South Korea to go first, or whether to stay in line behind Republicans and call for action on all three.
The South Korean deal is the most economically meaningful agreement the U.S. has negotiated since the North American Free Trade Agreement with Mexico and Canada in the mid-1990s, with the administration saying it could add $10 billion in exports to South Korea, supporting tens of thousands of U.S. jobs. (By comparison, total U.S. exports to Colombia in 2009 were $9.5 billion.)
A 54 percent tariff on orange juice and an 18 percent tariff on frozen french fries are among the tariffs that would be eliminated immediately under the deal, giving orange and potato growers, along with frozen food makers, immediate access to a huge market.
Those benefits could ultimately lead businesses to pressure the GOP to move on the Korean deal.
An official with the U.S. Chamber of Commerce on Wednesday said the business lobby wants a timeframe for all three deals, but also said it will not get into a discussion on “sequencing.”
Republicans control the clock right now. The South Korean deal was negotiated under fast-track rules, and as soon as the Office of the U.S. Trade Representative walks members of Congress through the deal’s technical details, a clock would start ticking to floor votes.
Speaker John Boehner (R-Ohio) could move legislation stalling that clock, as former Speaker Nancy Pelosi (D-Calif.) did when the Bush administration tried to force her hand on the Colombia deal three years ago. But if he does not, Congress would have 90 legislative days to conclude South Korea once the walk-through is completed.
Hatch and other senators were disappointed Wednesday when Kirk did not provide a detailed plan on how the administration would proceed with Colombia.
The lack of a specific plan spoke volumes. The Obama administration set out a timeframe for completing the South Korea deal, and then did so, though the talks took a bit longer than expected.
The distrust held by business groups and Republicans that Obama really wants to move Colombia was underlined by the lack of a plan provided by Kirk.
The White House might not ever be ready to send the Colombia deal to Congress.
While the AFL-CIO and other big unions oppose all three deals, the South Korean deal has won support from the United Autoworkers. And while other unions oppose the Korea and Panama pacts, they would see movement on Colombia by the administration as almost an act of war. For years, unions have drawn a line in the sand over Colombia, which they say has not done enough to stop violence against union organizers.
Trade was supposed to be a winning issue this year for Obama and the GOP. Wednesday’s move shows it will be a victory that is hard to achieve.