However, more economically significant deals with Colombia and South Korea, while covered by the deal, still face an uncertain future. United States Trade Representative (USTR) officials and business lobbyists acknowledged there is no guarantee those accords will come up for votes anytime soon.
“Under the deal, it appears that Colombia and South Korea are longer-term,” said Christopher Wenk, senior director of international policy for the U.S. Chamber of Commerce.
Spokesmen for Ways and Means Committee Chairman Charles Rangel (D-N.Y.) and trade subcommittee Chairman Sandy Levin (D-Mich.) said they would encourage their colleagues to vote for the Peru and Panama deals, but gave no such assurances on Colombia and Korea. Wenk predicted the Peru deal could be voted on as early as June or July, with a vote on Panama, which President Bush must still sign, put off until fall.
Colombia has become a tough sell to Democrats because of violence against labor organizers, while Korean policies on U.S. beef imports and auto trade make that deal more difficult to move through Congress.
Still, Doug Goudie, director of international trade policy for the National Association of Manufacturers, said NAM hopes the deal will ultimately help move the Colombia deal forward as well.
The deal also marks a significant shift in power on who gets to set trade policy.
After years in the wilderness, House Democrats led by Rangel won key concessions from the administration on labor and other issues while agreeing only to move forward immediately with the Peru and Panama deals, business sources noted.
NAM President John Engler said that the trade policy was not one that NAM would have designed, but that it reflects political reality. He also said compromises are necessary to restore the bipartisanship that has lately been missing from trade policy.
Trade agreements approved while Republicans had a majority in Congress received minimal Democratic support for the most part, but it is unclear whether the new deal will win support for even the Panama and Peru deals from the left wing of the Democratic Party.
Six House Democrats had sought to get House Speaker Nancy Pelosi (D-Calif.) to put off the announcement of a deal until after the caucus reviewed it, but were rebuffed. In a May 10 letter to Democratic Caucus Chairman Rahm Emanuel (D-Ill.), the members, including Rep. Mike Michaud (Maine), said they were trying to avoid a split in the caucus “given the devastating effects of splits in the past.”
AFL-CIO President John Sweeney said his organization would reserve final judgment on the Peru and Panama free-trade agreements in order to review the language, although he said real progress had been made. He said the AFL-CIO would vigorously oppose the Colombia and Korean deals, as well as an extension of trade promotion authority.
The conceptual deal, which must still be written into legal language, will lead to changes in the four agreements on the environment, intellectual property, investment and port security, but business sources see labor rules as the most important change.
Specifically, the administration agreed to a long-standing demand from Democrats to include International Labor Organization (ILO) principles in U.S. trade deals, and to make compliance with these principles subject to dispute settlement. U.S. labor laws also are not explicitly excluded from possible challenges, something business groups had desired.
The deal calls on parties to adopt, maintain and enforce in their own laws and practice the five basic ILO standards of freedom of association, the right to collective bargaining, the elimination of forced labor, a prohibition on the worst forms of child labor and the elimination of discrimination in employment and occupation.
While groups like the U.S. Chamber of Commerce endorsed the deal, others held back to study the language on labor. For example, the American Farm Bureau Federation is reviewing the language to see if there are any implications for farm labor, including children who work on the farm.
“We want to make sure that U.S. agriculture is not in jeopardy of being challenged,” a source with the group said.
Another business source described the deal as “a little troubling” since there is no “safe harbor” for U.S. labor laws. At the same time, the business source said the deal does appear to set a very high hurdle for a challenge.
Engler said the deal would not bind the U.S. to more detailed ILO conventions on labor that the U.S. has not ratified, which NAM warned it could not support.
Goudie said it is “not 100 percent assured” that U.S. labor laws could not be challenged, but that language meant to ensure that state laws are not covered by the deal and that ILO conventions would not be considered by panels reviewing trade challenges were reassuring.
The deal would weaken protections that have been included in recent trade deals for U.S. pharmaceuticals, and the Pharmaceutical Research and Manufacturers of America (PhRMA) also did not endorse the deal. In a statement, PhRMA President Billy Tauzin said his group was “extremely concerned” during the negotiations about whether core U.S. intellectual property rights would remain protected.