House Speaker Nancy Pelosi yesterday announced plans for a lame duck session of Congress to bail out the Detroit car makers. The transformation of the once-great U.S. auto industry into a national transportation utility is underway. If President Bush is going to sign this bailout, he should at least insist on a vote on the outstanding free trade agreements with Colombia, South Korea and Panama.
And if Barack Obama is as politically pragmatic as chief of staff Rahm Emanuel says he is, the President-elect will gladly go along. In fact, Mr. Obama should pick up the phone, call Speaker Pelosi and tell her that he wants all of the FTAs brought to the floor during the lame duck. Republicans would surely help them pass. U.S. business and the rest of the world would applaud, and Mr. Obama would take a difficult political issue off the table before his inauguration. President Bush could do the heavy lifting.
Consider the virtues of the Colombia FTA, which in a nonelection year would have already been ratified. It has the votes on Capitol Hill. But unions made blocking it a litmus test for election support. So when Mr. Bush asked Congress for an up or down vote under long-respected Congressional trade rules, Mrs. Pelosi used a procedural trick to shove the pact in a drawer.
That ploy made the world safe for Democrats on November 4, but killing the deal now would have nasty consequences. The U.S. is already open to Colombian goods under the Andean Trade Preferences Act. The FTA would open Colombia to U.S. exports, at a time when U.S. producers need every new market they can find. Take Caterpillar Tractor, with a U.S. work force of over 50,000. Cat makes off-highway trucks and motor graders in its Decatur, Illinois plant, bulldozers in East Peoria and wheel loaders in Aurora. All three locations are organized by the United Auto Workers and export to Colombia.
But an off-highway truck exported to Colombia pays a 15% tariff — $200,000 apiece. More Cat D-11 bulldozers operate in Colombian coal mines than in any other country in the world, but they pay a 5% tariff. Canada is close to signing its own FTA with Colombia, and when it does Canadian-made motor graders will have an immediate cost advantage over those made in Decatur. U.S. farm exports will face similar disadvantages. Meanwhile, the European Union says that it wants to begin its own free trade talks with Colombia.
U.S. geopolitical interests are also at stake. Colombia’s President Alvaro Uribe has been a solid ally since taking office in August 2002. Under his leadership, that nation has battled narcotics trafficking as part of the U.S. «war on drugs» and the home-grown terror group known as the FARC. Violence has fallen sharply and murders of union members have fallen even faster.
Mr. Uribe negotiated with the U.S. in good faith. Opening Colombian markets has political costs for him too. But he has made a commitment to liberalizing a highly protectionist Colombian economy to reduce poverty and create more opportunity for the working poor. The FTA has been a centerpiece of that effort. Waiting to pounce if it fails are the Colombian allies of Venezuela’s Hugo Chávez, who will be quick to point out that the U.S. is an unreliable partner.
Mr. Obama ran with union backing but has given conflicting signals about his trade priorities. He says he wants to unilaterally rewrite Nafta if Mexico and Canada decline to go along, yet he says he’s not a protectionist. Mr. Obama has also said that «now is a good time for us to set politics aside for a while and think practically about what will actually work to move the economy forward . . .» With the global economy in recession, and investors staging a capital strike, an Obama nod to approving the Colombian FTA would send a signal of reassurance around the world.