Analysis: Republican win could revive U.S. trade deals

WASHINGTON Thu Oct 28, 2010 5:50pm EDT

WASHINGTON (Reuters) - Three long-delayed trade agreements with South Korea, Panama and Colombia could jump to the top of the U.S. congressional agenda if Republicans win control of the House of Representatives next week.

While the fate of those deals rests primarily with President Barack Obama, U.S. business leaders say trade is one area of potential compromise between the White House and Republicans in 2011.

"Trade has been at the back of the bus for last two years and I think there's a real opportunity for trade to be in the front seat next year," said Christopher Wenk, senior director for international policy at the U.S. Chamber of Commerce.

Republicans are expected to pick up enough seats in Tuesday's congressional elections to take control of the House, which they lost to Democrats in 2006. Democrats are likely to hold onto the Senate, but the party's opposition to trade agreements traditionally has been strongest in the House.

Other factors could influence the debate too.

Obama, who tapped into the Democratic party's aversion to free-trade deals when he ran for president in 2008, must decide whether to push Congress to approve the deals negotiated by his predecessor George W. Bush and risk alienating a swath of his Democratic Party base.

Indeed, critics of the deals, such as Public Citizen's Global Trade Watch, say Obama risks his own re-election in 2012 if he pushes the three agreements through without big changes.

"We're looking at over 100 House races where Democrats are playing defense and those campaigning on 'fair trade' themes appear a lot more likely of succeeding," said Todd Tucker, research director for Global Trade Watch.

If the recovery of the U.S. economy remains sluggish -- and unemployment holds near 10 percent -- Obama could face voters in 2012 who are even more skeptical of trade deals. That would hurt his chances in Ohio, Pennsylvania, North Carolina and Virginia -- states that were important in his 2008 victory.

TEA PARTY INFLUENCE

Another wild card? The Tea Party movement and what side of the trade debate it will join. Tea Party candidates, who favor a smaller, less expensive federal government, could win dozens of seats.

Representative Kevin Brady, a Texas Republican, said he thought most would support the pacts.

But some analysts see a more mixed effect.

"Some of these Tea Party advocates may not be automatic votes for trade agreements. I think some of the Tea Party members are prone to the more populist rhetoric about foreign influence and jobs going overseas," said Dan Griswold, director of trade studies at the Cato Institute.

"They'll help boost the overall number of Republicans, but also increase the size of the more trade-skeptical faction within the Republican caucus," Griswold said.

Representative Dave Camp, a Michigan Republican in line to become chairman of the House Ways and Means Committee if Republicans take control, has promised he would hold early hearings on the three trade agreements.

Republicans also could make a push to give Obama new "fast track" authority to negotiate trade deals, which would send a positive signal of U.S. interest in finishing the nine-year-old Doha round of world trade talks.

The current Ways and Means chairman, Sander Levin, a Michigan Democrat, has been so loathe to deal with trade that he has not once invited Obama's chief trade negotiator, U.S. Trade Representative Ron Kirk, to testify publicly.

Obama has moved slowly toward embracing the pacts since entering the White House, especially the one with South Korea. He told Kirk to try to resolve auto and beef trade concerns blocking the pact by the time Obama travels to Seoul for a summit of the Group of 20 major economies on Nov 11-12.

But many Democrats say they can only support the trade deal if the president persuades the Koreans to accept other difficult demands in areas such as the pact's investment chapter and its financial services provisions.

(Reporting by Doug Palmer; Editing by Anthony Boadle)

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