Republicans block action on Bush trade pacts

U.S. President Barack Obama speaks during a news conference in the East Room of the White House in Washington June 29, 2011.

WASHINGTON (Reuters) - Senate Republicans on Thursday blocked action on three free trade agreements they have long supported to protest against President Barack Obama's decision to include a retraining program for workers hurt by trade in one of the bills.

"We gave the administration fair warning on this," said Senator Orrin Hatch, the top Republican on the Senate Finance Committee, referring to the fight over the Trade Adjustment Assistance program.

"We made it clear time and time again that we would not stomach attaching a program as big as this on to these agreements. The president knew where we stood and he decided to ignore those who don't agree with him," he told reporters.

The deals with South Korea, Panama and Colombia are expected to boost exports by $13 billion, helping to support or create tens of thousands of jobs.

But the dispute clouds chances of their approval by the end of July, as both the Obama administration and many Republicans have said they want.

Democrats accused Republicans of a political stunt aimed at hurting Obama ahead of the 2012 presidential elections, after demanding for years he send the deals to Congress for a vote.

"Today the agreements were there -- and Senate Finance Committee Republicans were not," U.S. Trade Representative Ron Kirk said in a statement.

"Americans need their leaders at work -- in their seats, eyes on the ball, pushing every day to enact policies that create jobs here at home, advance this country's economic recovery, and help our working families."

Senate Finance Committee Chairman Max Baucus canceled a Thursday meeting of the panel after the Republican boycott.

Hatch said Republicans were making a principled stand and tried to persuade Democrats to reschedule the meeting to give senators more time to review the legislation and the 97 amendments expected to be offered.

"Why isn't this reasonable to give the senators on the committee the time to consider these agreements? What is the White House afraid of?" Hatch said.

$1 BILLION A YEAR

TAA was broadened in 2009 to cover more workers and provide more healthcare assistance. But those new benefits, which boosted the cost of the program to about $1 billion per year, expired early this year and Republicans in the House of Representatives, fresh from their victory at the polls in November, balked at renewing them.

That made Obama's job to win approval of the trade pacts more politically difficult since many Democrats blame previous agreements for the loss of manufacturing jobs.

In May, the White House warned it would not send the trade deals to Congress for votes until there was also a deal to renew TAA. They negotiated a compromise TAA program with House Ways and Means Committee Chairman Dave Camp, a Republican, and stuck it in the implementing bill for the South Korea deal, although Camp did not agree to that move.

Baucus, a Democrat, said U.S. exporters would pay a price for the setback.

"Every day we delay, we lose ground to our competitors. Tomorrow, Korea's trade agreement with the European Union goes into force. In August, Colombia's deal with Canada enters into force," said Baucus.

He said after the aborted meeting that he still hoped for action in July on the pacts.

The House Ways and Means Committee could take up the agreements next week, but Republicans in that chamber also are insisting on a separate vote on TAA.

The three deals were signed during the administration of former Republican President George W. Bush and have been languishing for more than four years.

The U.S. Chamber of Commerce, in a letter to Baucus and Hatch, said it strongly supported both the trade deals and renewal of TAA, as well as two trade programs for developing countries included in the Senate draft version of the Colombia implementing bill.

"A U.S. Chamber study has warned that the United States would lose more than 380,000 jobs and $40 billion in export sales if the pending agreements suffer further delays," said R. Bruce Josten, the group's executive vice president.

(Additional reporting by Donna Smith; editing by Mohammad Zargham)