Senator eyes deal to help pass Colombia pact

WASHINGTON (Reuters) - A senior Republican senator said on Monday he was optimistic a deal could be reached with Democrats that would lead to congressional approval of a free trade agreement with Colombia before the November U.S. elections.

Sen. Charles Grassley, an Iowa Republican, said he hoped to strike a deal soon with Senate Finance Committee Chairman Max Baucus, a Montana Democrat, to reform and expand the federal program that provides retraining and extended unemployment benefits for workers who have lost their jobs because of foreign trade competition.

Grassley said he believed a deal on Trade Adjustment Assistance, or TAA, would be enough to clear the way for a vote in the House of Representatives on the trade agreement with Colombia.

However, House Speaker Nancy Pelosi has called for Congress to approve a second economic stimulus package before lawmakers vote on the Colombia pact.

The fate of the Colombia agreement has been up in the air since April when Pelosi pushed through a vote to indefinitely delay action.

Pelosi said she took that step to reassert control over the congressional agenda after President George W. Bush sent the agreement to Congress against her advice.

Bush, in turn, has accused Pelosi of killing a mutually beneficial trade deal with a strong U.S. ally in Latin America.

"Obviously, Colombia is my first priority. But if it's necessary to do TAA to get Colombia, I'm willing to work in that direction," Grassley said in remarks at the Brookings Institution. "We've got a record of getting together, and I feel we'll get together on TAA," he said, referring to his negotiations with Baucus on the program.

RETRAINING MONEY

Grassley is the top Republican on the Senate Finance Committee and was chairman of the panel before his party lost control of the Senate in the November 2006 elections.

An aide to Baucus also was upbeat about the prospects for a deal soon on TAA.

"Sen. Baucus continues to work closely with Sen. Grassley to move forward on TAA legislation, and hopes to advance a bill in the Senate in the coming weeks," the Baucus aide said.

Bush has said he supports reforming and improving the adjustment assistance, which is dependent on annual appropriations to continue after its authorizing legislation expired last year.

However, the White House has not put forward a proposal for revamping the program and also threatened to veto a reform bill passed last year by the House.

Baucus has proposed doubling annual TAA retraining funds to $440 million and also wants to expand the program to include service industry workers who have lost their jobs because of import competition or companies moving overseas. Currently only manufacturing workers can qualify for the aid.

Grassley said he and Baucus disagreed over the number of service industry jobs that would be covered under the program, as well as the level of proposed funding.

He also said he opposed some Democratic provisions that would duplicate benefits that workers already receive under the federal unemployment insurance program.

Grassley said he believed the free trade agreement with Colombia and a second one with Panama could be approved by Congress before the November elections.

However, "it will be difficult" for Congress to pass a third trade agreement with South Korea this year, he said.

That pact faces strong opposition from senior Democrats such as Pelosi who say that its auto provisions favors South Korea carmakers too much.

(Editing by Jackie Frank)