August 1, 2011 / 8:37 PM / 6 years ago

U.S. business hopes debt deal clears way for trade

* Business looks for framework for action on pacts

* Congressional aides say situation still unclear

* Manufacturers says delay cost workers $12 billion

By Doug Palmer

WASHINGTON, Aug 1 (Reuters) - A deal to raise the U.S. debt ceiling after weeks of tough talks between the White House and Congress has raised hope leaders will now turn their attention to resolving difference blocking three long-delayed trade deals, U.S. business groups said on Monday.

"It would be good if we can start those wheels turning before (lawmakers) go away" for their month-long August recess, said Bill Reinsch, president of the National Foreign Trade Council, whose members include major exporters such as Boeing (BA.N) and Caterpillar (CAT.N).

The ugly negotiations over raising the debt ceiling and cutting the huge budget deficit occupied most of the White House and congressional leaders' time in July, blocking work on a deal to move the trade pacts with South Korea, Colombia and Panama to Congress for votes.

But now that it looks like Congress will approve a debt agreement, "I think there's a very strong desire to come together and work out something" on the trade accords, said Bill Morley, president of Altrius Group, which lobbies on behalf of the American Chamber of Commerce in Colombia.

Morley said he hoped Senate Majority Leader Harry Reid and Senate Republican leader Mitch McConnell would "lay out a framework" for action in September on the pacts and a worker retraining program known as Trade Adjustment Assistance (TAA).

That would give South Korea, Colombia and Panama some reassurance that years of U.S. delay in passing the agreement are nearly over, he said.

However, congressional aides said it was unclear whether such an announcement would come.

There have been "productive" talks with leaders in the House of Representatives and the Senate, but "there is not an agreement on a path forward," a Senate Democratic aide said.

The administration expects the three pacts to boost exports by about $13 billion, helping to create or support about 70,000 jobs and giving the U.S. economy a much-needed lift.

The deals were all signed during the administration of former President George W. Bush. However, they languished because of strong opposition from Democrats, who controlled the House of Representative from 2006 through 2010.

Frank Vargo, vice president at the National Association of Manufacturers, said his group estimates American workers would have earned $12 billion more in wages and benefits over the past several years had the pacts not been delayed.

Unless the debt deal falls apart and "turns everything upside down ... I am optimistic for the trade agreements in September," Vargo said.

TAA STUMBLING BLOCK

President Barack Obama's administration has negotiated a number of side agreements to address Democratic Party concerns about the pacts and had hoped to win congressional approval of the deals before the August break.

But Republicans strongly objected to a White House plan to include an extension of TAA in the implementing agreement for the South Korean pact. Many party members question the value of the nearly 50-year-old retraining program for workers who have lost their jobs because of foreign competition.

Last week, U.S. Trade Representative Ron Kirk said the administration was open to a separate vote on TAA and hoped a deal could be reached soon to clear the way for it and the trade deals to be approved in September.

Timothy Keeler, a lawyer at Mayer Brown and former U.S. trade official, said that target was more likely now that the administration has reconsidered its plan to include TAA in the legislation for the Korea pact.

The most likely way forward is for the Senate to start by debating and approving TAA, as House Ways and Means Committee Chairman Dave Camp outlined last week, Keeler said.

Once that has been done, Obama would submit the free trade agreements to Congress and the House would begin action on the pacts along with TAA, he said.

But many Democrats want both the House and the Senate to approve TAA before Obama sends up the agreements. (Editing by Mohammad Zargham)

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