Trade deals: three big winners from America's new free-trade agreements
Trade deals passed by Congress Wednesday could be double-edged, but several economic sectors look set to gain the most from the trade deals with South Korea, Colombia, and Panama.
The three free-trade pacts passed by Congress Oct. 12 could signify that both Congress and the White House, which bucked its labor allies to back the agreements, view trade as a potential way to grow the US economy.Skip to next paragraph
Subscribe Today to the Monitor
With US imports vastly outweighing exports in recent years, free trade with South Korea, Colombia, and Panama is seen as one modest attempt to redress the imbalance, with farmers and the auto industry perhaps the biggest winners.
Of course, trade goes two ways, meaning the pacts have the potential to hurt US manufacturers as well as help them. But there have been signs that some exporters were losing jobs as Europe and Canada, with their own trade deals, took business away from the United States in these countries. As a result, US business was ramping up pressure on the Obama administration to act.
“The administration was suspicious of trade, but now there is a recognition of its importance and the need for a deeper engagement with the fast-growing economies of Asia and Latin America,” says Edward Alden, a trade expert at the Council on Foreign Relations.
All three of the trade agreements had been negotiated during the Bush administration, but President Obama delayed sending them to Congress for approval and renegotiated parts of them to respond to Democratic criticisms.
In the case of Korea, Mr. Obama won changes to help the US auto industry, says Mr. Alden. In Colombia, he successfully pushed for assurances over labor rights to assuage unions. And he pushed Panama, a big banking center, to be more helpful in rooting out tax cheats.
For the most part, the trade pacts are not seen as being a significant driver for new US jobs or economic growth. But the US Chamber of Commerce estimates that the agreements will save 350,000 jobs.
For example, after the European Union implemented a free-trade agreement with South Korea in July, US companies suddenly started to lose sales. The same thing happened during the past two years to US farmers selling goods to Colombia, where Canadian, Brazilian, and Argentine companies were paying lower tariffs.
But the same advantages could also work in the reverse direction, too.
Korean automakers, kept out of the US light-truck market by a 25 percent tariff, will see that tariff disappear in 10 years. And Colombian textile and apparel makers could benefit at the expense of the few US companies still in that market.