Agreement on Trade Deals Opens Way for Peru, Panama, Other Pacts

Congressional Democratic leaders say they have forged new trade policy guidelines with the Bush administration that will elevate labor and environmental rights to key components in future free trade agreements.

Democratic House of Representatives Speaker Nancy Pelosi, flanked by Treasury Secretary Henry Paulson and U.S. Trade Representative Susan Schwab, said the agreement signaled "a giant step forward" in advancing U.S. economic interests without sacrificing American workers and the environment.

The new policy will apply immediately to pending free trade agreements with Peru and Panama. It also will become a part of trade accords with South Korea and Colombia, although lawmakers said other issues, such as violence in Colombia, must be dealt with before Congress can consider those agreements.

Most Democratic lawmakers have opposed most bilateral free trade agreements in recent years, contending that the deals negotiated by the administration were weak in requiring trading partners to deal with such issues as child labor, workplace discrimination and environmental degradation.

With the Democratic takeover of Congress, the new majority made clear that no trade agreement would move forward without progress on those issues. The new policy, said Pelosi, was "a recognition of the results of the November election."

Schwab said the deal with the Democrats was "a historic bipartisan breakthrough," and Paulson said it was important not only to American economic prosperity but also "to the geopolitical stability of the region."

A half-dozen House Democrats with strong labor ties, watching the news conference from the back of the room, later expressed strong dissatisfaction with the process. "The strongest voices for workers and the environment were not included" in the negotiations and were not informed of the deal, said Democratic Rep. Marcy Kaptur.

"I'm very disappointed that Speaker Pelosi held a press conference before meeting with the caucus," said Rep. Michael Michaud, also a Democrat. "In a democratic process, Democrats ought to know."

Under the new policy, free trade agreement countries would be committed to adopting and enforcing laws that abide by basic international labor standards as outlined in a 1998 International Labor Organization declaration. It would prohibit those countries from lowering their labor standards.

The labor commitments would be incorporated as part of the core free trade treaty rather than, as has been the practice, spelled out in side agreements or side letters.

Similarly, countries that reach trade agreements with the United States would have to adopt and enforce laws that are in line with seven major multilateral environmental agreements.

Peru would have to crack down on illegal logging, including of mahogany.

The new policy also moves toward easier rules for poor people in trading partner countries to get access to cheaper generic drugs.

The governments of Peru and Panama will need to take legislative or other action to alter the trade agreements signed with the United States to incorporate the new U.S. policy. Pelosi said she had assurances from leaders of the two countries that would not be a major problem.

In another provision, the United States would have full, nonchallengeable authority to prevent foreign companies from operating U.S. ports, based on national security concerns.

It also states that Congress and the administration will develop an initiative to promote education and training, as well as portable health and pension benefits, for workers hurt by the effects of trade and technology.

House Ways and Means Committee Chairman Charles Rangel, who negotiated the new trade principles, said, "We didn't want the U.S. trade representative to be a lobbyist just for U.S. businesses." He said she also has to be concerned with all jobs and businesses adversely affected by globalization.

Several business groups praised the new bipartisan approach to trade. Jim Owens, chairman and chief executive of Caterpillar Inc., and co-chairman of the Business Roundtable's International Trade and Investment Task Force, said it would pave the way for larger trade initiatives.

Those include renewal of "fast track" authority that gives the president power to negotiate trade agreements that Congress can approve or disapprove but cannot amend. That authority expires within months, and Democrats have shown little enthusiasm for renewing it.

The new policy, while not applicable to fast track or the Doha round of multinational trade talks, "lays the groundwork for a bipartisan position on trade," said Rep. Jim McCrery of Louisiana, top Republican on the Ways and Means Committee.