Prospects of FTAs Passage

By Troy Stangarone

When U.S. President Barack Obama gave his State of the Union address to Congress, he opened a door for the passage of the Korea-U.S. free trade agreement (KORUS FTA) in 2010.

By mentioning the agreement in his address, the President provided his strongest signal yet that he wishes to see the FTA implemented. However, it is important to maintain perspective regarding the agreement's prospects for passage this year.

The road to a vote in Congress remains long, and arguably more arduous than before. The President laid out an ambitious agenda in his State of the Union, while challenging Congress to take up the work it has put off for years.

Despite his call for action, history suggests that many of the initiatives he outlined will not be taken up by Congress this year.

After a year of efforts to reform America's health care system, the impact of the financial and economic crisis has come to bear. With unemployment above 10 percent and continued signs of weak economic growth, reviving the economy and creating jobs has become an imperative.

In his remarks, President Obama called on Congress to send him a new jobs bill without delay. This is now the administration's priority.

To his credit, the President acknowledged that trade is an important part of job creation. In doing so, he set an ambitious goal of doubling U.S. exports over the next five years in an effort to create 2 million new jobs.

Having framed the debate over trade and the FTA as part of the effort to create jobs, the president has given his strongest rationale for passing the agreement so far. However, passing a free trade agreement in the current political climate is still a significant task.

Despite the new emphasis on creating jobs, the mid-term Congressional elections loom just around the corner and trade is not a popular topic among key Democratic supporters.

As the mid-term elections draw closer, there will be an increasing reluctance to address trade in general or the KORUS FTA specifically, and other priority issues such as financial regulatory reform, climate change, and perhaps even another effort at a more limited version of health care reform are likely to be addressed first.

Behind the heavy legislative load rests a weakening political climate for Democrats on Capitol Hill. What once seemed improbable only a year ago ― heavy Democratic losses in the mid-term elections ― now seems more likely.

In recent weeks, six key House Democrats from swing districts won by Sen. John McCain in the last election have announced that they will not seek election later this year.

These announcements ― coupled with dwindling support for Democrats among swing voters, a drop in President Obama's approval ratings to below 50 percent, and losses in off-year elections, including the unexpected loss of the late Sen. Ted Kennedy's Senate seat in Massachusetts― have created significant concern among Congressional Democrats about their electoral prospects come November.

As November approaches, Democrats will be looking to enact policies that will reverse these trends and enhance their prospects for re-election. Trade is unlikely to be among them.

Despite the bad political climate, the worse prospect for the FTA might be a Republican victory in the mid-term elections.

Should the Republican Party find a way to retake the House, or come close to doing so, questions about the president's own political future might arise. If that were to occur, it would likely take trade off the table as an issue until after the 2012 presidential election.

The best prospect for the KORUS FTA's passage in 2010 rests in a successful return to job creation in the United States and the ability of the Democratic Congress and the president to advance some of their legislative priorities, perhaps even some form of health care reform. Doing so would ease the ability of Democrats politically to vote for an FTA.

The road for the KORUS FTA has been a long one, often stalled by elections and domestic politics in both countries.

If enough can go right politically in the United States, and concerns about the agreement's automobile provisions can be addressed, it is possible for the agreement to pass this year.

However, if the agreement is not sent to Capitol Hill in 2010, its prospects should increase significantly in early 2011 as many of the domestic constraints in the United States that have prevented its consideration will have begun to move off the political calendar in Washington.

Troy Stangarone is the director of Congressional Affairs and Trade for the Korea Economic Institute of America. The views expressed in the above article are his own and do not reflect the editorial policy of The Korea Times.