Bloomberg News

Obama Said to Consider Adding Worker Aid to Trade Measure

June 03, 2011

(Updates with comment by Levin in fifth paragraph.)

June 3 (Bloomberg) -- President Barack Obama’s administration is weighing whether to add provisions renewing aid for unemployed workers to legislation for free-trade agreements with South Korea, Colombia and Panama, according to people familiar with the matter.

Republicans in Congress have objected to renewing an expansion of Trade Adjustment Assistance and said Obama shouldn’t link the trade deals to that aid. Inserting the provisions in implementing legislation for one or more trade accords would force Congress to extend the aid or reject the agreements under fast-track procedures that guarantee an up-or- down vote on such trade measures.

“The administration would rather work out a deal, but this is a possibility,” Greg Mastel, a former Democratic trade counsel to the Senate Finance Committee who is a lobbyist at Dutko Worldwide in Washington, said in an interview yesterday. Lawmakers would “have the choice of accepting it or effectively killing the bill.”

A decision on whether to include the aid depends on negotiations between administration officials and congressional staff members over the next two weeks, according to the people, who spoke on the condition of anonymity in order to describe private conversations with legislative aides and U.S. trade officials.

“If necessary, that’s an option,” Representative Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee, said today at an event in Washington. Unemployment figures, reported today at 9.1 percent for May, “show the need to act,” he said.

The U.S. Trade Representative’s office had no comment on the administration’s plans, spokeswoman Carol Guthrie said.

Health, Unemployment Aid

The trade-assistance program augments health and unemployment benefits to workers who lose their jobs because of competition from overseas competition. As part of the stimulus bill in 2009, it was expanded to include service workers such as call-center employees, who accounted for more than half of the 280,000 people helped in 2009, according to data from the Labor Department. Those added benefits expired in February.

Obama reworked free-trade agreements his predecessor, George W. Bush, made with South Korea, Panama and Colombia to respond to concerns among Democrats about matters such as labor rights.

Now the administration says it wants the deals approved by Congress in the next few months. Before it will submit the free- trade agreements, it wants Republicans in Congress to agree to reinstate the broad worker aid program.

‘Robust Renewal’

“We want to make it clear that movement forward on the pending FTAs must be accompanied by a robust renewal of trade adjustment assistance,” U.S. Trade Representative Ron Kirk told reporters on May 16. Democrats such as Senate Finance Committee Chairman Max Baucus of Montana say they agree.

Senator Orrin Hatch, the top Republican on that committee, and colleagues in his party say they oppose the expanded Trade Adjustment Assistance because the $7 billion price over the next decade is too high.

“Senator Hatch believes TAA should be dealt with on its own merits,” Julia Lawless, his spokeswoman, said yesterday when asked about its possible insertion in the free-trade agreements.

Legislation to implement the three trade bills is covered by fast-track protection, which guarantees that once they are submitted to Congress by the president they can’t be amended and must receive up-or-down votes.

‘Necessary, Appropriate’

Only items that are “necessary or appropriate” to carry out the trade agreements can be included in that legislation, which may give Republicans grounds to challenge inclusion of the trade assistance program.

What is “necessary or appropriate” can be elastic. The North American Free Trade Agreement in 1993 included trade- adjustment assistance for any workers affected by that deal, according to Mastel.

The Korea legislation will have to include changes to automobile tariffs and rules that the Obama administration negotiated in December, which is similar to what happened in Nafta for supplemental provisions on labor and the environment, according to a report by the Congressional Research Service in December 2010.

Politically, the calculation the Obama administration must make is whether it’s willing to risk the free-trade agreements by including the workers’ aid.

‘Obvious Risk’

“If the administration does it without the agreement of the Republicans, then it runs the obvious risk that the House will strip it out of the implementing bill” and that could complicate getting the measure passed in the Senate, said Timothy Keeler, a lawyer at Mayer Brown LLP in Washington and the former chief of staff of the U.S. Trade Representative’s office.

Business groups such as the U.S. Chamber of Commerce have joined with Democrats in pushing for renewal of the trade- adjustment program.

“We urge Congress and the administration to find a way forward to ensure that the United States has in place an effective TAA program to support U.S. global economic engagement,” the Chamber and 17 other groups wrote in a letter to congressional leaders on May 2.

--With assistance from Richard Rubin in Washington. Editors: Larry Liebert, Steve Geimann

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net


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