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Trade Agenda Update

Despite the popular pessimism concerning congressional action on trade issues in an election year, 2008 is likely to see a number of trade-related measures taken up by Congress. Some of these are high-profile, such as the extension of expiring trade preference programs; others are more low-key but still important, such as a miscellaneous tariff bill; and still others could re-emerge or develop suddenly during the year. Following is a report on how things look at the moment.

The House Ways & Means Committee passed a significantly scaled back trade preference bill, extending trade benefits for Colombia, Peru, Bolivia and Ecuador until Dec. 31. The Andean trade preference program expires on Feb. 28. The vote on just the Andean trade preferences marked a vastly different approach than one House Ways & Means Chairman Charles Rangel (D., N.Y.) had intended on taking with a much broader trade preference bill he introduced last week. It also signaled a struggle between Democrats and Republicans and the Bush administration over a pending, controversial bilateral free trade agreement with Colombia.

U.S. apparel importers shipped $1.29 billion of apparel made in the Andean region to the U.S. in 2007. Importers had hoped for a longer extension but the short-term extension will give them duty-free benefits for apparel made in the Andean region through the end of the year.

Rangel’s original bill sought more than a 2-year extension for the four Andean countries, and the same extension for trade benefits for all of the Caribbean countries and the Generalized System of Preferences. The bill also sought to eliminate a requirement in the African Growth & Opportunity Act that U.S. companies making denim in Africa use 30 million Square Meters Equivalent of local African denim before being allowed to use denim fabric from other countries in the world. But Rangel’s bill was gutted of all of those provisions in favor of a short-term extension of trade benefits for the four Andean countries.

Some lawmakers said Rangel intends to bring up a second trade bill with some or all of those provisions that were eliminated from the bill that passed. Rep. Jim McCrery (R., La.) said that Republicans asked for a short-term extension to give them more time to convince Democrats to vote for the pending free trade deal with Colombia, which would make the preference program’s benefits permanent.

The free trade deal has met considerable opposition from organized labor and many lawmakers, particularly Democrats, because of the assassinations of hundreds of union activists in that country that are believed to have been carried out by paramilitary groups.

Both McCrery and Rep. Sander Levin (D., Mich.) pointed to concerns about recent restrictions on private sector companies by the governments of Bolivia and Ecuador as reasons for providing only a short term extension of trade benefits for those countries.

Legislation to extend the U.S.-Caribbean Basin Trade Partnership Act, which expires Sept. 30, and the Generalized System of Preferences, which expires Dec. 31, is expected later this year. Provisions to extend these programs were removed from the ATPA bill to give lawmakers more time to consider possible reforms and changes.

Several new bills could be introduced this year as well. One would make certain adjustments to the Haitian Hemispheric Opportunity through Partnership Encouragement Act and the African Growth and Opportunity Act. Another would create a program for pants and trousers made in the Dominican Republic under specific conditions. This measure could also include a footwear provision addressing a tariff snapback provision for shoes made in the DR that resulted after DR-CAFTA took effect and CBTPA benefits were rescinded.

FTAs. Pending free trade agreements with Colombia, Panama and South Korea are at the top of the trade agenda for the Bush administration this year but not for Congress. On Colombia, the White House’s highest priority, administration officials are pressing Democratic leaders to clearly define what additional progress needs to be made on anti-labor union violence before the FTA can be considered. House Ways and Means Committee Chairman Charles Rangel, D-N.Y., has responded by saying it is up to the administration to negotiate the steps Colombia must take. “It would appear to me that USTR has heard all the reasons that members have given why they cannot give their support ... for the free trade agreement,” an Inside US Trade article quoted Rangel as saying. “They should know where the shortfall is.” On Feb. 14 a group of House Republicans sent a letter to the chairmen and ranking members of the Ways and Means Committee and its Trade Subcommittee asking them to schedule a public hearing on the FTA, which they said would be the best way to acknowledge and address concerns. The clock for expedited consideration under trade promotion authority would not start ticking until implementing legislation is sent to Congress from the White House, but unless a successful outcome is within striking distance the administration may not send that bill and risk a failed vote.

One FTA that is likely to see progress this year is Peru. President Bush signed implementing legislation into law Dec. 14, and Peru is now working to amend its laws and regulations to comply with the terms of the agreement. The annual meetings of the Asia-Pacific Economic Cooperation forum are due to be held in Lima this year, and there is speculation that the U.S. could announce at that time that the Peru FTA will enter into force Jan. 1, 2009.

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