CongressDaily
TRADE
Panama Agreement Hits Multiple Snags On A Brutal Day

Friday, May 22, 2009
by Peter Cohn, with Anna Edney contributing

The odds got longer for a stalled trade accord with Panama on Thursday.

Union opposition hardened, a bloc of 55 mostly Democratic House members as well as a key GOP senator came out against the deal, and the Obama administration signaled it might want to re-evaluate the agreement's role in a larger economic strategy.

"I will absolutely fight to the death to not get that bill up here," said House Rules Chairwoman Louise Slaughter at a briefing announcing a coalition to oppose the deal. "And I think we have to make it as clear as we can to this administration that [President Obama] doesn't have a lot of support up here that they might think that they have to get this passed."

Senate Finance Chairman Max Baucus - leader of a vocal minority of Democrats pressing for approval -- held the first hearing on the Panama deal Thursday, which was signed by the two governments on June 28, 2007. At the behest of Democratic leaders, the Bush administration negotiated stronger labor, environmental and investment standards into that agreement as well as other pending deals with Colombia and South Korea than had been incorporated into previous pacts.

The Obama administration brought with it the promise of revising the Bush-era trade model as well as a crackdown on offshore tax havens, of which Panama is a prime example. The AFL-CIO announced its opposition at the hearing Thursday, and senators on both sides of the aisle criticized that country's banking practices.

Sen. Olympia Snowe, R-Maine, said Congress should first pass a trade enforcement bill to provide remedies to U.S. firms hurt by trade. She also said reform of Panama's bank secrecy laws and a tax information exchange agreement must come first. "I do not support passage of the Panama Trade Promotion Agreement at this time," Snowe said in a statement.

Maine has been hard-hit by job losses and lawmakers in that state tend to be skeptical of trade deals. Rep. Michael Michaud, D-Maine, co-chair of the House Trade Working Group, called it "just unbelievable" and a "huge mistake and contrary to what the president campaigned on" to ask lawmakers to approve the Panama accord.

Trade Representative Kirk said this week the administration is "working furiously" to iron out remaining kinks on labor and tax issues with Panama. He added that the time before outgoing Panamanian President Martin Torrijos leaves office June 30 represents a "discreet window" for action. Kirk has never given an explicit timeframe, however, and a deputy's comments to the Finance panel Thursday indicate the pact might be on a slower path than expected.

"The president believes that it is very important that Panama be considered in the context of a broader domestic agenda," including healthcare reform, Assistant USTR for the Americas Everett Eissenstat said.

He said Obama will articulate his broader trade and economic vision "in the near future" but did not elaborate. "I think that one of the key elements is to move the agreement at the appropriate time, in consultation with Congress, that gets the support, enables us to move forward on the broader trade agenda, including other items like" a separate trade deal with Colombia, he said.

His comments led some Republicans to suspect that Obama might want to focus for the time being on health care rather than risk a party-splitting debate on trade. Eissenstat said that was not the case and that the trade agenda could move "parallel" to domestic initiatives.

The comments suggested that the votes might not be there to approve the deal in the House, or at least secure a majority of Democratic support. "I don't know why anyone's talking about it," House Ways and Means Chairman Charles Rangel told reporters. "No one's talked to me about Panama, except the press. ... I believe that when the president believes the House is ready for Panama, we'll get Panama."