Friday, April 06, 2007

Is the FTA Really A Done Deal?

Perhaps this is just posturing. Maybe the folks on the Hill are simply making sure they have their say. It could be a Senator just trying to look good (tough) for his constituents. Could it be partisan obstinance?

We wondered in class how the FTA could have been passed without resolution on some of the more sensitive aspects of the deal (beef & autos, in particular). Perhaps it was my failure to read reports that covered the deal carefully, but it turns out that beef wasn't addressed in the FTA (yet may have been in a sort of side deal).

Apparently, the USTR framed the issue in a way that, in essence, passes the buck to the Congress with respect to beef. The AFP reports that the USTR expressed to its Korean counterparts the belief that the deal would not pass Congress if South Korea failed to completely reopen its market to US beef. (Seoul halted the importation of US beef due to fears about mad cow disease.)

The report quotes Deputy US Trade Representative Karan Bhatia as noting, "We have made very clear and have been very clear all along that we don't believe our Congress will feel comfortable approving this deal without the Korean beef market being fully reopened."

It seems as if there's disagreement, though, on exactly what measures the South Korean contingent agreed to take. Senator Max Baucus (D, Montana), head of the Senate finance committee, seems to think that the ROK made only a general promise to resolve the issue at some point in the future. Baucus then notes that nothing short of a complete lift on the ban will suffice and that he'll block movement of the deal through the Senate until Korea does so.

Not to be a skeptic, but here's a long, yet perhaps relevant aside from our friends at (the National Cattlemen's Beef Association) that *might* shed some light on why Senator Baucus feels so strongly (is anyone else surprised at how dated this information is?):
"In terms of gross cash receipts, the $760 million of cattle marketings represents 44.8 percent of all agricultural marketings and 85 percent of livestock and poultry marketings for the most currently available year, 1992.....Including the meat processing sector, an estimated 21,700 jobs and $802.7 million of personal income are generated in Montana from the beef industry.....Montana is the eleventh largest cattle inventory state and the sixth largest beef cow state."

So, it looks like we've got our work cut out for us (isn't this what the FTA was supposed to take care of??!?) and a new deadline to work with before we can consider the deal that's done, well, done (for real this time). (Somebody stop me from saying "Mission Accomplished" here. Ooops.) President Bush's authority to expedite the agreement (Congress would have to approve or reject it, but can't alter it) expires at the end of June (after which the agreement would still have to be sent to Congress for approval). However, it seems some in the Congress will prevent it from even being considered pending the resolution of the beef issue.

I always find the interplay between domestic and international politics interesting. But, in this case, I think what we're seeing is a result of the simple fact that the FTA didn't resolve at least one of the issues I would have thought it would have had to address. Although the issue of beef wasn't addressed by the agreement (which Congress would not have been able to alter), it seems the folks on the Hill will still have their say.

I never quite got how the agreement could pass without something being done about beef & automobiles. Well, I guess it can't. But here's a question: by not including it in the agreement, is the trade in beef then subject to the vagaries of domestic politics in both nations as relations wax and wane in the future? Is this a wise move? Was this the only way to move forward on the FTA? Seems like the deal kind of misses the point then (settling the tough issues). Also, if you're a GOP'er, why give the Democrats some wiggle room here? Or are the Dems creating some where there really isn't any? Ugh.

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