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Uncertainty Despite FTA Deal

Despite a breakthrough deal, the U.S. FTAs with Colombia, Panama and Peru still face serious hurdles, experts warn.


Although the Bush Administration and leaders of the opposition Democrat party, which control the U.S. Congress, reached a compromise agreement last week on the pending free trade agreements with Colombia, Panama, Peru and South Korea, their passage is still uncertain, some experts warn.

At the same time, leading business groups were cautious about praising the deal, witholding final comments until they know more details.

"Although it now appears very likely that Peru and Panama will accept the agreed-to deal and that the US Congress will ratify the two accords, that is by no means guaranteed," Peter Hakim, president of the Inter-American Dialogue told the organization's daily Latin America Advisor today. "We really do not yet know how many additional Democrats will be persuaded to vote in favor because of the inclusion of labor protections; nor do we know how many Republican votes will be lost. It is touch and go whether the administration and congressional Democrats can broker a similar deal for Colombia, and even less sure that it would gain a majority in Congress."

The U.S. free trade agreement with Central America and the Dominican Republic (DR-CAFTA) barely passed congressional approval in July 2005 after nearly all Democrats voted against it.

However, the new deal was better than no deal, Hakim says. "By making a deal with Democratic leaders in Congress to use free trade agreements to protect labor rights, the Bush administration may have salvaged its trade policy agenda," he says. "Certainly without that deal, the administration's trade strategy would have been in shambles."

Congressional ratification of four negotiated and signed trade pacts — with Peru, Colombia, Panama, and South Korea — would have been deferred until a new U.S. president took office, according to Hakim.

The United States Chamber of Commerce, which boasts three million members and the position as the world's largest business federation, praised the deal.

"It is our hope that this deal can pave the way for a solid majority of Members to vote in favor of renewing trade promotion authority and passage of bilateral agreements with Peru, Colombia, Panama, and Korea, "  Tom Donohue, Chamber president and CEO, said in a statement last week.

Also the National Foreign Trade Council (NFTC) expressed hope that the deal will result in congressional passage of the FTAs. "We look to Congress to act swiftly to approve the pending FTAs with our close allies and trading partners in Latin America and in Asia," Mary Irace, NFTC Vice President of Trade and Export Finance, said in a statement Monday.

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