US Congress Finally Passes FTAs

Both the House of Representatives and the Senate have, in quick succession, passed implementing legislation for the long-awaited United States free trade agreements (FTAs) with South Korea, Panama and Colombia, which will now be passed to President Barack Obama for his signature.

The FTAs were passed in Congress on a bipartisan basis, at the same time as the Generalized System of Preferences, Trade Adjustment Assistance and, in the case of Colombia, the Andean Trade Preference Act. The latter, which lowers costs for US manufacturers by giving them duty-free access to goods from Colombia and Ecuador, is extended retroactively from February 12, 2011 to July 31, 2013.

It is forecast that the FTAs, by reducing tariffs, will increase US exports by USD13bn each year and boost US gross domestic product by more than USD15bn, creating 250,000 American jobs.

For example, more than 80% of US exports will immediately gain duty-free access to Colombia, and the remaining tariffs will be phased out over the next 10 years. In addition to boosting manufactured and agricultural exports, the FTA will also provide new access for US service suppliers to Colombia’s USD166bn services market.

Senate Finance Committee Chairman, Max Baucus (D - Montana), said: “These FTAs will give our economy a much-needed shot in the arm and create tens of thousands of American jobs. These trade deals, along with the job-training program Trade Adjustment Assistance, equip our workforce with the tools it needs to capitalize on new market access abroad and create American jobs.”

In like manner, the House of Representatives Ways and Means Committee Chairman, Dave Camp (R - Michigan) stated that the House had “passed on a bipartisan basis some of the most important job-creating legislation in the last several years by approving our trade agreements with Colombia, Panama and South Korea”. However, he could not help pointing out that “passage has been delayed for years, costing American workers, farmers and businesses valuable customers in those markets”.

The US Chamber of Commerce joined in the welcoming of the FTAs’ passage through Congress. Thomas J. Donohue, its President and CEO, added that, for American businesses: “It means we will immediately stop losing jobs to our competitors who have cut their own deals and we can start creating hundreds of thousands of new jobs for Americans”.

He urged lawmakers to build on passage of these agreements with an aggressive new trade agenda, including swift negotiation of a Trans-Pacific Partnership Agreement. Following a recent visit to the European Union (EU), Donohue also emphasized the need to explore a possible trade agreement with America’s largest economic partner, including the possibility of eliminating all tariffs on US-EU trade. That, he said, could boost transatlantic trade by USD120bn over five years.

October 13, 2011

Source: Tax News