To feed the world, you need a seat at the table. That’s what Montana wheat producers hoped for last spring when long-delayed free trade agreements with three rapidly improving economies seemed ready to pass.
But with the table set for trade agreements with South Korea, Colombia and Panama, Congress has seemingly lost its appetite for deal making. The agreements worth $13 billion a year to the U.S. economy were once slated for passage this summer but will now wait until after Labor Day.
Meanwhile, America’s three would-be business partners are striking deals with U.S. trade rivals.
“The big thing for Montana, and wheat and barley commodities in particular, is that the Canadian free trade agreement with Colombia is going into effect in August,” said Lola Raska, executive vice president of the Montana Grain Growers Association.
MGGA had hoped to beat the Canadians to the punch when Colombian ships began loading hard red spring wheat in Portland. Montana happens to be one of the nation’s largest producers of the crop.
And the state became the nation’s largest lentil producer in 2010. Colombians eat a lot of large, green lentils — the kind Montana grows.
“We started our free trade agreement with Colombia before the Canadians did and now they’re going to pass us,” said Kim Murray, of the USA Dry Pea and Lentil Council. “We’re cutting our own throats here, I think.”
Murray, who farms near Froid, sees a chance to sell 60,000 tons of U.S. lentils to Colombia annually if House Republicans and Senate Democrats can compromise on the free trade agreement first proposed by President George W. Bush in 2006.
Murray, Raska and a dozen other Montana business representatives accompanied Sen. Max Baucus, D-Mont., on a Colombian trade mission in the spring. At that point, the House and Senate indicated they would pass the trade agreements by July 1. They have since dug in their heels over a worker retraining program that costs $322 million, or 2.4 percent of what the U.S. expects to gain in business if all three trade agreements are approved.
The delayed Colombia trade agreement promised to immediately eliminate 80 percent of the dues on U.S. products sold there, with the remaining 20 percent slowly expiring.
South Korea presented Montana with bigger opportunities. Even with high tariffs, South Koreans have become the No. 2 foreign buyer of Montana exports. South Korea spent $189.8 million on Montana products last year, according to the Montana Department of Commerce, a 141 percent increase from the previous year. There, Montana ranchers hoped better trade would produce a $200 million increase in U.S. beef sales.
Panama had doubled its U.S. imports in the past five years. Its trade deal was to eliminate all tariffs on Montana wheat and beef immediately. Panama has already signed trade agreements with Canada and Europe, which now trade at bargain prices compared to tariff-burdened U.S. products.
The stalled U.S. trade agreements are rooted in two things. First, the battle between the House and Senate over raising the debt limit has put trade agreements and several other issues on the back burner. Second, House Republicans and Senate Democrats are at odds over the worker retraining program, known as Trade Adjustment Assistance, which for 40-plus years has been used to retrain U.S. workers who lose their jobs as a result of increased imports of foreign products or added pressure from foreign manufacturers.
On Thursday, the northwest Montana town of Eureka opened a 22-acre business development center to help it change its economic profile after being clobbered by cheap Canadian lumber and the recession-crippled U.S. housing industry. Eureka has lost two major timber industry employers in the past few years.
Baucus indicated Thursday that he’s worked out a deal with House Republicans that could get the trade agreements back on track in September.
“While we stand still, the European Union’s trade agreement with Korea entered into force July 1, and Canada’s agreement with Colombia will take effect on Aug. 15, threatening to cut Montana farmers out of the wheat market altogether,” Baucus said. “We can’t afford to put American jobs in jeopardy any longer.”
Baucus has found cuts to other programs to offset the costs of Trade Adjustment Assistance. However, some House members have indicated they oppose the worker retraining on principle as much as cost and may still object.
TAA was also presented earlier as a package deal with the trade agreements, but House leaders have agreed to peel Trade Adjustment Assistance from the trade bills and vote on it separately in committee as a way of getting the trade votes moving.
Senate Democrats initially balked at peeling off TAA before House Ways and Means Chairman Dave Camp, R-Mich., indicated that Trade Adjustment Assistance and the trade bills would be moved together but voted on separately.
That’s no assurance that Trade Adjustment Assistance will pass through committee, but die on the House floor. The White House said this week that it won’t approve the free trade agreements without the Trade Agreement Assistance program passing also. Senate Democrats are equally insistent the program needs to pass.
Raska said it’s frustrating that Trade Adjustment Assistance has become a wedge issue. Voting history indicates the last time the program was passed, it received more support from Republicans than Democrats in both the House and Senate.
This time, politics have congealed over Trade Adjustment Assistance, and America’s trade partners have found new partners with whom to sit.