California Apparel News

When President Bush’s term expired in January, three free-trade agreements were left with a semi-uncertain future.

Colombia, Panama and South Korea, the countries with pending trade pacts with the United States, must now deal with a new set of politicians in the White House and a Congress under the Democrats’ grip.

Moreover, the White House nominee for U.S. Trade Representative, Ron Kirk, has not been confirmed for his new job, leaving the trade office in limbo.

With the Obama administration and Congress concerned with crafting a stimulus package and a bank-rescue plan, it might be a while before Kirk, a lawyer and the former mayor of Dallas, comes on board.

Trinh Nguyen, a U.S. Trade Representative spokesperson, said the administration was working with the U.S. Senate Finance Committee to schedule confirmation hearings. No one expects that to happen until after Feb. 16.

Meanwhile, Deputy U.S. Trade Representative Peter Allgeier, who was left over from the Bush administration, is the acting U.S. trade representative until a permanent replacement comes in.

Playing the odds

Trade-policy experts foresee two of the three free-trade agreements being approved by Congress this year. But many believe it will be an uphill battle to win backing for a trade accord with South Korea.

“Everyone seems to agree that the Panama free-trade agreement will pass Congress,” said Julia Hughes, president of International Development Systems in Washington, D.C., whose company monitors trade agreements, trade preferences and quotas for businesses. “It’s much more difficult to get consensus on the Korean agreement. It is a large industrial nation, and they make a lot of things that compete with U.S. products.”

Previously, the Panama agreement was stalled because many U.S. politicans objected to the fact that Pedro Miguel Gonzaacute;lez, an alleged criminal, headed the Panamanian legislature. Gonzaacute;lez is accused of being involved in the 1992 murder of a U.S. serviceman in Panama. However, Gonzaacute;lez is no longer in the legislature, clearing the way for the Panama free-trade agreement to go forward.

“Panama might be the first one out of the box. That’s the easiest to do,” said Steve Lamar, executive vice president of the American Apparel & Footwear Association in Arlington, Va. “The opposition that was mounted on Panama was a focus on that legislator. He has moved on, and the issue is less sensitive.”

While Panama is of less concern for the apparel and footwear industries because little clothing production is done there for the U.S. market, it would be of great interest to U.S. businesses such as Caterpillar Inc. in Peoria, Ill. The ailing company could take advantage of the expansion of the Panama Canal to sell its construction machinery.

Colombia would be next on the approval list. While the country enjoys a trade-preference program with the United States, it still doesn’t have a free-trade agreement. The same free-trade agreement was approved for Peru and went into effect in January right before Bush left office.

Colombia has had a hard time winning over congressional delegates who object to the way labor-union officials have been treated in that South American country. Scores of labor advocates have been killed in Colombia’s 20-year civil war. “The labor union people drew a line in the sand that allowed Peru to go forward and not Colombia,” Lamar said.

But David Spooner, formerly an assistant Secretary of Commerce and the textile negotiator in the U.S. Trade Representative’s office under the Bush administration, believes the agreement will make it through Congress this year.

“Despite all the anti-Colombian rhetoric by the unions and some folks in the incoming administration on the campaign trail, Colombia is a no brainer from a trade-policy perspective and a geopolitical perspective,” said Spooner, now with the Washington, D.C., law firm Squire, Sanders & Dempsey LLP. “We have already given Colombia unilateral access to the U.S. market through the Andean Trade Promotion and Drug Eradication Act.”

He noted that Colombian President Aacute;lvaro Uribe was democratically elected and has waged a vigorous campaign against drug traffickers and the leftist military movement known as FARC, or the Revolutionary Armed Forces of Colombia.

Other trade observers believe Colombia may have to make some readjustments on the agreement. “It is viewed that Colombia will be negotiated on some aspects,” IDS’ Hughes said. “As long as they are willing to do that, I think they will be in.”

South Korea is another story. The industrial powerhouse has a very strong automobile industry whose lower-priced Hyundai and Kia cars directly compete with General Motors, Ford and Chrysler, three big U.S. auto companies being bailed out by the federal government. “The auto issue is huge,” Hughes said. “I don’t think that will play very well.”

Also, the U.S. textile industry is concerned that cheaper fabric from South Korea will be very competitive with U.S. fabric. “They believe it will give the Koreans unlimited access to the U.S. market and not vice versa,” said AAFA’s Lamar. “A lot of people believe the textile industry in Korea is subsidized.” Waiting for trade

Meanwhile, the trade pacts aren’t going anywhere until a new U.S. Trade Representative is named.

Kirk, Obama’s choice for the job, does not have an extensive trade background. But he has made political inroads in Texas. He was the first black mayor of Dallas, elected in 1995 and re-elected in 1999. He ran for the U.S. Senate in 2001 but lost to Republican John Cornyn.

As a politician, he is known to have backed the North American Free Trade Agreement with Mexico and Canada. He also worked for former U.S. Sen. Lloyd Bentsen, a Democrat from Texas who headed the Senate Finance Committee, which is in charge of tariffs, import quotas and trade agreements.

Currently, he is a partner in the Houston-based law firm Vinson & Elkins, where, according to the Associated Press, he made more than $1 million last year.

Named as his advisor for one year is Peter Cowhey, the associate vice chancellor and dean of the School of International Relations and Pacific Studies at the University of California, San Diego. Cowhey is an expert on international trade and regulatory issues.

“People who worked with Ron Kirk in Dallas said that he is sharp, articulate and he will be good because he has the ear of the president,” Hughes said. “That is the most important thing.”