Hearing exposes flaws in Colombia and Korea trade pacts

There were some interesting and damaging admissions yesterday at a House Energy & Commerce Committee hearing on the pending free trade agreements with Colombia and South Korea. The hearing, entitled “Made in America: Increasing Jobs through Exports and Trade” had Under Secretary of Commerce for International Trade Francisco J. Sanchez on the hot seat along with a panel of business executives and advocates for corporate America. Rep. Mary Bono Mack, chair of the Subcommittee on Commerce, Manufacturing and Trade urged Sanchez to get the Colombia, Panama and Korea trade pacts up to Capitol Hill as soon as possible and the California Republican asked if the Colombian deal was being “held hostage by organized labor.” Sanchez, who leads the International Trade Administration (ITA) as part of his portfolio, noted that the Obama administration is seeking an agreement that “reflects our values as Americans,” with respect to Colombia’s labor code and history of violence toward labor organizers. Sanchez actually has some direct experience here. As his official bio says “among his private-sector achievements, Sánchez directed a team in Medellín, Colombia, as part of the “Teaching Tolerance” program, an initiative designed to break the cycle of violence then threatening the country.” When pressed by Rep. Mike Pompeo about the labor situation in Colombia, Sanchez told the freshman Republican from Kansas that there is “impunity towards those who commit acts of violence,” against trade unionists. And Sanchez responded to questioning by Rep. Bill Cassidy (R-LA) about Colombia’s human rights record by saying “people have literally gotten away with murder.” The most interesting exchanges though came when Rep. John Dingell exposed the soft underbelly of the Korea FTA by asking Sanchez a series of questions where the Michigan Democrat wanted the responses as yes or no. The crusty Dingell, the dean of the House and a long time chair of the Energy & Commerce Committee, asked Sanchez if he agreed with the statement that while the Korea deal is projected to create 70,000 U.S. jobs, Korean President Lee Myung-bak has boasted that 335,000 jobs will be created in his nation over the next 10 years. Sanchez replied that “I have no reason to challenge that.” Dingell, who represents a chunk of the rust belt outside of Detroit, also wanted to know if in fact as the Korea FTA is currently drawn, an item with a minimum of 35 percent of its content from Korea can be considered a Korean product. Dingell pointed out that the "rules-of-origin" provisions in the agreement open the door to South Korean goods containing as much 65-percent Chinese content to enter the United States duty-free. Sanchez fessed up that this also is true. Newly-elected Rep. David McKinley used his time to paint a picture of economic hardship facing his northern West Virginia district and to signal that he can disagree with his national Republican leadership on trade policy. Bemoaning the loss of jobs that once fueled a booming industrial and manufacturing economy with steel, glass and marble factories, McKinley complained that “China and Japan have dumped their steel in America,” adding “we feel left behind.” After Sanchez was excused, the panel of business boosters and corporate suits prattled on about how Congress really needs to chop the corporate tax rate down to size and get rid of onerous government regulations which will spur a new round of hiring and job creation. In his testimony, James Crouse, executive vice president of sales and marketing for Capstone Turbine Corporation, a Chatsworth, CA firm which makes microturbine energy systems, said “as a small company, we have made use of the export promotion programs of the U.S. Department of Commerce’s International Trade Administration (ITA). In particular, Capstone Turbine has benefited from participation in trade missions overseas, such as Secretary Locke’s 2010 trade mission to China and Indonesia.” Crouse added that “ITA’s Foreign Commercial Service has been effective in setting up meetings with potential distributors and customers,” and that 70 percent of their business is exported overseas to 50 countries with China as a big customer. This admission prompted North Carolina Rep. G.K. Butterfield, the subcommittee’s ranking Democrat to note that in their zeal to downsize federal spending, the GOP may be throwing the baby out with the bath water. “In what we call H.R. 1 (the bill to cut money from the FY2011 federal budget), the Republicans cut ITA staff that work with companies like yours to expand exports,” Butterfield told Crouse noting that ITA has been targeted for a $93 million hit.