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Louisiana-friendly trade pact with Peru sails through

Section: Business

Bill Walsh

Despite deep-seated voter anxiety about American jobs being sent overseas, Congress overwhelmingly passed a free-trade bill with Peru this week that critics warned would cost lawmakers at the polls.

The Peru Free Trade Agreement enjoyed broad support among Democrats who control both houses of Congress and whose political ties with organized labor make them instinctively wary of foreign trade pacts.

But with an unusual split in union ranks over this trade bill, Democrats sent the signal that they won't always vote "no" on pro-business measures. The deal was an especially easy sell in Louisiana, whose ports make it a gateway to South American markets and which was the third-largest U.S. trading partner with Peru last year.

"I absolutely refuse to have the Democratic Party be viewed, and I say this to my Republican colleagues, I don't want this party to be viewed as anti-trade," Speaker Nancy Pelosi, D-Calif., said before the bill moved comfortably through the House last month, 285-132.

The margin was even wider in the Senate, which approved the trade pact Tuesday 77-18, with 29 Democrats, including Sen. Mary Landrieu, D-La., in support. Sens. Hillary Clinton, D-N.Y., and Barack Obama, D-Ill., both candidates for the Democratic presidential nomination, missed the vote because they were campaigning but said they supported it.

Such an accommodating tone from Democrats is a stark contrast to the rhetoric normally heard on the campaign trail, where the North American and Central American Free Trade Agreements are routinely blamed for the loss of manufacturing jobs and stagnation of wages in the United States.

Anxiety about jobs

The rhetoric feeds a fear among voters that their jobs could be "outsourced" to countries where wages are a fraction of what they are domestically and where companies don't have to comply with the same environmental and labor restrictions.

A Los Angeles Times/Bloomberg poll released Monday found that 44 percent of people thought "free international trade" hurt the U.S. economy. Just 27 percent said it helped.

But Democrats said the Peru Free Trade Agreement was markedly different from NAFTA and CAFTA. For starters, it is with a single country, not a region, so its impact is limited. Of the nine free-trade agreements passed since President Bush took office in 2001, those targeting a single country have tended to have an easier time winning congressional approval. By contrast, a trade pact with Andean nations in 2002 cleared the House with just three votes. CAFTA squeaked through in 2005 by two.

The latest trade deal includes requirements that Peru abide by a variety of environmental and labor standards that Democrats said should form the basis of all future foreign trade agreements the United States signs.

"If you are going to support any trade agreement, I would think this would be the easiest one to do," Pelosi told her colleagues.

'One-sided deal for us'

For Louisiana lawmakers, there were few reasons to vote against it. The state sent $206 million in goods to Peru last year and $243 million in the first nine months of this year, according to figures compiled by the World Trade Center in New Orleans. Petroleum products accounted for nearly half the trade with Louisiana. Grains, chemicals and processed foods made up the rest of an export portfolio that has more than doubled since 2001.

From a political standpoint, the decision by influential sugar interests to support enhanced trade with Peru gave lawmakers in sugar-producing states, including Louisiana, the green-light to vote "yes."

Rep. Charlie Melancon, D-Napoleonville, a former sugar industry representative, said the industry's acquiescence played a role in his decision to support the measure. But he said a more important factor was that the deal favored the United States. With few existing barriers to Peruvian goods coming into the United States, the agreement was seen as a boon to U.S. companies seeking cheaper entree for their own goods to the South American nation.

"It was not like CAFTA and NAFTA that we gave more than we received," Melancon said. "This was more a one-sided deal for us."

In an unexpected twist, Rep. William Jefferson, D-New Orleans, a reliable free-trader, voted against the measure. He was the only member from Louisiana to do so.

Jefferson cited the opposition from the Teamsters, carpenters, engineers and other trade unions as well as concerns that environmental and labor standards won't be enforced. But he also said the deal's small size didn't elicit the kind of controversy trade agreements generally see.

"It was a close call for me," Jefferson said. "It didn't mean much either way."

Backlash predicted

But critics said Democrats would pay a price for their support of the Peru Free Trade Agreement.

Lori Wallach, director of the nonprofit Public Citizen's Global Trade Watch, a liberal-leaning group and frequent critic of international trade agreements, called the deal "bad foreign policy, bad domestic policy and egregiously bad politics."

She said that although the Peru deal is small compared with broader trade agreements, it represents a powerful enticement for U.S. businesses that could reverberate in factories and offices at home. She said little-noticed portions of the agreement allow U.S. companies to operate in Peru without the risk of facing justice in local courts or having their property expropriated by a foreign government.

For Democrats, she said, the Peru deal was an opportunity to sidle up to deep-pocketed business interests with the 2008 election season looming.

"Why the hell would a bunch of Democrats vote for another NAFTA expansion?" she asked. "There is a huge corporate coalition that will benefit and who give a lot of campaign contributions. The labor and environmental (provisions of the deal) give them political cover."

The Democratic support is unlikely to be the start of a trend. Proposed trade agreements with Korea, Colombia and Panama all promise to generate staunch opposition from labor unions and human rights groups.

With little more than a year left in Bush's term, lawmakers in both parties speculated that the unusual alignment of interests behind the Peru pact likely will make it the last free-trade agreement of his administration.

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