GAO Evaluates Benefits and Challenges of Existing FTAs, Implications for Pending FTAs
The Government Accountability Office has issued a report entitled, "International Trade: Four Free Trade Agreements GAO Reviewed Have Resulted in Commercial Benefits, but Challenges on Labor and Environment Remain."
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
GAO's report focuses on Jordan, Chile, Singapore, and Morocco, chosen because of their economic, social, and geographic diversity, and because they are relatively older FTAs.
Selected FTAs Have Increased Trade, Eliminated Import Taxes, Etc.
GAO states that the four selected FTAs have largely accomplished the U.S. objectives of achieving better access to markets and strengthening trade rules, and have resulted in increased trade.
While varying in details, the FTAs have all eliminated import taxes, lowered obstacles to U.S. services such as banking, increased protection of U.S. intellectual property rights abroad, and strengthened rules to ensure government fairness and transparency. Overall merchandise trade between the U.S. and partner countries has substantially grown, with increases ranging from 42% to 259%. Services trade, foreign direct investment, and U.S. affiliate sales in the largest partners also rose.
Labor Reforms Have Been Uneven, U.S. Engagement Minimal
GAO's report also states that while FTA negotiations spurred some labor reforms in each of the selected partners, progress has been uneven and U.S. engagement minimal, according to U.S. and partner officials. For example, Morocco enacted a long-stalled overhaul of its labor code; however, partners reported that enforcement of labor laws continues to be a challenge, and some significant labor abuses have emerged.
In the FTAs that GAO examined, the Department of Labor provided minimal oversight and did not use information it had on partner weaknesses to establish remedial plans or work with partners on improvement.
Challenges in Enforcement of Environmental Laws
According to GAO, the selected partners have improved their environmental laws and made other progress. For example, Jordan has established an environmental ministry and a strong environmental law enforcement force.
However, partner officials report that enforcement remains a challenge, and U.S. assistance has been limited. Elements needed for assuring partner progress remain absent, including the U.S. Trade Representative's lack of compliance plans and sporadic monitoring, the State Department's lax management of environmental projects, and U.S. agencies' inaction to translate environmental commitments into reliable funding all limited efforts to promote progress.
Congress Faces FTA Questions, FTA Approval for Colombia, Panama, Korea
GAO's report also notes that the current Congress faces several FTA-related questions hinging in part on confidence that trade agreements do indeed benefit U.S. citizens and that the presidential Trade Promotion Authority's goals, and official expectations created by the President, are being achieved.
Bills to strengthen monitoring and enforcement of FTAs and other trade agreements to better assure effective implementation have been introduced. President Obama may decide to seek congressional approval of the FTAs with Colombia, Panama, and Korea that President Bush finalized. Congress may also need to decide whether to provide the President a new grant of trade agreement negotiating authority, which lapsed in July 2007.
(Certain members of Congress have said a "time out" on FTAs is in order, questioning whether existing agreements are having the positive commercial, labor, and environmental effects that were claimed, and some suggest more rigorous conditions should be considered for future agreements.)
(See ITT's Online Archives or 03/05/09 news, 09030505, for BP summary of President Obama's 2009 trade policy agenda, including on pending FTAs.
See ITT's Online Archives or 07/29/09 news, 09072920, for BP summary of the USTR's request for comments on labor-related issues for the pending Colombia FTA.
See ITT's Online Archives or 07/27/09 news, 09072715, for BP summary of the USTR's request for comments on the pending South Korea FTA.
See ITT's Online Archives or 06/02/09 news, 09060210, for BP summary of 55 House members' advocate of the renegotiation of Panama FTA.)
GAO report (GAO-09-439, dated July 2009) available at http://www.gao.gov/new.items/d09439.pdf