Free trade agreements hold promise for Hawaii

THE ISSUE The Bush administration and Democratic leaders have agreed on environmental and labor standards in free trade agreements.

AN agreement by the Bush administration and Democratic congressional leaders to attach environmental and labor standards to free trade agreements is a major breakthrough in trade policy. Hawaii stands to benefit substantially from such agreements, if they survive presidential politics and international diplomacy.

In the 1990s, President Clinton had difficulty getting fellow Democrats to support presidential fast-track trade authority, which blocks congressional amendments to trade pacts. He had to rely on Republicans to accept the 1993 North American Free Trade Agreement and to normalize trade relations with China.

President Bush and the Republican Congress could ignore Democratic concerns, but that changed when Democrats took control of Congress. Bush's agreement to the worker and environmental protections marks his first bipartisan compromise with the new Congress.

The agreement, reached last week, would guarantee workers the right to organize and prohibit child labor and forced labor in trading-partner countries, which also would be required to enforce environmental laws. The requirements should be extended to all other U.S. trade accords and eventually become a worldwide standard.

The standards would be attached to pending free-trade pacts for four countries -- Colombia, Panama, Peru and South Korea. The deal with Seoul, reached in April, would be the largest for the United States since NAFTA and Korea's biggest ever.

The White House wants to revise the agreement to reflect the labor and environmental guidelines, but South Korea is resisting. "Our position is that the deal is over and it's wrong to attempt to disturb it," said Kim Won-Kyong, a South Korean trade official. It should be more difficult for Korea to reject.

Prior to the agreement between Bush and congressional Democrats, presidential candidate John Edwards said he opposed the South Korean trade deal, calling it bad for the U.S. auto industry. The guidelines should eliminate such concerns.

The ramifications for Hawaii are significant. In the single year following the U.S.-Singapore Free Trade Agreement in 2004, the value of Hawaii's exports to Singapore soared from $48 million to $520.9 million, accounting for more than half of Hawaii's export market, according to the U.S. Department of Commerce.

Other leading export markets for Hawaii are Japan ($138 million) and China, which increased 27-fold to $133 million by 2005 following normalization of trade relations in 2000.

A new study by the Washington-based Business Roundtable found that Hawaii jobs tied to foreign trade number 165,704, or 20.5 percent of Hawaii's employment, a higher proportion than in any other state. Two-thirds of the exports are transportation equipment, while the fastest-growing exports are beverage and tobacco products, according to the study.