With Congress recently approving three major pending free trade agreements, the conversation surrounding the benefits and challenges of trade liberalization has begun anew.  What do these FTAs really mean for the U.S. economy? Here are a few thoughts on what just happened…

Panama

With such obvious strategic importance to global trade, the passing of this agreement seems long overdue to many in the industry. But, as a primarily service-based economy, where are the real opportunities of increased trade with the ‘Crossroads of the Americas’?  Despite the small manufacturing output of Panama, U.S. investment in the region is a big part of the agreement. Considering the country’s substantial problems with corruption, tax-evasion and money laundering activities, this could sour long-term relationships and be a burden on the success of the FTA. Ultimately, however, the passing of the U.S. – Panama FTA is broader, representing strategic development of U.S. trade policy.

Colombia

This agreement, while still approved with a decent majority, received more scrutiny and resistance from all parties. Is this pushback due only to the tense political and narco-trafficking environment, or was there more to it? A country with so many natural resources surely is attractive to commodity-hungry countries like China (as evidenced by the chinese-financed cross-country railroad), but where the benefits are for the U.S. seems a bit more vague.  Needless to say, a liberal trade policy with Colombia will be a stark contrast to that of neighboring Brazil, and its protectionist demeanor.  It will be interesting to see how these relationships develop, both with the U.S. and with each other as a result.

South Korea

This one was inevitable. With strong support from both sides, (and recent high-profile visits from Secretary of State Clinton and others), it is generally agreed that a good working trade relationship is important for the U.S., and will strengthen ties with the Asian-Pacific region. The dramatic increase in European exports which followed their FTA ratification on July 1 is evidence of S. Korea’s potential for U.S. businesses as well. There is obviously still scrutiny, especially concerning possible currency valuation misrepresentation of the Korean Won. But, important (if somewhat unlikely) U.S. industries are on board, with substantial support from the automotive, agricultural, and financial services sectors.