WASHINGTON — The Senate passed the U.S.-Oman Free Trade Agreement on Thursday amid a debate over the pact’s labor provisions and working conditions in the Middle East country. The vote was 60 to 34.

The labor issue also drove the vote on the House Ways and Means Committee, which passed the agreement along party lines, with 23 Republicans voting in favor and 15 Democrats opposing the pact, setting the stage for a showdown in the House when Congress returns from the July 4 recess.

Republican leaders are using the Oman accord as a barometer to measure the mood on trade in Congress, which has been sharply divided. The outcome could impact the timing of two other pending trade bills: a free trade agreement with Peru and legislation granting permanent normal trade relations status for Vietnam.

Oman is a small apparel producer, exporting $53.5 million in apparel products to the U.S. last year, but importers support it because some do business there and the free trade agreement with Oman is part of an effort by the Bush administration to create a Middle East Free Trade Area by 2013.

The U.S. textile industry opposes the pact because it allows apparel manufacturers in Oman to use 50 million square meters equivalent of cotton and man-made fiber fabric from anywhere in the world in the assembly of clothing and still receive duty-free benefits when entering the U.S. In 2004, Oman shipped 56.9 million SMEs in apparel to the U.S., but last year fell to 16.4 million SMEs.

During the floor debate in the Senate, Democrats decried the administration’s trade policies, the growing trade deficit that hit $725.8 billion last year and mounting job losses.

Sen. Kent Conrad (D., N.D.) was upset that an amendment prohibiting the importation of products made by slave labor or defacto slave labor was not in the bill that passed unanimously in the Senate Finance Committee.

“In the case of Oman, its labor laws fall short of core International Labor Organization standards,” Conrad said. “Oman, like Jordan, relies heavily on guest workers who are often at a serious disadvantage.”

Sen. Orrin Hatch (R., Utah) said it was unfair to “saddle this agreement with accusations” made about working conditions in Jordan’s apparel industry.” Hatch contended the U.S. maintains a small surplus in two-way trade with Oman, which hit about $1.1 billion last year, and that it is an important, strategic ally.

This story first appeared in the June 30, 2006 issue of WWD. Subscribe Today.

“The U.S.-Oman Free Trade Agreement … sends a very important message that the U.S. strongly supports the economic development of moderate Middle Eastern nations,” Hatch said.

The Senate Finance Committee also held a hearing on the pending U.S.-Peru Trade Promotion Agreement. Sen. Max Baucus (D., Mont.) indicated the measure may face more serious challenges than Oman.

Among the concerns lawmakers have are a partial ban on U.S. beef exports, barriers to U.S. investment in Peru over commercial dispute provisions, labor issues and an overall “difficult climate on international trade.”

“Trust in the administration’s trade agenda is bottoming out,” Baucus said.

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