WASHINGTON — With the election cycle heating up, supporters of two trade deals that are expected to go before Congress are hopeful that the measures will be voted on before political pressures put lawmakers’ attention...
WASHINGTON — With the election cycle heating up, supporters of two trade deals that are expected to go before Congress are hopeful that the measures will be voted on before political pressures put lawmakers’ attention elsewhere.
Both supporters and opponents of the measure agree that with the presidential and Congressional elections set for Nov. 2, if the vote on the Central American Free Trade Agreement isn’t held by June, it’s unlikely to take place this year.
However, observers said the chances for a vote to extend the textile trade breaks given to the poorest sub-Saharan African countries through the African Growth & Opportunity Act are better. The proposed extension would continue the allowance for the 17 poorest countries to use third-country fabrics through 2020. It’s currently set to expire in 2008.
CAFTA proponents are faced with the twin difficulties of a shortened election-year Congressional calendar and gaining support from politicians worried about voter concerns over the uneven impact of liberalized trade on employment, particularly in manufacturing and agriculture.
“The closer to the election, the more difficult it would be politically” to pass the CAFTA measure, said Erik Autor, vice president and international trade counsel with the National Retail Federation. “We have passed trade legislation in an election year before. It can be done. But it obviously will have to be done with a lot of political lifting.”
The President’s strategists could get cold feet about sending CAFTA to Capitol Hill if the agreement’s prospects, or Bush’s reelection chances, have dimmed. While it’s still early in the year, recent polls showed that a slim margin of voters are more apt to back a Democratic candidate over Bush. The slow economic recovery is among the concerns of those opposed to Bush, and Democrats love to highlight the likelihood Bush will be the first president since Herbert Hoover to preside over an overall loss of jobs, including in textiles.
“There’s probably a greater concern about jobs and job losses on the Hill today than there has been in the last 10 years,” said Cass Johnson, interim president of the American Textile Manufacturers Institute. “Pushing CAFTA through Congress at this time is a very dicey proposal.”More than 90 percent of all apparel sold in the U.S. is imported. The five current CAFTA nations — plus the Dominican Republic, which is expected to be included in the final deal — accounted for 19.4 percent of the apparel imported into the U.S. through the 12 months ended in November, according to government data. Retailers and U.S. companies producing offshore have said that the region’s market share could climb if the deal is approved.
The region is looking for a boost because, in less than 11 months, the rules of the apparel trade will change dramatically when the nations of the World Trade Organization drop quotas on textiles and apparel. Importers still contend that with duty-free benefits, as well as no quotas, the CAFTA would be an ideal place to increase production.
“The lack of a CAFTA will have a strong impact on business,” said Kevin Burke, president of the American Apparel & Footwear Association, which has members, including Kellwood Co. and Liz Claiborne, that source in the region.
These importers are facing a longtime foe on Capitol Hill: A large swath of the beleaguered U.S. textile industry is vehemently opposed to CAFTA as detrimental to U.S. jobs. Mill executives are calling for a rethinking of U.S. trade policies and are cashing in their political currency among textile-producing state lawmakers in an effort to kill the pact.
Textile makers are particularly irked by a portion of the pact that contains trade-preference levels, which allow the use of a certain amount of third-country fabric in qualifying garments. Karl Spilhaus, president of the National Textile Association called TPL’s “a back door” to illegal Chinese imports. He said NTA also opposes CAFTA’s duty breaks for apparel made from certain Mexican fabrics, as well as the pact’s list of fabrics that can be imported if they’re in short supply among CAFTA countries.
White House officials did not return calls inquiring about the CAFTA strategy. Supporters of the agreement said they were perplexed when Bush in his State of the Union address last month did not mention CAFTA, the first free-trade pact to be entirely negotiated during his administration.
However, supporters of the agreement say they expect the administration to get the CAFTA ball rolling and are hoping that might even occur this week. The first step in the process would be for the President to announce his intention to sign CAFTA. The House and then the Senate would each have 45 days to vote on the pact, which they cannot amend.Cal Cohen, who heads up a U.S.-Central American CAFTA coalition of businesses, said he believed there was a reasonable chance for a CAFTA vote this year.
Last week, the full 800-page text of CAFTA was released and after reading it, wavering lawmakers might end up supporting the pact, said Julia Hughes, vice president of international trade with the U.S. Association of Importers of Textiles and Apparel.
“Initially there’s been a lot of concern on Capitol Hill” among GOP lawmakers with textile constituencies, Hughes said. “But as members of Congress look closer at the details of the agreement I think it will attract more positive response.”
In an October letter to the President, 139 House members and 26 senators said they would oppose CAFTA if it including allowances for third-country fabric. Of those signatories, 60 were from Bush’s GOP camp, which controls the House.
No one has polled these lawmakers to see if they’re still opposed to the agreement, but textile caucus co-chair Rep. Howard Coble (R., N.C.) said he hasn’t changed his mind. However, he said he might be open to supporting CAFTA if a deal could be reached in which China’s imports are reined in.
“I’m not adverse to horse trading, if we could do it,” Coble said.
U.S. textile mill executives are fearful that after quotas are removed Jan. 1 low-cost Chinese apparel and textile imports will surge further. The executives want the U.S. to negotiate new Chinese quotas.
“I dislike being a naysayer every time a trade bill surfaces here,” Coble said. “But I also dislike promoting free trade when the element of fairness is conspicuously absent.”
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