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government-trade

Bush Takes CAFTA Push to Capitol

The arm-twisting and deal-making to get CAFTA passed reached a crescendo and brought President Bush to Capitol Hill for a final push.

WASHINGTON — President Bush and Vice President Dick Cheney traveled to Capitol Hill Wednesday to personally lobby for passage of the Central American Free Trade Agreement as political pressure intensified in advance of a House vote on the accord that is crucial to the administration’s global trade agenda.

Although the prospective vote appeared close, Republican leaders said they were cautiously optimistic the House would approve the pact, which seeks to eliminate tariffs on goods that flow between the U.S. and El Salvador, Guatemala, Honduras, Nicaragua, Costa Rica and the Dominican Republic. The Senate has approved CAFTA.

Bush and Cheney met behind closed doors with members of Congress as House Majority Leader Tom DeLay told reporters the trade battle would be tough, but CAFTA would pass with little support from Democrats. The House has 231 Republicans, 202 Democrats, one Independent and one vacancy.

House Ways and Means Committee chairman Bill Thomas (R., Calif.) was a bit more circumspect, but said leaders were moving in the right direction in terms of picking up enough votes.

Opposition to CAFTA has remained strong among Southern textile-state lawmakers, members representing sugar growers and a large bloc of Democrats. The Bush administration has been aggressively trying to chip away at the opposition to CAFTA and has leaned on Southern GOP loyalists to find the votes it needs for passage.

The administration views passage as critical to its goal of reducing barriers to free trade. Opponents have said it would encourage companies to move more production to nations that provide low wages and little protection for workers. Supporters, however, have argued that the measure would boost U.S. exports. The debate has occurred against the backdrop of a trade surplus with China that reached a record $162 billion last year.

The political maneuvering secured last-minute votes from at least four Republican textile-state lawmakers, including Reps. Bob Inglis (R., S.C.), J. Gresham Barrett (R., S.C.), Michael Rogers (R., Ala.) and Spencer Bachus (R., Ala.), who were trying to get better assurances about three proposed changes to the textile rule of origin as a condition for supporting CAFTA. Rep. Sue Myrick (R., N.C.) and John Linder (R. Ga.) had also said they support CAFTA.

Barrett was the latest Southern House member to announce he would vote for CAFTA on Wednesday afternoon.

“We told our leaders in the House ‘if you want our vote, you need to solve these issues,’ and that’s exactly what they did,” he said.

Among the final side deals the administration made with certain textile House members in exchange for their votes were: getting a commitment from Nicaragua to buy one unit of U.S. fabric each time it buys a unit of fabric outside of the region for man-made fiber trouser fabric. Nicaragua has an allowance to use 100 million square meters equivalent of fabrics from outside the U.S. and the region.

As a concession to its one-for-one agreement, the U.S. agreed to let the 100 million square meter allowance stay in place for a full 10 years instead of being phased out beginning in the sixth year, which in essence gave Nicaragua an extra 200 million SME.

The lawmakers were also looking for, and said they received, further commitments from the CAFTA trade ministers that they will agree to change a provision for pocketing and lining fabrics to require that it be made by one of the signatory countries. The third revised commitment involves a provision that allows a limited amount of woven, denim and wool apparel made in the CAFTA countries from Mexican and Canadian fabric to qualify for duty-free treatment in the U.S. As part of the new side deal, the U.S. has committed to forgoing the implementation of cumulation with Mexico until its customs procedures are improved.

The House members also received written assurances from Thomas that he would expeditiously push legislation on the amendments through the House if CAFTA passes.

Amid the high tension of the day, the opposition challenged the administration’s commitments and circulated a report from La Nacion, a Costa Rican newspaper, citing the trade minister saying his government had not held consultations on the proposed amendments.

David Spooner, special textile negotiator at the Office of the U.S. Trade Representative, said that the rumors were “false” and that U.S. trade officials had received a second letter from the Costa Rican government reaffirming its commitment to hold consultations and approve the pocketing and lining change.

Opponents of CAFTA said the changes may take months and even years to fulfill and might never be realized. They also argued the proposed changes will not close loopholes on Chinese fabrics, which could displace U.S. business in the CAFTA region.

Many textile industry opponents also remained skeptical about the proposed changes and questioned whether the Central Americans would ask for anything in return, which could mean giving away more U.S. business.

A U.S. trade official, who spoke on the condition of anonymity, said the Central Americans have “unequivocally committed to making the pocketing and lining change during consultations, but the U.S. has yet to offer up something in return.”

The official stressed he would work closely with the U.S. textile industry during the consultations with the six countries before making any concessions. However, many House Republicans remained opposed to the pact up until the final vote.

Rep. Howard Coble (R., N.C.), seen as many as the linchpin in the House Textile Caucus, planned to vote against CAFTA as of late Wednesday, said Ed McDonald, his chief of staff.

“There is nothing new with these deals,” McDonald said. “Every time we have a trade agreement, side deals go on and we get mixed signals about how authentic these deals are.”

Still, as the clock ticked down, Inglis said he expected additional textile-state members to support CAFTA and it would pass.

“I’m not privy to the whip count, but it must be positive because I don’t think the President would have come down otherwise,” Inglis said. “It’s got to be good.”