By  on July 5, 2005

WASHINGTON — The Senate's passage of the Central American Free Trade Agreement last week set the stage for one of the most important trade battles to reach the House in a decade. The outcome may hinge on lawmakers from textile states, whose constituents are divided on the accord.

Retailers and importers who favor CAFTA were buoyed by the Senate vote of 54-45 to approve the treaty. While the balloting gave President Bush a major victory and momentum, the result in the House is far less certain.

The Bush administration, lobbying aggressively for a cornerstone of its trade agenda, has been making promises in both chambers during the run-up to the votes. It won the support of Sen. Elizabeth Dole (R., N.C.) and the National Council of Textile Organizations with a pledge to change the pact to require that pocketing fabrics be made by one of the signatory countries rather than any country. However, the White House unsuccessfully tried to make a last-minute deal with senators representing sugar-producing states, who fear surging imports.

Sugar, textiles and China are likely to figure prominently in the administration's efforts to secure House votes, along with Democrats' concerns that the pact doesn't adequately protect workers.

"I think the administration is going to have to be more concrete on what it is doing for sugar and make more sugar-related promises," said Gary Hufbauer, senior fellow at the Institute for International Economics."In the meantime, it could possibly do more on China and there might be more textile actions, such as safeguards."

Revenue-generating legislation, which includes trade agreements, originates in the House. However, the Senate can take up such an item first in an attempt to build momentum when leaders are concerned they don't have the votes in the House, which is what occurred with CAFTA.

The administration and other supporters of the treaty argue that it will eliminate trade barriers with Costa Rica, Guatemala, Nicaragua, Honduras, El Salvador and the Dominican Republic. Most fabric producers oppose CAFTA, while fiber producers support it because of its potential to boost exports.

Rep. Bill Thomas (R., Calif.), chairman of the House Ways and Means Committee, has previously said Congress might need to play the China card to get enough votes to pass CAFTA in the House. Thomas told reporters last week that he is preparing legislation to address trade issues associated with China and would like the House to act on the measure before it considers the treaty.Kevin Burke, president and chief executive officer of the American Apparel and Footwear Association, said the fact that 16 of 20 senators from textile states voted for CAFTA was a good sign. The key states include Alabama, Arkansas, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Virginia.

"This, to me, provides momentum going into the July 4th recess [Congress returns July 11]," Burke said. "The fact that the Senate has done it will energize the House, although the House will be a much tougher road to hoe."

Erik Autor, vice president of international trade counsel at the National Retail Federation, said he expects the "overwhelming support" from the Southeastern senators to "really help us" with lobbying efforts in the House. The Senate vote also could give political cover to House members.

On the opposite side of the debate, Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, maintained that the slim margin of victory signaled a tough fight in the House.

"This vote should have been a blowout, especially considering that the U.S. Senate traditionally is strongly supportive of free trade and that CAFTA opponents put almost no resources into lobbying that body," he said in a statement.

Tantillo noted most experts expected the trade bill to pass in the Senate. "It was never really in question in the Senate," he said. "The true fight has always been in the House ... and they don't have the votes there yet, which is why they avoided the normal procedural practice of having revenue-related legislation originating in the House."

A coalition spokesman said, "Members in the House are in the political crosshairs every two years and they get a much more immediate reaction from the public" than senators about how they vote on trade.

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