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.

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