WASHINGTON — A vote on the controversial Central American Free Trade Agreement could come as early as this week. President Bush sent the pact to Congress late Thursday.
The Senate is expected to approve the pact, which under the President’s Trade Promotion Authority cannot be amended. But the vote in the House is expected to be tight; the measure is opposed by varied interests, such as the textile and sugar industries, and labor-rights proponents.
The accord is one of the cornerstones of the President’s trade agenda, but it has become a hot-button topic, beset by the issues of jobs, and the pros and cons of free trade, particularly with surging imports of textiles and apparel from China this year due to the elimination of global quotas. The trade debate over CAFTA has been the most heated since the passage of the North American Free Trade Agreement in 1994.
CAFTA drops tariffs on qualifying goods moving among the U.S., Honduras, Guatemala, Costa Rica, El Salvador, Nicaragua and the Dominican Republic.
“We’ve made excellent progress — with bipartisan majorities in both the Senate Finance Committee and the House Ways & Means Committee approving the bill,” said U.S. Trade Representative Rob Portman.
Earlier this month, both committees were given the opportunity to recommend modifications to a draft of the accord. The only tweak that made it into the final bill was one from Rep. William Jefferson (D., La.) creating a biannual reporting mechanism on labor issues that will let Congress monitor the commitments to labor rights of countries that are parties to the agreement.
The administration argues that CAFTA will strengthen fragile Central American democracies and level the playing field by opening the market to U.S. producers. Some domestic textile producers support the agreement, citing the importance of Central America as an export market, while others in the textile camp contend that CAFTA will open a back door for Asian goods to enter the U.S. duty-free. Apparel importers have supported the agreement, as it would shore up a quick-turn sourcing alternative to Asia.
The sugar lobby and organized labor, citing weak enforcement of labor laws in the trading nations involved, have also mounted stiff resistance to CAFTA.
This story first appeared in the June 27, 2005 issue of WWD. Subscribe Today.
“There’s an intense effort to bring it to a vote next week, but it’s not at all clear that the vote will actually take place before the Fourth of July recess,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, which opposes the accord because it allows third-country fabric to qualify for duty-free status. “Right now, I’d say the votes in the House of Representatives do not exist to pass it.”
Stephen Lamar, senior vice president of the American Apparel & Footwear Association, which favors the accord, said a vote should come “sooner rather than later” and that the bill would be passed.
“More and more people realize this is a good agreement,” he said.
If Congress doesn’t vote on CAFTA this week, no action will be taken until it reconvenes on July 11, after the Fourth of July recess.
In Sunday’s Washington Post, 36 Democrats, including former national security advisor Samuel Berger and former senator and governor of Florida Bob Graham, supported the agreement in a paid advertisement. “The world is watching whether DR-CAFTA succeeds, and the fate of the U.S. trade and investment agenda, which supports over a quarter of the entire U.S. economy, hangs in the balance,” said the ad. “If DR-CAFTA fails, other nations are less likely to negotiate with the U.S. to reduce barriers to U.S. trade and investment.”