WASHINGTON — House textile-state lawmakers cast the deciding votes in pushing the controversial Central American Free Trade Agreement over the finish line just past midnight on Thursday.
With the Senate already approving the pact, President Bush needs only to sign the agreement into law, ending a long battle of arm-twisting and deal-making. It was also a major legislative victory for the President, who made a rare trip to Capitol Hill Wednesday to lobby for passage, and it boosted his credentials in the global trade arena.
A defeat of CAFTA could have cost the U.S. credibility in the ongoing Doha round of World Trade Organization negotiations, which seeks to reduce global tariffs and could ultimately have a major impact on trade.
Passage of the agreement also could give a boost to the Free Trade Agreement of the Americas, which has been in the works for more than a decade, but stalled since 2003. The FTAA would bring down trade barriers throughout the Western Hemisphere — from Alaska down to Tierra del Fuego, with the exception of Cuba.
While retailers and importers hailed the agreement that, among its provisions, reduces or eliminates tariffs on goods flowing between the U.S. and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic, maintaining the region now will become a more viable sourcing alternative, textile executives were split over the accord’s potential impact.
The sharply divided House eked out passage of CAFTA on a 217-215 vote after Southern GOP loyalists capitulated to 11th hour pressure from GOP leaders — coincidentally, the voting began at 11 p.m.
GOP leaders strategically cut enough side deals, primarily on textiles, leading up to the vote to overcome strong opposition from textiles- and sugar-producing states’ representatives, as well as a large swath of Democrats opposed to the accord’s labor provisions.
The House vote reflected a polarized textile industry, divided between fabric producers that oppose the deal because of the allowance of foreign fabric, and yarn spinners and fiber producers that support it for the export opportunities.
Of the 39 House members from the four largest textile state delegations — South and North Carolina, Alabama and Georgia — 17 lawmakers voted for the accord and 21 voted against it and one did not vote.
This story first appeared in the July 29, 2005 issue of WWD. Subscribe Today.
Wilbur L. Ross, chairman of International Textile Group, which includes Burlington Industries and Cone Mills, said he is firming up plans to build a denim plant in the region now that CAFTA has passed.
Ross said he is considering building a factory in Nicaragua, and has not ruled out Guatemala and could build plants in both countries. He noted the dynamic has changed due to one of the new side agreements that calls for 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 and cotton trouser fabric.
“We supply a lot of denim to CAFTA countries now, particularly to Guatemala, and we already have good customers down there and…we are just taking another look at the region to make sure we have the exact geography correct,” Ross said.
Vendors were almost universally supportive of the agreement, which strengthens the appeal of nearby Central America as a sourcing region.
“While it’s far from perfect, the passage of CAFTA is a step toward more free trade, and that’s good for our industry, our customers and our consumers,” said Paul Charron, chairman and chief executive officer of Liz Claiborne Inc.
Peter Boneparth, ceo of Jones Apparel Group, said, “CAFTA will encourage the buildup of a stronger supply, sourcing and logistics network in the region that will allow us to partner with high-quality, reliable manufacturers that can turn product, both fashion and basic, and deliver it to our customers very quickly.”
Nobody is under the impression that Central America will dethrone China as the rising sourcing star.
“They won’t become a powerhouse, but they could stay healthy,” said Wendy Wieland Martin, Kellwood Co.’s vice president of international trade.
Had the agreement been passed sooner, more production might have stayed in Central America, she said.
“It will provide great market access,” said Helga Ying, director of worldwide government affairs and trade policy at Levi Strauss & Co. “It promotes regional growth. It drives demand for U.S. goods and services.”
Ying also stressed that the agreement would encourage better enforcement of workers’ rights in the region.
“It’s a bellwether on trade and whether or not this country and this government are serious about keeping free trade and opening markets,” said Kevin Burke, president and ceo of the American Apparel & Footwear Association. “The last thing we need is to be viewed by the world as protectionist.”
Textile opponents painted the passage of CAFTA in stark terms and said they would hold their representatives accountable if the side deals are never realized.
“If they get the promises upheld, then we applaud them,” said Roger Chastain, president and chief operating officer of Mount Vernon Mills, based in Mauldin, S.C. “If they don’t, we’ll hold them responsible.”
The drama on the House floor was intense as leaders held open the 15-minute vote for more than an hour to lean on Republican lawmakers for support.
In one of the most defining moments of political deal-making, one textile state lawmaker, who had already registered a “no” vote on the agreement, went back to the dais to change his vote at 11:30 Wednesday night after a last-minute plea from House Speaker Dennis Hastert (R., Ill.).
“[House leaders] had tried all of their sources and alternatives and had run out of options, so the Speaker came to me and said, ‘Look, we have to have your vote to get this legislation passed. If you vote with us, we will give you what you want on textiles and jobs at home,'” said Rep. Robin Hayes (R., N.C.) in a phone interview.
Hayes said he was in discussion with U.S. Trade Representative Rob Portman into the early hours of Thursday morning and is still hammering out the details of what he would like in exchange for his vote.
Last-minute political maneuvering secured the votes of 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 committed to voting for CAFTA based on three side deals dangled by the administration.
“I’m standing here tonight certain that CAFTA is a wise Western Hemispheric strategy,” said Inglis during the two-hour floor debate. “I’m convinced… the best strategy available is to combine with our neighbors to the south to compete with the Chinese.”
Barrett, who was one of the last members to come out in support of CAFTA before the vote, based his vote on the side deals and last-minute support from a major constituent, Avondale Mills.
Barrett, who toured the Avondale plant earlier this week, said he was moved by an employee who has worked for the company for 31 years and is now a quality assurance inspector.
“Roosevelt Mims is the heart and soul of this whole debate — a textile worker in Graniteville, S.C.,” said Barrett on the floor of the House. “[He is] a textile worker … that a good CAFTA is going to save.”