WASHINGTON — The Senate Finance Committee voted Wednesday to send the Central American Free Trade Agreement to the full Senate with a favorable recommendation.

The affirmative voice vote paves the way for Senate balloting, possibly by the end of the week.

CAFTA, which is intended to eliminate trade barriers with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic, is expected to face tough going in the Senate. The Bush administration has made the accord a cornerstone of its trade agenda but has not resolved the concerns of senators representing sugar-producing states that fear a surge in imports.

Nonetheless, U.S. Trade Representative Rob Portman said in a statement: “Step by step, we’re making good progress and building momentum for its successful passage.”

The House Ways and Means Committee is likely to vote on CAFTA today, but a full vote in the House is not expected until after Congress returns from the July Fourth recess on July 11.

Sen. Craig Thomas (R., Wyo.), who was involved in negotiations with the administration and sugar industry representatives, voted against the bill.

However, the administration won the backing of Sen. Jeff Bingaman (D., N.M.), who reversed his position and said he would vote for CAFTA after Portman made commitments to increase funding for labor law enforcement in Central America and find more money to help subsistence-level farmers in Central America.

Portman sent a letter to Bingaman on the eve of the committee vote promising $40 million for labor and environmental enforcement in the 2006 fiscal year. He said the administration would support the same level of funding in the next three fiscal years.

Another pledge was to take $3 million out of the $40 million each year for three years to fund a biannual workers’ rights monitoring initiative by the International Labor Organization.

Portman said the administration also would commit $10 million a year for five years for development assistance to rural farmers in El Salvador, Guatemala and the Dominican Republic who could be hurt by a surge in U.S. exports. That offer stands until the three countries are eligible to apply for U.S. grants.

This story first appeared in the June 30, 2005 issue of WWD. Subscribe Today.

In addition to opposition from sugar-state lawmakers in the Senate and the House, lawmakers from textile-producing states in the House also pose a big hurdle.

The textile industry, which is represented by a key voting bloc, is divided over the proposal. Most fabric producers oppose it, while yarn spinners and fiber producers support the pact.

Retailers and importers support the bill, saying it gives them an alternative to sourcing in China. Many companies have said they plan to maintain business in the region and could increase business there if CAFTA passes.

Bush administration officials met with sugar-state lawmakers and industry representatives last week and again on Tuesday night to try to hammer out a deal intended to ease the effects of imports, but a deal was not reached.

An administration official, who asked not to be identified, told reporters after the Senate panel’s vote that the administration is continuing discussions with House and Senate members “to allay their concerns about the sugar provisions in CAFTA.”

The sugar industry recently rejected as “short-term” an offer by Secretary of Agriculture Mike Johanns that would establish a cap on sugar imports from the region and involve the U.S. paying the CAFTA countries in cash or commodities not to export over the limit.

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