WASHINGTON — The Senate Finance Committee, sending a signal to the Bush administration that the battle over the Central American Free Trade Agreement is far from being decided, on Tuesday kicked off preliminary consideration of the trade accord.

Opposition to CAFTA is strong, particularly among lawmakers representing the textile and sugar industries and blocs of Democrats who oppose the trade bill’s labor provisions. Those who favor it feel it offers export opportunities for U.S. textile and agricultural products.

The administration appears willing to hold discussions with representatives of the U.S. sugar industry and lawmakers, it was revealed at the hearing, and it recently won over a key textile association by promising to change a provision on pocketing and linings in exchange for its support of CAFTA.

It is unclear, however, whether the commitments have swung any votes among textile-state lawmakers, other than Sen. Elizabeth Dole (R., N.C.), who recently said she would vote for the pact. Many textile-state lawmakers in the House remain largely undecided or are leaning toward no.

The informal hearing, known as a “mock markup” of the implementing legislation, allows lawmakers to make recommendations to modify provisions in the accord. The House Ways & Means Committee will hold a similar session today.

“The fact is, passage of CAFTA is good for both our geopolitical and economic interests,” said Sen. Chuck Grassley (R., Iowa), chairman of the committee, in his opening remarks.

The recommendations are not legally binding because, under Trade Promotion Authority, Congress cannot make amendments to a trade bill and must vote it up or down. The session is essentially a test run that gives lawmakers a chance to air their concerns about or support of the bill, request modifications and send signals to the administration on where they stand.

The White House can then send implementing legislation to Congress to allow for full House and Senate debate to begin. Some lawmakers have said they would like to move the bill before the month-long July 4 recess.

At the hearing, Senators approved one recommendation and rejected another before voting to approve the draft-implementing bill.

The committee approved a recommendation offered by Sen. Ron Wyden (D., Ore.) to extend Trade Adjustment Assistance — a federal aid program for workers who lose their jobs because of imports — to service-industry workers.

This story first appeared in the June 15, 2005 issue of WWD. Subscribe Today.

“There is a huge disconnect in what happens in Washington, D.C., and on the shop floors where people are concerned about free trade,” Wyden said. “With respect to the Trade Adjustment Assistance program, there is a huge gap … that helps displaced manufacturing workers but doesn’t address service workers who now account for 80 percent of the U.S. workforce.”

The committee rejected an amendment by Sen. John Kerry (D., Mass.) on a split vote that sought to strengthen the enforcement provisions of labor laws in the Central American region.

Sen. Craig Thomas (R., Wyo.) cast the deciding vote to approve the draft legislation based on a letter he received from Secretary of Agriculture Mike Johanns extending an offer to hold discussions on “any reasonable proposals that may help address your sugar growers’ concerns.”

Many lawmakers have voiced concerns about the impact of duty-free sugar imports from Central America, as well as the precedent CAFTA might set by allowing foreign-subsidized sugar imports into the U.S. that could hurt the American sugar beet industry.

Meanwhile, Sens. Lindsey Graham (R., S.C.) and Hillary Rodham Clinton (D., N.Y.) launched a Senate Manufacturing Caucus Tuesday to address the erosion of the U.S. manufacturing base and spearhead efforts to counter it.

In a joint statement, they said the caucus will also identify opportunities for Congressional action to keep manufacturing jobs in the U.S., a sector they noted has lost 3 million jobs in the past seven years.

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