cafta

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U.S. Pushing for Trade Pact
Deal Would Expand NAFTA Through Central America

By Jonathan Weisman
Washington Post Staff Writer
Wednesday, December 10, 2003; Page E01


The Bush administration is determined by week's end to conclude an
agreement to extend the North American free-trade zone throughout Central
America, despite a wave of protectionist sentiment cresting over
Washington.

Lawmakers from both parties are warning President Bush that congressional
passage of the agreement during next year's campaign season will present a
daunting challenge. With labor unions, sugar growers and textile
manufacturers expressing strong concern, some Republicans are hoping the
agreement never comes to a vote.

"Is there a backlash in the Senate and House right now? Oh yeah," said
Sen. Lindsey O. Graham (R-S.C.), whose state textile economy has been
hemorrhaging jobs. "It's going to be a tough sell to get any trade
agreement at a time when our manufacturing is in decline, and if past
performance is any indication, there's no way."

The five delegations gathered this week at the Mayflower Hotel to hash out
the details of a Central American Free Trade Agreement (CAFTA) hardly
represent a major threat to the U.S. economy, or a vast market for U.S.
exporters, even opponents concede. Between them, the economies of Costa
Rica, Honduras, El Salvador, Guatemala and Nicaragua produced $140.7
billion in goods and services last year, considerably less than
Bangladesh.

But for both the Bush administration and globalization opponents, the
agreement has assumed outsized symbolic and strategic importance. U.S.
Trade Representative Robert B. Zoellick sees it as an important step
toward regaining momentum for a trade liberalization agenda that has
targeted agreements with the Dominican Republic, Panama, Colombia, Peru,
Ecuador and Bolivia in rapid succession, followed by a long-sought
free-trade agreement for the entire western hemisphere.

For opponents, the lax labor and environmental standards they see in
Central America, coupled with the extremely low wages of workers there,
have turned CAFTA into something of a last stand. If they can bring the
agreement down over such issues, they believe they will force a change in
negotiating tactics on future trade deals.

The 10th anniversary of the North American Free Trade Agreement will be
Jan. 1, further focusing attention on free trade's track record and
efforts to expand it.

"This is where we draw the line," said Rep. Sander M. Levin (D-Mich.).

U.S. trade officials negotiating the agreement said yesterday that
opponents' concerns are misplaced. The U.S. economy may have far more to
gain from an agreement than the Central Americans, negotiators insisted
yesterday

Under prior trade deals, such as the Caribbean Basin Initiative, Central
American nations already have duty-free status for 75 percent of the
products they ship to the United States, one trade official said. In
contrast, U.S. exporters pay duties on 70 to 80 percent of the products
shipped to the region.

CAFTA could go a long way to remedying that imbalance, the official said.
Negotiators have already concluded talks on industrial goods, excluding
textiles. Under the draft agreement, 99 percent of Central American
products would enter the United States duty-free, an "incremental gain,"
she said, while more than 80 percent of U.S. goods would no longer face
Central American tariffs, a much more dramatic improvement.

But no agreements have been reached on the two most important, and
controversial, industries -- textiles and sugar. How those issues are
decided could determine the agreement's fate in Congress.

For textile makers, there is some hope the final agreement could help the
beleaguered industry compete with China. Trade negotiators will try to
create conditions that would favor U.S. yarn and fabric makers seeking
access to Central American apparel manufacturers. But U.S. textile
industry officials say the Central Americans are demanding flexibility to
seek lower-cost fabrics from Asia, which would then be finished into
clothing and shipped into the United States duty free.

"We are very concerned about how CAFTA is going to come out," said Auggie
Tantillo, Washington coordinator of the American Manufacturing Trade
Action Coalition, a textiles trade group. "We've got to prevent them
opening up one more backdoor entrance into our market for China."

Sugar will be even more daunting. The five CAFTA countries produce 2
million tons of sugar a year, considerably more than the United States now
imports, and those nations want to get around steep U.S. sugar tariffs. In
their way stands a well-organized sugar beet and sugar cane industry, with
congressional advocates in 42 states.

"This is life or death for us," declared Jack Roney, director of economics
and policy analysis at the American Sugar Alliance, an umbrella trade
group. "This is the most disturbing struggle I've been in in my 20 years
with the sugar industry."

Allen Johnson, the administration's chief agriculture negotiator, told
reporters yesterday that he would not take sugar off the table, as the
sugar growers want. To do so would only encourage Central American
negotiators to close off parts of their market to U.S. exports, such as
beef, pork, corn and rice.

Such nuanced arguments may be beside the point in today's political
climate, said Rep. David E. Price (D-N.C.), a former Duke University
political scientist who generally has supported trade deals. In areas of
the country that are still struggling with job losses, free-trade
agreements have become potent political symbols of decline, he said.
Politicians once willing to listen to intricate economic arguments will be
considerably less receptive next year.

"Any CAFTA agreement next year is going to be tough, regardless of whether
or not industry groups back home support it," said Rep. Richard Burr
(R-N.C.), who is running for the Senate next year. "If a final agreement
hurts domestic industry, it will have serious political ramifications
throughout the Southeast."

But one administration official, while acknowledging the challenge, said
the Bush White House has a track record of building coalitions to squeak
deals through. Bush won "fast track" trade-promotion authority last year
by three House votes.

Trade negotiators will try to include the Dominican Republic in the
agreement early next year to win over New York Democrats with huge
Dominican constituencies. And they will try to counter the strength of the
sugar industry in Louisiana and the Midwest by mobilizing other
agricultural interests, and even Louisiana shipping companies.

"From our perspective, our job is to make these agreements as good as they
can, then they'll stand on their own merits," one U.S. trade official
said. "That's not to say there's not a lot of work to be done to make
people understand those merits, but we don't have the luxury of saying,
'Stop the world. I want to get off.' "


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No, he wants the luxury of saying 'heh, heh, suckers it's time to kick
away the ladder"..................