This will hurt in the Textile states. It will be interesting to see how the candidates handle it. The Sugar Welfare we continue to provide makes me angry. It's been around for about 120 years now.
Accord Reached On Free Trade
Hill Fight Likely Over U.S. Pact With Central Americans
By Jonathan Weisman
Washington Post Staff Writer
Thursday, December 18, 2003; Page A01
The Bush administration reached a free-trade agreement with four Central American countries yesterday, setting up a tough trade fight in Congress in an election year.
The trade accord -- reached just weeks before the 10th anniversary of the North American Free Trade Agreement -- would allow more than 80 percent of U.S. consumer and industrial products into Guatemala, Nicaragua, El Salvador and Honduras duty-free as soon as it went into force. That figure would rise to 85 percent within five years and 100 percent in a decade.
U.S. agricultural products would take considerably longer to reach duty-free status, as long as 18 years, in large part because U.S. trade negotiators insisted on protecting the American sugar market from Central American exports.
U.S. negotiators failed to reach agreement with Costa Rica, the region's most developed economy. But U.S. Trade Representative Robert B. Zoellick expressed hope that Costa Rica would agree early next year, in time for congressional consideration of the pact. Negotiators would also like to include the Dominican Republic in the agreement that reaches Capitol Hill.
"This agreement provides hope," said Miguel E. Lacayo Arguello, El Salvador's economy minister. "This is hope for a prosperous new era in our societies."
Few economists believe that the Central American Free Trade Agreement would significantly affect the U.S. economy. Between them, the four Central American signatories produced $108.4 billion in goods and services last year, compared with Mexico's $900 billion. But CAFTA has already become an important political symbol, as President Bush pushes forward with efforts to create a hemisphere-wide free-trade agreement and opponents of globalization try to stop trade liberalization.
"It's a very big issue for us," said Thea M. Lee, chief international economist for the AFL-CIO. "This represents the cutting edge of the flawed Bush trade policy."
If, as promised, the administration pushes for passage early next year, the White House will present congressional Republicans with a difficult trade vote just as a wave of protectionist sentiment crests in Washington.
"This will be a major challenge," Zoellick said. "There's no doubt about it. But we're committed."
Republican congressional leaders looked at that challenge with chagrin yesterday. One senior leadership aide said Bush could lose as many as 30 Republican votes in the House, especially from textile states that have been losing jobs. Republican seats in North and South Carolina will be open in the 2004 election, the aide noted, and two of the retiring members, Reps. Jim DeMint (R-S.C.) and Richard Burr (R-N.C.), will seek open Senate seats against Democratic rivals likely to capitalize on the Bush administration's trade policies.
"What you don't want to have in an election year is a vote that is going to hurt a lot of your guys," the aide said. "Zoellick doesn't have a political bone in his body. He's a technocrat, and his interests and our interests are running very counter to each other right now."
Zoellick said the agreement includes unprecedented protections for labor and the environment. It should open new markets for U.S. yarn and fabric makers selling to Central American apparel manufacturers, while providing new customers to U.S. livestock producers, insurance companies, express shippers and computer firms. It also extends special protections to what he termed the United States' "most sensitive" commodity, a reference to long-protected sugar growers.
But the accord was attacked by labor organizations, which contend that it would weaken existing labor protections. Health care groups decried U.S. intellectual-property provisions that would protect U.S. pharmaceutical companies from low-cost Central American generic drug makers. "If CAFTA makes intellectual property protection of pharmaceuticals even more stringent, lives will be lost," said Manuel Munoz, who runs Doctors Without Borders' AIDS treatment program in Honduras.
Perhaps more important to its political fate was the reaction from U.S. textile makers and sugar growers -- and their congressional allies. The American Manufacturing Trade Action Council, which represents textile firms, and the American Sugar Alliance swiftly came out against the deal.
Under the agreement, clothing made in Central America would come into the United States duty-free if the fabric and yarn was made in the United States or one of the Central American partners. But at the insistence of Central American negotiators, the agreement also extends duty-free access to apparel made in part with Mexican and Canadian materials. And for some clothing, like boxer shorts, bras and pajamas, additional loopholes were opened for Chinese material, said Alfredo Milian, a consultant to the negotiations from the Salvadoran Apparel Manufacturers Association.
U.S. textile firms charged that the administration was putting undue faith in the ability of Mexican customs officials to ensure that only Mexican -- and not Chinese -- fabrics would be shipped to Central America for assembly.
"Once again, the administration has delivered a lump of coal to South Carolina textile workers," said Sen. Ernest F. Hollings (D-S.C.). "We've already lost 62,400 jobs to Mexico, China and other countries, and this will get rid of the rest."
Sugar-state lawmakers were also concerned. Sen. Byron L. Dorgan (D-N.D.) said the agreement's limits on sugar imports would protect growers for now.
Under the agreement, the existing quota on duty-free sugar shipments into the United States would rise immediately from 111,000 metric tons a year to nearly 200,000 tons, then rise slowly to about 236,000 tons over 15 years. But that is considerably less than the level the Central Americans sought, and the tariff levied on sugar above those quota levels -- about 100 percent of the value -- would remain indefinitely.
But, Dorgan said, by including quota adjustments in the agreement, Zoellick would ensure that further modifications would be made in free-trade agreements under negotiation with Australia, Brazil, the Dominican Republic and elsewhere.
"We will see the dismantling of the U.S. sugar industry," Dorgan said.
The stiff headwind facing the accord could persuade Bush to postpone sending it to Congress for consideration next year, a GOP leadership aide said. But if the economy continues to improve, some of the opposition could evaporate, DeMint said.
For now, with a Senate campaign already underway, DeMint was not about to pledge his support.
"If we continue to have job losses, I think Congress will be very slow to take any free-trade agreement," he said. "Right now, everybody's a little gun-shy about trade."
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