CAFTA Could Be Reality by End of July
Political observers are betting that the U.S. House of Representatives will approve the Central American Free Trade Agreement by the end of July, right before Congress adjourns for a five-week summer break.
“It is going to be voted on [July 28],” said Cass Johnson, president of the National Council of Textile Organizations (NCTO), a Washington, D.C., trade group that first opposed the free-trade accord and now backs it. “I don’t think the White House or the House of Representatives would have let it get this far if it wasn’t going to pass. I think it will be a close vote. But we haven’t seen a trade agreement go down in 40 years.”
House Ways and Means Committee Chairman Bill Thomas said in a press conference on July 20 that he expects there will be a House vote on CAFTA by the end of July and that it will be close. The Ways and Means Committee approved CAFTA on June 30, paving the way for the entire House to vote on it.
Thomas (R-Calif.) hopes to send the bill, known as H.R. 3045, to the House floor soon, setting the clock ticking on its approval. Congress has 15 working days to vote on the agreement, which would reduce or eliminate trade barriers between the United States and Nicaragua, Costa Rica, Honduras, El Salvador, Guatemala and the Dominican Republic. The Senate approved CAFTA on June 30 by a 54-45 vote.
There is still strong opposition to CAFTA among most House Democrats and a large Republican contingency from the South, where the sugar and textile industries have criticized the agreement as being bad for their livelihoods. Specifically, many textile factories oppose CAFTA because it would allow fabric from Canada and Mexico, as members of the North American Free Trade Agreement, to be used in Central American factories and return to the United States duty- and quota-free.
Also, Nicaragua has been given a special exemption to use up to 100 million square meters of fabric coming from regions outside Central America or the United States. That means the country could import fabric from China.
“The administration is trying to cut deals right now because they don’t have the votes,” said Lloyd Wood, spokesperson for the Washington, D.C.–based American Manufacturing Trade Action Committee, which opposes CAFTA. The trade group represents companies such as Cranston Print Works and textile manufacturer Milliken & Co. “Bob Inglis, a representative from South Carolina, is from a district that lost 4,600 textile jobs between January 2001 and September 2004. Can he go back home and say, ’I just voted on another outsourcing agreement?’”
In mid-July, President George W. Bush made a quick visit to North Carolina to lobby for the pact.North Carolina has lost roughly 65,000 apparel and textile jobs since 2001. At Gaston Community College, Bush told an invitation-only crowd that CAFTA was a pro-jobs, pro-growth and pro-democracy bill.
The Bush administration is working hard to eliminate Southern opposition by proposing to make three legislative changes to the trade pact.The proposed changes are: the preservation of $100 million in existing U.S. pocketing and lining exports; revisions to Nicaragua’s ability to import fabric from third countries; and a limitation on the amount of woven, denim and wool apparel being made in Central America from Mexican or Canadian fabric receiving duty-free status.Those promises convinced NCTO and Sen. Elizabeth Dole (R–N.C.) to support the trade agreement.
Many apparel manufacturers support the agreement because it gives them a financially viable alternative to producing clothes in China and other Asian countries.
Two major California companies, Gap Inc. and Levi Strauss & Co., already make a large quantity of jeans in Guatemala.
