Unraveling CAFTA: Lobbyists vs. free trade, by Frances Smith

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The Bush administration is taking a risky tack to garner House support for the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). Debate on the House floor is imminent, yet the votes for the trade pact aren't lined up yet.


To try to get approval nailed down, <?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />U.S. trade officials have gone back to the negotiating table with the six CAFTA-DR countries to redraft textile provisions so they can win a few more votes from textile-state representatives. According to the new textile agreement, only U.S. fabric can be used for pockets and linings in apparel entering the U.S. duty-free from CAFTA-DR nations. The deal attempts to placate some segments of the textile industry that complained about this so-called loophole.


Making changes in CAFTA-DR after the agreement has been submitted to Congress and already approved by the Senate is a risky proposition. It obviously undermines the “fast track” authority given to the president in the Trade Act of 2002, which allows the president to submit a trade agreement to the House and the Senate for an up-or-down vote without any amendments. Changing the terms of the agreement after it has been negotiated to satisfy special interests opens the door for other protectionists to lobby for special treatment. Already, the ranking Democrat on the House Ways and Means Committee, Rep. Charles B. Rangel, who wants U.S.-style-workplace provisions in the agreement, has issued a statement saying, “If they can renegotiate on textiles, they can renegotiate on basic labor standards in CAFTA.”


The indefatigable sugar industry may also be waiting in the wings with new demands. The U.S. already caved to the sugar lobby, which doesn't want even a teaspoon of sugar more to come into the U.S. duty-free, as CAFTA-DR allows. Agriculture secretary Mike Johanns wrote to sugar industry supporters saying that the U.S. would take care of the additional sugar imports by buying the sugar and turning it into ethanol instead of letting it be used in food production. Even that taxpayer bailout didn't satisfy Big Sugar, whose legislators in the sugar cane and sugar beet states are holding out for a complete exception in CAFTA-DR and in future bi-lateral trade agreements, including the pacts now being negotiated with Thailand and with the Andean countries.


Redrafting the trade pact also puts the six CAFTA-DR countries in an uncomfortable position, even when they have agreed to the textile deal. Isn't the credibility of the U.S. as a negotiating partner at issue when it signs an agreement and then reneges on it? Those countries have expended a lot of political capital promoting the benefits of CAFTA-DR in the region—and here the U.S. is, trying to extract more “concessions.”


CAFTA-DR, as the agreement was originally negotiated, had serious flaws, yet the potential benefits to consumers and producers in all the countries outweighed the defects. The trade pact should have sailed through Congress with strong support. But with special interests now lining up to get their pound of flesh from renegotiations, their legislators may be more willing to support the trade pact. On the other hand, the new special-interest deals may unravel the agreement. In either case, the costs to consumers and taxpayers, and the blows to U.S. credibility in future trade negotiations are a high price to pay.