CAFTA pact drawing fire on Capitol Hill

Opponents fear impact on farmers, trade deficit


WASHINGTON - For the first time since Congress fought fiercely over the North American Free Trade Agreement 11 years ago, a president's proposed trade deal faces major resistance on Capitol Hill.

At stake is the Dominican Republic-Central America Free Trade Agreement, known as CAFTA, which the Bush administration contends will boost U.S. exports and reward staunch allies. Opponents fear the deal will increase the U.S. trade deficit, put U.S. sugar cane and sugar beet farmers out of business, and result in unfair competition because of lower labor standards in Latin CAFTA countries.

Senate Finance Committee Chairman Charles E. Grassley, an Iowa Republican, said in a hearing yesterday that the gains for U.S. companies and diplomacy are so clear that opposing it "defies logic."

But labor and environmental groups - and free-trade skeptics of both parties - are out to kill the deal and may prevail.

Montana Sen. Max Baucus, a Democrat who is a supporter of past trade pacts, said he has "serious concerns about this agreement."

If hearings in the Senate and the House of Representatives yield no momentum for CAFTA, which was drafted more than a year ago, it's likely to face further delays. It isn't terribly popular in Central America either. Guatemala saw violent protests last month when its legislature endorsed it.

Besides the Dominican Republic, CAFTA comprises Honduras, Guatemala, Costa Rica, Nicaragua and El Salvador. Combined, their economies are smaller than Connecticut's, but the six countries buy more U.S. goods than India, Russia and Indonesia combined.

Trade experts said the pact's fate could have an impact on the stalled Free Trade Area of the Americas initiative, a project launched at a 1994 summit of Latin American leaders that's intended to drop trade barriers among U.S. allies in the Western Hemisphere.

"This could really be the final nail in the coffin [for the Free Trade Area of the Americas], and it would complicate other bilateral and multilateral trade negotiations," said Jeffrey Schott, a trade specialist with the Institute for International Economics, a Washington research center.

The Bush administration argues that CAFTA would give U.S. exporters greater access to Central American markets and would strengthen democracy in a region that's friendly to Washington.

"What is the point of turning your back to countries that have done their homework?" said Rene Leon, El Salvador's ambassador to Washington. He said many "myths and monsters" had been tagged to the trade agreement, and "there are those who want a rematch of the NAFTA battle."

That may include Sen. Kent Conrad, Democrat of North Dakota, who worried yesterday that CAFTA would open U.S. doors to sugar imports and injure his state's sugar beet farmers. "You've just negotiated away another industry here," Conrad complained to Acting U.S. Trade Representative Peter Allgeier.

The American Sugar Alliance, which represents 146,000 farmers from 19 states, is fighting U.S. negotiators' consent to let in 109,000 metric tons of sugar the first year that the pact would go into effect, and to gradually raise that amount.

Allgeier said that equals just one and a half teaspoons per week per U.S. citizen and the U.S. government can stop those imports unilaterally at any time.

The sugar industry argues that the quota would simply add to the 600,000 tons of sugar they already have stored in warehouses and would be a foot in the door for future sugar imports.

"I do think the precedent this sets is going to be difficult," said Wyoming Sen. Craig Thomas, a Republican.

Sugar cane and sugar beets account for 10 percent to 20 percent of cash crop receipts in states such as Florida, Minnesota, North Dakota, Montana and Michigan. In Louisiana, sugar accounts for 44 percent.

Rep. E. Clay Shaw Jr., the Florida Republican who is chairman of the trade subcommittee of the House Ways and Means Committee, acknowledged that CAFTA supporters don't have the votes to pass the pact today. He said he'd try to persuade those who would benefit from the agreement to enter the fray.

Recent free-trade pacts with Chile and Singapore had broad bipartisan support in the House, winning over roughly 70 Democrats, who voted with 190 or so Republicans for the deals.

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