With the Central American Free Trade Agreement (CAFTA) in serious trouble, a prominent
business leader recently laid it on the line: Business groups are prepared to
cut off campaign contributions to House members who oppose the pact.
"If you [lawmakers] are going to vote against it, it's going to cost you,"
Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, warned
recently during a meeting on Capitol Hill of leaders of a 500-plus business-trade
association coalition with more than 500 members.
President Bush has declared ratification of CAFTA his top trade priority of
the year. The pact would create a NAFTA-like free-trade zone between the United
States and five Central American countries plus the Caribbean's Dominican Republic.
But both sides agree that without a major push from the White House and the
GOP leadership, CAFTA is likely to become the first major trade deal to be defeated
in more than 40 years and a major embarrassment for the administration.
The administration recently dispatched high-profile officials -- including
Secretary of State Condoleezza Rice, Defense Secretary Donald H. Rumsfeld, Secretary
of Commerce Carlos M. Gutierrez, Agriculture Secretary Mike Johanns and U.S.
Trade Representative Rob Portman -- to enlist support from House and Senate
Rep. Sherrod Brown (D-Ohio), who is coordinating the opposition among House
Democrats, said the percentage voting against trade agreements has steadily
grown from the 60 to 65 percent range in the early 1990s, and predicted 90 percent
will oppose CAFTA.
"If the vote was held today, we would get 190 Democrats and somewhere
in the vicinity of 40-plus Republicans," more than enough to defeat the
measure, Brown said. Republican opponents of CAFTA are more cautious in their
The administration and GOP leaders are pushing for ratification of CAFTA before
the July 4 recess. Matthew Niemeyer, assistant U.S. trade representative for
congressional affairs, said that "we are in excellent position to successfully
mark up this agreement" in the Senate Finance Committee this week. The
major threat in the committee is that all the Democrats could line up with two
Republicans, Michael D. Crapo (Idaho) and Craig Thomas (Wyo.), to pass a nonbinding
but politically damaging amendment eliminating sugar provisions.
Some of the biggest winners if the pact is approved would include the pharmaceutical
industry, which would get protection from producers of generics; the high-tech
and telecommunications industries, which would get intellectual property protections
and access to the Caribbean Internet, cellular and land-line phone systems;
and exporters including the National Pork Producers and Procter & Gamble,
which would see tariff barriers lowered or eliminated.
But they are up against formidable opponents, including organized labor, the
sugar industry, most House Democrats and some conflicted southern Republicans,
who want to support Bush and the GOP's free trade policies but are under pressure
to protect producers in their districts from overseas competition.
House Democrats overwhelmingly oppose the agreement, largely because of concerns
of labor unions that the agreement would not adequately protect the rights of
low-paid workers in Central America who would be competing more directly with
Many pro-trade, centrist Democrats are also declaring their opposition in order
to voice their broader disagreement with Bush administration tax and domestic
spending policies that they argue are not doing enough to equip the workforce
to deal with a changing global economy. "CAFTA is a 'place holder' "
for those concerns, said Rep. Adam Smith (D-Wash.).
A number of Republicans who represent once-Democratic southern congressional
districts heavily dependent on agricultural subsidies and tariff and quota protections
for textiles also object to the treaty.
The leaders of the Republican opposition to CAFTA are Reps. Walter B. Jones
Jr. (N.C.) and Virgil H. Goode Jr. (Va.), both former Democrats. A substantial
number of Republicans have declared they will defect from the White House agenda.
Others are under intense pressure to cast "no" votes from the sugar
industry and segments of the beef and textile industries concerned about increased
competition from Central America.
House Democratic leader Nancy Pelosi (Calif.) predicted last Wednesday that
wavering Republican lawmakers who are forced by the administration and GOP leaders
to vote for CAFTA will be highly vulnerable in the 2006 elections.
Under CAFTA, the United States would make permanent the temporary suspension
of tariffs set by the Caribbean Basin Initiative. In return, the Dominican Republic,
Honduras, Costa Rica, El Salvador, Guatemala and Nicaragua would reduce or eliminate
tariffs on most imports, open state monopolies to foreign competition, and remove
legal barriers to foreign investment.
The pact gets strong backing from business groups that see new export and import
opportunities. Organized labor, however, sees a threat from low-wage production
competing with American goods, and many Democrats have voiced concerns that
not enough is done to protect Caribbean workers from exploitation, and to educate
and train displaced U.S. workers.
The possibility of defeat has pro-CAFTA leaders of U.S. business -- who see
the treaty as a test vote for future, much broader, free trade negotiations
-- deeply worried. "If we walk away from this deal, we walk away from years
of investment and we walk away from extraordinary trade opportunities,"
Teams of corporate executives and lobbyists are meeting regularly with undecided
House members here and in their home districts. Officials of the Distilled Sprits
Council, Procter & Gamble and the Farm Bureau have, for example, met with
Rep. John S. Tanner (D-Tenn.) to press the case for CAFTA. In addition to boosted
agricultural exports, the treaty would open markets for Procter & Gamble's
shampoo factory in Tanner's district and would guarantee that bourbon and Tennessee
whiskeys sold in the CAFTA countries would have to be produced in the United
States, according to lobbyists for these interests.
In a recent speech on behalf of the treaty, House Majority Whip Roy Blunt (R-Mo.)
said, "Frankly, this is the model for a global economy."
Jones, who has seen his state's textile factories and workforce devastated
by foreign competition, rejected that analysis. "Enough is enough; we are
losing the manufacturing base of this country," he said.
Brown and Jones predicted the administration will begin offering special favors
to wavering lawmakers. "They are going to open the bank for these guys,"
said Brown, citing past offers of bridges and other public works projects to
win votes on controversial trade bills.
Public Citizen, in a bid to weaken the administration's bargaining position,
this week is to issue a report showing that 83 promises have been made to win
trade votes over the past 15 years and that only 13 of them were kept: three
of 53 commitments to change policies and 10 of 30 pork barrel commitments.