CAFTA in Peril on Capitol Hill: One Business Leader Gives Lawmakers an Ultimatum

Washington Post

By Thomas B. Edsall

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 members.

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 estimates.

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 U.S. workers.

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," Donahue said.

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.