Uphill fight for Central American trade deal

Bush is pushing free trade with Central America to stay competitive with China and to spread democracy further.

A decade after the inception of the North American Free Trade Agreement, officials and experts are still debating its merits, even as communities across the country absorb its impact.

Meanwhile, China, which continues to rack up huge trade surpluses with the US, looms on the eastern horizon.

It is in this context that President Bush's initiative for a free-trade accord with Central America and the Caribbean's Dominican Republic (known as CAFTA) continues to flounder - despite the high-profile press from the White House this week to get the signed agreement ratified by Congress.

President Bush was scheduled to greet the presidents of five Central American countries and the Dominican Republic to the White House Thursday, while Deputy Secretary of State Robert Zoellick - the administration's past trade representative - is to give a speech next week echoing his boss, Secretary of State Condoleezza Rice, who recently argued that CAFTA is essential to securing freedom - economic and political - in the region.

The administration's problem is not so much the impact of an accord with six economies that together barely match the economic heft of Pittsburgh. Rather, it's the "bad rep" that trade agreements and the notion of free trade in general have developed as the United States has continued to see a decline in manufacturing jobs and a rise in "offshore outsourcing."

Criticism from both parties

Any hopes of new trade agreements - such as one encompassing the entire Western Hemisphere that the administration had once hoped to conclude this year - are probably doomed until the public, and Congress, are more certain of the benefits.

In the debate over CAFTA and free trade in general, "the two phantoms are the experience with NAFTA and what to do about China," says Jeff Vogt, a senior associate for rights and development at the Washington Office on Latin America. "That's really what's put the spook into" the Congress.

The Democrats, who were mildly supportive of free trade under President Clinton, have increasingly turned against trade agreements in recent years. Some Republicans, too, are showing increased resistance to pressure from traditional Republican free-trade constituencies, citing job losses and inadequate planning for the fallout of trade accords.

Sen. Saxby Chambliss (R) of Georgia, argues in a recent article in The Hill newspaper that while "open trade" can boost the export of US products, it also causes hardships at home - hardships the US hasn't prepared for adequately in the past.

While touting his state as a "crossroads of international trade," he adds that "Georgia was also home to a thriving textile sector that has suffered the costs of free trade...."

Trade promotes democracy

Against such resistance the Bush administration is retooling old arguments while developing new ones. Officials are refashioning the argument that free trade promotes democracy by placing it within the context of President Bush's second-term focus on the global spread of freedom.

Recently Commerce Secretary Carlos Gutierrez claimed that the forces opposing the CAFTA agreement in Central America today are drawn from the same elements that opposed "democracy and freedom" during the war-torn 1980s.

And more than just administration officials are jumping on the trade-promotes-democracy bandwagon. Last month a list of former Democratic administration officials sent a letter to Congress supporting CAFTA's passage as a way to "reinforce democratic processes and rule of law in Central America." The letter also said political trends in the region make passage urgent because "opponents of democracy are increasingly active."

At the same time, US Trade Representative Rob Portman, a former member of Congress from Ohio, argues that CAFTA can actually work as a viable response to the Chinese trade juggernaut by favoring regional textile industries that would enjoy incentives for using American cloth, yarn, and thread.

Of course the administration's argument in favor of CAFTA is not devoid of economic elements. Mr. Portman cites US business organizations that estimate a $1.5 billion jump in farm exports and $1 billion gain in sales of manufactured goods as a result of CAFTA.

But critics say the administration is wrong to suggest that CAFTA will help US industries, in tandem with lower-wage southern neighbors, compete with Chinese garmentmakers, and other exporters.

Portman's argument is "the triumph of hope over experience," says Alan Tonelson, a specialist in trade policy at the US Business and Industry Council in Washington. "That's what we were told NAFTA would do - and what NAFTA failed to do."

How CAFTA could pass

Mr. Tonelson says the problem with US trade policy is not primarily regional trade accords, but the failure to come to grips with countries such as China that have "racked up huge surpluses and can now afford to follow whatever practices they need to to keep their trade growing."

That failure means that an agreement like CAFTA, which the administration wants as much for political as for economic reasons, is going to continue to face stiff opposition in Congress, Tonelson says.

But even some Democrats believe CAFTA can still be passed - a vote is anticipated in the next few weeks - if the White House and Bush personally really lobby for it. Rep. Jim Moran, a Virginia Democrat, supports CAFTA and says putting the accord in the context of making inevitable globalization work for the region is the best way to argue for it.

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