The Senate yesterday approved a controversial free-trade agreement with five Central American countries and the Dominican Republic, setting up a showdown in the House over the most fought-over trade deal in a decade.
The Bush administration and congressional supporters argue that the Central American Free Trade Agreement, or CAFTA, would open markets for US businesses and foster stability in a region that has suffered from poverty and political volatility. The pact's critics fear that easing trade restrictions with the six nations would lead to further erosion of manufacturing jobs in the United States and a tacit sanctioning of labor abuses abroad.
''If there's anything we need today, it's strong, viable economies in Central America" to encourage political stability and reduce illegal immigration, Senator John McCain, Republican of Arizona, said during floor debate. ''If people cannot feed themselves or their families where they are, they will go to places where they think they can. The stakes are very high."
The Senate's 54-to-45 vote followed a White House negotiation that brought on board two key senators who had worried about CAFTA's impact on the US sugar industry. The senators agreed to the trade deal with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic after the White House assured them they would provide protections for US sugar producers at least through 2007.
A win would give a political boost to the White House, which is struggling against lackluster support for the war in Iraq and the president's plan to create private Social Security accounts.
But the outcome is uncertain in the House, where Democrats and Republicans alike worry that the pact could result in the loss of more manufacturing jobs from their districts. ''Things are still very close" in the House, said Senate Finance Committee chairman Charles Grassley, Republican of Iowa and a chief proponent of CAFTA.
The trade deal -- which would eliminate nearly all tariffs on US imports to the region over the next decade -- is small, compared with other trade agreements approved in the past decade. The six countries in the CAFTA agreement bought about $15 billion in US goods in 2003. The nations' combined gross domestic product is about $100 billion -- less than one-tenth of the GDP of the United States, which hopes to sell more goods to the region, according to Dean Baker, co-director of the Center for Economic and Policy Research.
But CAFTA has become a potent symbolic fight about trade policy in general and the loss of US manufacturing jobs in particular. Democrats have seized on the job losses to paint the Bush administration as favoring big business more than US workers.
''The bottom line is this: CAFTA is not a good deal for America," said Senator John Kerry, Democrat of Massachusetts. ''The administration has turned a blind eye toward America's workers. I won't do that, and I hope my colleagues won't, either."
Many Democrats opposing the CAFTA package have voted for much broader trade deals in the past, including the North American Free Trade Agreement and the easing of trade barriers with China. But with US manufacturing jobs on the decline, those same lawmakers have made CAFTA a test of Congress's commitment to workers. ''Globalization is as inevitable as gravity," said Senator Dick Durbin, Democrat of Illinois. But ''I believe that this treaty is a mistake" because it does not protect US American workers from job losses or foreign workers from abuses such as child labor, he said.
The Bush administration has said it would seek $40 million a year to help CAFTA nations enforce labor and environmental laws. Opponents say the pledge isn't enough because workers don't have the right under the deal to lodge an official protest to violations of the trade pact.
The House Ways and Means Committee voted to approve CAFTA yesterday, and the full House is expected to take it up after Congress returns from its Independence Day break.
The White House hopes its deal on sugar -- which includes a study to determine whether sugar could be used to create ethanol, a gasoline additive -- will woo some lawmakers from states from Louisiana to Idaho, where sugar cane and sugar beets are grown. But lawmakers from farm states may balk at the bill, said Representative Jo Ann Emerson, Republican of Missouri.
Democrats and Republicans from agricultural districts are angry at the Bush administration's refusal to back efforts to reverse an administration policy enacted this year to make it harder to sell foodstuffs to Cuba, she said. Emerson said those lawmakers might be reluctant to extend trade advantages for Central America when Cuba is being shut out as a market, she said. ''Obviously, they're not serious about trade at all," she said.
© 2005 the Boston Globe