USTR Likely To Announce Delay In CAFTA Implementation, Rangel Sees Trade Policy Failure
December 30, 2005
Inside US Trade

The Office of the U.S. Trade Representative will likely announce today (Dec. 30) that it is unable to meet its target date of Jan. 1, 2006 for implementing a free trade agreement with any of the six Central American countries that signed it, according to a USTR spokesman.

These countries still have to make changes to their national laws to implement the agreement, according to the spokesman. “It is important to do it correctly, not just quickly,” he said.

He said the U.S. is hopeful it can implement the deal with El Salvador by Feb. 1, and that other countries may be ready to put the deal into effect shortly thereafter.

El Salvador has been furthest along in implementation and has passed an intellectual property protection law that is satisfactory to the United States. Other countries are lagging in making the changes to their domestic law that the U.S. says are required to implement the agreement, and Costa Rica has not yet begun the formal ratification process for the deal.

In anticipation of today’s USTR announcement, Rep. Charles Rangel (D-NY), the ranking member of the House Ways and Means Committee, said the delay in implementation is a “stunning failure” for the Bush Administration and USTR since they had declared the CAFTA their number one trade priority for 2005. “I cannot recall a similar embarrassment to the USTR or a President in international trade,” Rangel said in his statement.

He pointed out that the implementation delay hinges partially on a fundamental difference in legal interpretation between USTR and the CAFTA countries. USTR insists that signatory countries must change their domestic laws to reflect the obligations of the deal on a range of issues from IPR to agricultural market access. In contrast, the CAFTA signatory countries have argued that the agreement is a treaty which trumps domestic law under their legal system (Inside U.S. Trade, Dec. 9, p.1).

The USTR demand for domestic law changes stands in marked contrast to the position it took with respect to labor rights during the congressional consideration of CAFTA, Rangel said. At that time, House Democrats had pointed out that domestic labor laws in the CAFTA countries failed to reflect the standards of the International Labor Organization, which they believed then made insufficient the CAFTA obligation that countries enforce their own labor laws.

Rangel’s arguments in the Dec. 29 statement reflect the points made by him and three other House Democrats in a Dec. 15 letter to U.S. Trade Representative Rob Portman.

The letter pointed out that during congressional consideration of the CAFTA, USTR insisted that by ratifying the basic ILO conventions, CAFTA countries had incorporated these basic international labor standards into their domestic laws. “USTR further asserted because these conventions were incorporated into the CAFTA countries’ domestic laws, the provision in the CAFTA requiring that the countries enforce their existing labor laws would in effect require them to enforce basic labor standards as enumerated by the basic ILO conventions,” the Dec. 15 letter said.

According to the letter, the different stance USTR took with respect to labor rights versus other commercial obligations of the CAFTA constitutes a “double standard.” The letter emphasized that House Democrats support the approach that CAFTA signatories implement their obligations with changes in their domestic laws. “[H]owever, we believe there should be a single standard applied to all areas, rather than a double standard that gives preferential treatment to some areas over others,” the letter said.

In response to the letter, USTR did not address the charges that it has taken a fundamentally different approach to implementing of labor obligations versus other commercial obligations in the CAFTA. Instead, in a Dec. 19 statement by USTR spokesman Christin Baker said the U.S. is prepared to have the CAFTA go into effect “as early as January 1,” but only with countries that have made “sufficient progress” in adopting new laws and regulations where necessary.

The statement said that Central American countries that have not implemented the CAFTA would retain their benefits under the Caribbean Basin Trade Partnership Act. Countries that implement the deal by April 1, 2006, will retain their full year agricultural quotas for 2006, according to the statement. After that date, treatment of these quotas will be determined as “appropriate,” the statement said.

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