A US free trade agreement negotiated with Central America and the Dominican Republic received a cool reception yesterday at its first formal Congressional hearing before the Senate Finance Committee signaling the controversial trade pact may be facing a tough debate in the Senate as well as the House (WTD, 4/13/05).

Republicans and Democrats on the committee joined in expressing strong concerns about the agreement particularly it's potential impact on the US sugar and textile industries and whether it would improve conditions for workers.

I believe the sugar industry has presented a very good case that there would be a real threat to domestic producers if CAFTA is implemented, Sen. Mike Crapo (R-Idaho) commented. The US sugar industry has mounted a strong campaign against CAFTA.

A coalition of other agricultural producers recently launched a counter-campaign promoting the benefits of the trade pact for US farmers.

But Sen. Craig Thomas (R-Wyo) said he is hearing a lot of opposition from his state farmers mostly sugar but also beef producers who are worried that CAFTA will provide a back door for Brazilian beef to enter the US market.

Senate Agriculture Committee Chairman Saxby Chambliss (R-Ga) has already announced his opposition to CAFTA.

Republicans Olympia Snow (Maine) and Jim Bunning (Ky) raised concerns about CAFTA impact on US textile producers. Ms. Snowe said she is also finding it hard to support another free agreement when the Administration does not have a good record on enforcing existing trade pacts. I've lost confidence in the ability of our government to enforce trade agreements, she said. Sen. Baucus

Committee ranking Democrat Max Baucus (Mont) expressed similar concerns over beef and sugar.

Sen. Baucus along with several other committee members suggested that sugar producers might be more comfortable if the Administration sets a clear trigger for the special sugar compensation mechanism included in the agreement. Country-of-origin labeling for beef from the region was raised by several senators to address US ranchers concerns.

Acting US Trade Representative Peter Allgeier said the sugar mechanism gives the US broad discretion to halt sugar imports from the region if it believes the increased sugar coming in under CAFTA is threatening the US industry. The exact form and amount of compensation also would be up to the United States to decide.

But several senators suggested US producers would prefer a clear trigger so that they can have some confidence the mechanism will be used. They also reiterated concerns raised by sugar producers that increased imports allowed under CAFTA would turn off the marketing allotment program that permits the Agriculture Department to restrict domestic sugar sales in order to balance the market. US sugar producers are currently holding over a half million tons of sugar off the market which would be pushed into the market, causing prices to drop.

Senators also raised concerns about the precedent of including sugar in future trade agreements particularly the FTA with Andean countries currently being negotiated and the hemisphere-wide Free Trade Area of the Americas (WTD, 3/22/05).

USTR Allgeier indicated to reporters following his testimony that the Administration will not assure US producers that it will exclude sugar from future trade deals.

But House Ways and Means Committee member Rep. Kevin Brady (R-Texas), who will be taking a lead role in the effort to move CAFTA through the House, told WTD yesterday he expects many lawmakers concerns including sugar and textiles to be addressed in implementing legislation, which the Administration has yet to send to Congress. Despite the current controversy, Mr. Brady said he is becoming more confident of CAFTA passage as lawmakers take a close look at the benefits the trade pact will bring for US companies and farmers.

Finance Chairman Chuck Grassley (R-Iowa) also predicted Congress will endorse CAFTA because it will open the region market to US products.

Sen. Baucus also held out hope that his concerns can be addressed in the implementing legislation. But he warned that President Bush needs to get actively involved in pushing CAFTA. I have seen nothing to suggest this agreement is in any way a priority for the White House, he said. House International Relations

Members of the House International Relations subcommittee on the Western Hemisphere which also held a hearing focusing on CAFTA yesterday expressed frustration that the Administration did not show up to support the agreement. Assistant US Trade Representative Regina Vargo had been scheduled to represent the Administration before the panel, but was unable to appear. Subcommittee Chairman Rep. Dan Burton (R-Ind) said he was disappointed by the Administration absence, but expressed his support for CAFTA, saying he believes it will help to promote continued democracy in the region. Ranking Democrat Robert Menendez (NJ) declared himself undecided on CAFTA, but expressed strong doubts about whether the agreement will do anything to improve conditions for workers in the region.

At a separate forum yesterday, Costa Rican Presidential candidate Otton Solis called for a renegotiation of CAFTA, saying it will not improve workers rights, alleviate poverty or strengthen democracy. CAFTA fails and its fails dramatically, he told a gathering at the Inter-American Dialogue. Costa Rica legislature has not yet ratified the trade agreement. But Mr. Solis said lawmakers are being pressured by the government to vote for it by warning that the country will lose its preferential access to the US market under the Caribbean Basin Initiative program if it rejects CAFTA.

Administration officials have suggested that CBI benefits will not be extended to any of the CAFTA countries Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic if CAFTA is not approved.

View All News