CAFTA Toughest Issue on Congress Trade Calendar
Jan 5, 2005
By Doug Palmer, Reuters

WASHINGTON (Reuters) - Congress will wrestle with a number of trade issues in 2005, but a free trade pact with Central American countries is likely to be the most contentious, congressional aides and other experts said on Wednesday.

U.S. business groups are pushing for a vote in the first half of the year on the U.S.-Central American Free Trade Agreement (CAFTA), which has languished at the White House since the Bush administration wrapped up negotiations in 2004.

Many Democrats remain opposed to the pact on the grounds that its labor and environmental provisions are too weak. Provisions that would open the U.S. market to more textile and sugar imports also pose problems for some Republican members from districts representing those domestic interests. Development groups are concerned about patent provisions, which they say could boost medicine prices in the region.

Despite the opposition, Congress will likely approve the agreement after a tough fight, said Ed Gresser, director of the trade and global markets project at the Progressive Policy Institute, a centrist Democratic think tank.

"Once these things are sent to Congress, a lot of national security and foreign policy concerns come into play. It becomes harder to vote against it," Gresser said. The pact would tear down trade barriers between the United States, Costa Rica, El Salvador, Guatemala, Nicaragua, Honduras and potentially the Dominican Republic. The agreement offers substantial benefits for U.S. farmers and manufacturers, while helping a region that 20 years ago was mired in bloody wars and civil conflict, said Calman Cohen, head of a business coalition that supports the pact.

"I would say it would be a major battle ... but one that the supporters of CAFTA will win," Cohen said.

TRADE PROMOTION AUTHORITY

A second free trade agreement with Bahrain, a minor oil producer and Gulf region financial services hub, is expected to win easy passage, congressional aides said.

This deal not only bolsters U.S. ties with the Muslim world, but Democrats are not as worried about Bahrain's labor law and enforcement record as they are in the Central American region, the aides said. Lawmakers also could face votes this year on a renewal of trade promotion authority -- legislation that makes it easier for President Bush to forge trade deals -- as well as continued U.S. membership of the World Trade Organization.

The White House must submit a report to Congress by March formally requesting a renewal of trade promotion authority and outlining plans for its use. An extension would be denied if the full House or Senate voted against it.

That is not expected since Republicans can use their control of key House and Senate committees to keep any bill denying an extension from reaching the floor, congressional aides said.

It is much more likely that the House or the Senate -- and potentially both -- could vote on whether to withdraw from the WTO. U.S. law allows Congress to consider that issue every five years.

In 2000, a resolution to withdraw from the WTO was defeated in the House 363-56. A string of WTO rulings against the United States could lead to more votes in favor of withdrawing, but it is unlikely that anywhere close to a majority would be reached in either the House or the Senate, Gresser said.

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