USTR Seeks CAFTA Passage By Mid-Year, Zoellick To Consult Congress
November, 12
Inside US Trade

The U.S. Trade Representative’s Office is looking to secure congressional approval of a free-trade agreement between the U.S. and five Central American countries and potentially the Dominican Republic (DR-CAFTA) by the middle of 2005, and is pressing to ensure that this timetable is reflected in both the 2005 congressional and White House agendas, informed sources said. U.S. Trade Representative Robert Zoellick plans to meet with congressional leaders next week to discuss the 2005 congressional trade agenda, including passage of the DR-CAFTA, Assistant U.S. Trade Representative Matt Niemayer told Inside U.S. Trade.

USTR is also working with the White House to ensure that DR-CAFTA is taken into consideration when it sets the 2005 agenda, he said. Niemayer said USTR would like to move on the DR-CAFTA sooner rather than later but that a clearer timetable will not emerge until after these consultations. Congressional consideration of the DR-CAFTA agreement is complicated by the fact that USTR is embroiled in a fight with the Dominican Republic over a soft drink tax and has threatened to remove that country from the deal. One business lobbyist argued that it is too early to tell what the congressional agenda will be until the 109th Congress convenes next year. The extent to which Congress will tackle trade issues, he said, will depend on what other issues are a priority and how much willingness there is in Congress to take up numerous trade issues.

Another lobbyist said there has so far been no dialogue between congressional leadership and the White House on priority items, making it impossible to determine what issues will come up next year. The lobbyist noted that if President Bush were to decide on pursuing changes in Social Security, it would take up enormous amounts of time in the committees that also have oversight on trade issues. Niemayer said congressional approval of the DR-CAFTA agreement would require an effort comparable to that needed for passing fast-track negotiating authority in 2002. He said such an effort means even business groups that do not have a direct interest in the agreement would have to take part in lobbying to pass the deal to ensure that they retain some ability to influence the direction of the Administration’s trade agenda. Niemayer said it is difficult to assess how much of a fight will develop over CAFTA passage, particularly since it is unclear what position newly elected members of Congress will take on the agreement.

There will be more than 30 new members in the House and seven new members in the Senate, whose positions on trade are not well known. Business sources this week said reaching out to new members is critical to assess their positions, and that it is wrong to automatically assume Republican members back efforts to ratify free trade agreements. Similarly, these business sources said it is important to reach out to Democrats who in the past have voted in favor of trade agreements since pending FTAs cannot be passed without some bipartisan support. Business supporters of the deal have begun preparation for a series of congressional trade battles in 2005 and will initially reach out to the new members of Congress whose position on trade is unknown, private-sector sources said. Business groups will also try to better ascertain what position Ranking Ways and Means Committee Member Charlie Rangel (D-NY) will take on the agreement, particularly if the Administration decides to strip out the Dominican Republic, business sources said.

Business groups will also likely lobby individual members of the House Hispanic Caucus, which has not yet taken a position on the DR-CAFTA deal and may not be able to do so as a group, business sources said. One lobbyist noted that supporters are looking at urging some local politicians to press their members of Congress to support the deal. For example, this lobbyist said there is considerable support among local politicians in New York City for the DR-CAFTA deal, which may not be reflected by members of Congress. One way to increase support for the deal would be to exploit that difference and have local politicians pressure members of Congress, he said.

A House aide for a member supporting CAFTA this week said there is not yet sufficient support in the House to pass it. USTR favors moving forward with congressional consideration of the DR-CAFTA agreement rather than waiting to package it with other trade agreements the U.S. is still negotiating as some business representatives have proposed, according to informed sources. Business advocates believe a CAFTA-plus package that could contain the DR-CAFTA along with separate FTAs the U.S. is trying to complete with Panama and three Andean countries could be presented as much more than a commercially meaningful trade package. The deal could be pitched as serving a larger goal, such as promoting democracy in Latin America, one business lobbyist said. But he acknowledged that the Andean negotiations are lagging and that in order for the CAFTA plus package to work, the Andean talks would have to make major progress in the next 10 weeks.

Accelerating the Andean talks could give even more leverage to the Andean countries if they knew USTR wants to conclude the negotiations as quickly as possible, this source said. For the Panamanian deal, negotiators are unlikely to finish talks until January, after which 90 days would need to elapse under fast-track procedures before the deal could be signed. Within sixty days after an agreement is signed, the Administration has to present Congress with a list of changes that must be made to domestic U.S. laws in order to implement the deal.

USTR has been very cool to the idea of a larger trade package partially because it would delay consideration of the DR-CAFTA deal that has already been negotiated, and partially because a CAFTA-plus package would make a larger target for critics, sources said. Opponents of the package approach also argue that it is technically not possible to have one trade vote under fast-track on a package of trade agreement because they do not legally constitute one trade agreement. Advocates of the CAFTA-plus approach say it would avoid a situation where members of Congress would have to repeatedly fight opponents of FTAs such as labor groups or sugar producers. But others point out that these agreements could be presented to Congress in tandem over a day or two, albeit with legally separate votes.

In addition to outreach efforts to freshmen and House Democrats, DR-CAFTA supporters are planning to get individual states to take sides in the debate by securing support from the National Governors Association and from other state officials, sources said, including state government offices that promote trade and investment. Key agricultural states that could benefit from the deal, such as Iowa and Kansas, will have to play a role in the fight for the deal, one business lobbyist said. In the context of the outreach to new members, lobbyists have discussed whether to rejuvenate the U.S. Trade Coalition, which worked on passing fast-track in 2002. The National Association of Manufacturers, which served as the group’s secretariat, has advocated such a revival but no decision has been made on how to proceed.

Lobbyists are also deliberating how to handle two other trade votes facing Congress next year, according to sources. One is a vote to repeal the law that implemented the Uruguay Round, which will take place 90 days after USTR submits a report to Congress on March 1 of next year. Every five years, USTR is obligated to provide a report that analyzes the effects of the World Trade Organization agreement on the interests of the U.S., as well as its costs and benefits, and the value of continued U.S. WTO participation. The resolution to revoke the Uruguay Round implementing bill can be offered by any member and will be automatically discharged from a committee of jurisdiction 45 days after it has been referred.

Another trade vote that could potentially take place next year centers on a disapproval resolution that if approved would strike down a request President Bush is expected to make to extend fast-track negotiating authority by two years. That resolution has no privileged status and could be bottled up by the chairmen of the committees of jurisdiction. If either the Senate or House pass a disapproval resolution by June 1, fast-track authority would end. If no resolution is approved, fast track would continue until mid-2007. Business representatives are now debating whether it would be better to have such a resolution die in the committee or let it come to the floor as another trade vote.

One business source said he expects this issue to be actively debated in the Senate where members like to exercise their right to act and there is generally more consideration to requests from minority members there than in the House. He also argued that the departures of Sens. Tom Dashcle (D-SD), John Breaux (D-LA) and Bob Graham (D-FL) from the Senate Finance Committee could lead to new members more intent on introducing a disapproval resolution. He said he did not expect much of a debate on the TPA renewal in the House where the agenda is more controlled by the leadership, and a resolution of disapproval may never come out of committee.

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