New York Times, May 10, 2005

Free Trade Pact Faces Trouble in Congress

By ELIZABETH BECKER

WASHINGTON, May 9 - Social Security is not the administration’s only economic initiative that is in trouble in Congress.

The current centerpiece of President Bush’s trade agenda, the Central American Free Trade Agreement, is facing unusually united Democratic opposition as well as serious problems in overcoming well-entrenched special interest groups like sugar producers and much of the textile industry.

With record trade deficits, concerns about lost jobs and an overarching fear that the United States is losing out in the accelerated pace of global changes, the sentiment in Congress is shifting away from approving new free trade agreements.

"I don’t like Cafta; I am not going to vote for it; and I will do whatever I can to kill it," said Senator Harry Reid of Nevada, the minority leader. "We are approaching a trillion-dollar trade deficit. We can’t survive as a viable, strong country doing that."

Even more troubling to the administration, which says free trade agreements are critical components of any effort to enhance American global competitiveness, is the stance of Republicans like Senator Saxby Chambliss of Georgia, who wants to hold off on new bilateral trade agreements.

In a speech on the Senate floor and in a later opinion-page article in the newspaper The Hill, Senator Chambliss said that even though his state is home to global companies like Coca-Cola, United Parcel Service and Georgia Pacific, he could no longer support bilateral trade agreements without being assured that "American industries and workers are truly benefiting from these agreements."

The trade deal, which was signed one year ago, involves a handful of tiny countries: Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. But its prospects for moving forward have been soured by larger questions about China’s enormous economic power and whether it is playing by the rules of trade in protecting intellectual property rights, valuing its currency and calibrating the tide of its textile exports. Also playing into the situation are unmet expectations from the North American Free Trade Agreement.

The administration accuses the Democrats and other opponents of putting too much on the back of this trade deal, which would reduce tariffs for many American goods and, the White House says, improve the chances for democracy and free market economics in Latin America.

"Cafta can’t be held captive to China or any other trade problem," said Commerce Secretary Carlos M. Gutierrez, who has been crisscrossing the country trying to sell the agreement since he took office in January.

The administration admits that even in this off-election year, when trade deals have the best chance of passage, it does not have the votes to pass this one.

With little sign of progress, both sides notched up the battle last week. President Bush announced that he would play host this week at a high-profile White House meeting. Since his first term, the Bush administration has promoted free trade agreements with Central America and throughout the Western Hemisphere as important components of its foreign policy.

"For too many decades," Secretary of State Condoleezza Rice said in a speech before the Council of the Americas, "U.S. policy toward Central America and the Dominican Republic has oscillated from engagement to disregard. With Cafta, with the permanent engagement that free trade brings, we can break this trend once and for all and we can demonstrate that the United States is committed to the success of all Latin American countries that embrace the challenge of democracy."

On the other side, centrist Democrats who normally vote for every new trade deal said they opposed Cafta. They said the administration had yet to outline a clear policy aimed at narrowing the $617 billion trade deficit. And they challenged the White House to write trade deals that reflected what they saw as the pressing challenges of globalization in the 21st century.

The administration characterizes most of these complaints as protectionism and hopes that Rob Portman, the new United States trade representative and a popular former member of Congress, will be able to smooth the debate and win votes to its side.

But Representative Benjamin L. Cardin of Maryland, the ranking Democrat on the Subcommittee on Trade of the House Ways and Means Committee, said in an interview that Cafta was too small a treaty to warrant such attention.

"Cafta will have a minor impact on our economy; we should be spending time on the big issues like China, agricultural subsidies," Mr. Cardin said. "If I were the administration, I would not like my trade agenda to be judged on Cafta."

Despite its small weight, many interest groups are deeply divided over Cafta. The Latino groups and politicians who oppose Cafta say that Nafta, the decade-old agreement with Mexico and Canada, failed to fulfill its promise.

Representative Hilda Solis, Democrat of California, who describes herself as the only member of Congress of Central American descent, said she opposed Cafta because of Nafta’s record, which she said included 750,000 jobs lost in the United States and little progress in improving workers’ rights in Mexico.

By contrast, Mr. Gutierrez, the commerce secretary, said Nafta was a strong selling point for Cafta.

"I’ve been associated with Mexico for almost four decades and Mexico is better than it has ever been," said Mr. Gutierrez, who started his career in that country after fleeing Cuba as a child. "It now has its lowest inflation rate, and its growth last year was 4.5 percent."

But questions about labor rights and lost jobs are staying at the forefront of the trade debate, not retreating. American labor unions say the accord demands better enforcement of existing labor laws in Central America without imposing real sanctions. The administration defends the labor provisions as groundbreaking.

Even the countries within Cafta have some noticeable divisions. The ambassadors to the United States from Cafta countries are traveling around the nation to try to persuade members of Congress to vote for the accord.

But Beatrice de Carrillo, El Salvador’s human rights ombudswoman, said in an interview here that she opposed Cafta because it was not strong enough to stop the destruction of unions. And Costa Rica’s president, Abel Pacheco, has said he wants to postpone legislative review until an independent committee finds that it will not harm the poor.