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CAFTA A Done Deal, But Trade Politics Continue

posted on August 5, 2005

Trade negotiations get fleshed out in any number of ways, but often there's a hidden catalyst that gets things moving. Here's an example:

Sales of U.S. farm goods to Cuba have been limited by Bush administration ambiguity on just how those transactions are legal. Under a clarification issued by the Treasury Department, exports to Cuba can take place once payment is received by a third-country bank acting on behalf of the exporter. That clarification was sought by several lawmakers interested in boosting farm sales to the Caribbean island.

One of those lawmakers, Democratic Senator Max Baucus of Montana, lifted his hold on six Bush administration nominees once the ruling was made. And so it goes.

Political gamesmanship also played a part in the approval last week of a more prominent trade deal ... and by most accounts, the politicking on that one is far from done. David Miller explains.


CAFTA A Done Deal, But Trade Politics Continue

President Bush: "The bill I'm about to sign is good for America."

President Bush this week signed the Central American Free Trade Agreement, or CAFTA, saying the accord will alleviate poverty in Central America and promote economic growth at home.

Flanked by Congressional supporters of the deal, Agriculture Secretary Mike Johanns and Secretary of State Condoleezza Rice, the president said CAFTA is more than just a trade deal.

President Bush: "All of us in this room understand that to keep our economy growing and creating jobs we need to open markets to American products overseas. All of us understand that strengthening our economic ties with our Democratic neighbors is vital to America's economic and national security interests."

And with a stroke of the pen, the president ended a particularly hard-fought battle ... though the hardball game of trade politics continues. Last week's razor thin approval of CAFTA in the House -- it won by two votes -- gave the president an important political victory. But it may have cost the Republican Party in the long run.

The sugar and textile industries, both arch opponents of CAFTA, have vowed NOT to forget those members of the GOP who voted in favor of the deal.

Democrats also said they would remind voters in the next general election of how the CAFTA vote played out. House Democrats overwhelmingly opposed CAFTA, claiming free trade agreements negotiated by both the Clinton and Bush administrations prompted a mass exodus of U.S. jobs. They also argued that CAFTA labor rights provisions were too weak to protect impoverished Latin American workers from exploitation.

Perhaps mindful of the political fallout, scores of Republicans also voted against the pact, agreeing that it endangered U.S. jobs or that it was a threat to the domestic sugar and textile industries.

The president himself made a special trip to Capitol Hill to persuade wavering Republicans to vote for CAFTA. In the end, the House vote took more than an hour to complete -- four times longer than normal. A handful of Republicans, mostly from districts with textile and sugar interests, held the vote in limbo, simply by refusing to vote. Then, after receiving assurances from the administration on specific textile provisions and trade relations with China, CAFTA backers secured just enough votes to win passage of the trade accord.

Observers noted that once the first "no" vote switched to a "yes" vote, the necessary support fell quickly into place.

Meanwhile, Japan announced this week it will impose a 15 percent levy on American steel imports beginning in September. The move comes in retaliation for U.S, antidumping efforts, which were ruled illegal by the World Trade Organization in 2003.

Japanese officials are hopeful the U.S. will not retaliate against Japan's retaliatory tariffs with sanctions against Japan for its ban on imported American beef.

The Bush administration has been pressuring Japan to lift the ban, which was imposed after the first U.S. case of mad cow disease was discovered late in 2003. Some lawmakers have warned of economic sanctions if Japan fails to end the beef import ban.

Even so, Japanese trade officials expressed their hopes that the separate trade issues of steaks and steel will not get entangled.

For Market To Market, I'm David Miller.


Tags: agriculture beef food safety government Japan Latin America Mad Cow news trade