1.

IN BUSH WIN, HOUSE NARROWLY APPROVES CAFTA
By Mary Dalrymple

Associated Press
July 28, 2005

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2005/07/27/national/w210903D64.DTL

President Bush insisted that the small trade agreement with six Latin American nations would pay big dividends for security, stability and freedom in the Western Hemisphere. After persistent lobbying by the White House, Congress finally agreed.

It took personal visits from the president and vice president, along with strenuous arm-twisting from Republican leaders, before the House passed the Central American Free Trade Agreement early Thursday by a two-vote margin, 217-215.

The Senate approved CAFTA last month 54-45, and it now goes to the president for his signature.

It was a major victory for the Bush administration, which had to fend off claims by critics that the pact would harm American workers.

"CAFTA helps ensure that free trade is fair trade," the president said in a statement following the vote. "By lowering trade barriers to American goods in Central American markets to a level now enjoyed by their goods in the U.S., this agreement will level the playing field and help American workers, farmers and small businesses."

The accord eventually eliminates tariffs and other trade barriers between the United States and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republican. The countries signed the trade deal a year ago.

Those nations join Australia, Chile, Singapore, Jordan and Morocco in seeing free trade agreements approved during Bush's time in office.

The president took some political risk placing the relatively small trade pact at the top of his economic agenda. He and numerous administration officials advertised the agreement as a tool to give fragile Latin American democracies the opportunity for stability and prosperity.

The House vote, supposed to take 15 minutes, dragged on for an hour as negotiations swirled around the floor among GOP leaders and rank-and-file members reluctant to vote for the agreement. In the end, 27 Republicans voted against CAFTA, while 15 Democrats supported it.

House Republican leaders prevailed over mostly Democratic objections that the agreement leaves American workers vulnerable to losing their jobs, and Latin American workers vulnerable to laboring without employment protections.

"It will widen the gap between the haves and have-nots, weaken labor and environmental standards and set a dangerous precedent for future trade agreements," said Rep. Robert Menendez, D-N.J.

Those who backed the agreement said goods like the apples, pears and cherries grown in Washington state and the corn, soybeans and tractors produced in Illinois will be sold free of duties in a market of 44 million people.

It levels the playing field with the Latin American nations party to the deal that already escape duties on 80 percent of their exports to the United States, they said.

Bush administration officials dispatched to sell the idea to reluctant lawmakers said the stakes went beyond a newly opened market in a region that bought about $15 billion worth of U.S. goods last year.

They used a national security argument, saying that rejecting the deal would impoverish the region and undermine new and fragile democracies. Instability and poverty would drive people north and increase the flow of illegal immigrants into the United States.

"Certainly CAFTA doesn't fix all the problems facing Central America," said Rep. Jim Kolbe, R-Ariz. "But increased integration can only add jobs and help alleviate poverty, reduce the flow of migration northward and make the region more competitive in world markets."

The administration won over several Republicans by pledging to protect textiles from Central American imports, but some never warmed to the agreement. A few lawmakers from states that produce textiles and sugar continued to fear that new imports would wipe out industries in their districts.

"I don't see any benefits for workers, for sugar people," said Democratic Rep. Charlie Melancon, who said his family owed everything to 225 years of sugar production in his home state of Louisiana.

"We've given away textiles. We've given away steel. We've given away fruits and vegetables," Melancon said. "Now let's just go ahead and give away everything and be dependent on every other country for our food and our defense."

The House also passed legislation strengthening the monitoring of China's trade policies, a bill that GOP leaders brought to the floor to satisfy lawmakers who wavered in support for CAFTA because they said the United States wasn't tough enough in enforcing trade laws.

2.

Inside Politics

HOUSE NARROWLY APPROVES CAFTA

** Trade accords passage a win for Bush **

CNN
July 28, 2005

http://www.cnn.com/2005/POLITICS/07/28/house.cafta/

WASHINGTON -- After an all-day, full-court press by the White House, the House early Thursday narrowly approved the controversial Central America Free Trade Agreement, avoiding a potentially embarrassing political defeat for President Bush on an issue he championed for months.

The final vote to approve the pact was 217 to 215. House leaders held the vote open for an hour -- well past the normal 15-minute voting time -- as they rounded up enough votes to win.

In the end, 25 Republicans defied their leadership, and their president, to oppose CAFTA, while two others didn't vote. Only 15 of the House's 202 Democrats broke ranks to support it.

As the House debated deep into the night, Vice President Dick Cheney, two Cabinet secretaries and the U.S. trade representative were all in the Capitol, working with GOP leaders to secure the votes of wavering Republicans.

With Democrats nearly united in opposition to CAFTA, Bush took the unusual step of coming to Capitol Hill in person Wednesday to lobby members of his own party, painting the trade pact as a national security issue.

The agreement, which passed the Senate in June, will eliminate trade barriers between the United States and five Central American countries -- Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica -- along with the Dominican Republic in the Caribbean.

Supporters said the agreement will improve the economies of those countries, increase the living standards of workers and strengthen fledgling democracies in a region awash in armed conflict 20 years ago.

"These freely elected presidents came to us and said, 'Help us,'" said House Ways and Means Committee Chairman Bill Thomas, R-California. "We help them by voting yes on CAFTA."

"Why in the world should people stick to the path of democracy if supposedly the most richest, most generous democracy in the world rejects a trade agreement with these countries?" Thomas asked.

Concluding the night's debate, Thomas also chided Democrats for abandoning their traditional support for free trade.

"They have urged, all night, protectionism. They have urged fear. They have urged that we don't do what's right," he said.

But House Minority Leader Nancy Pelosi, D-California, insisted that Democrats were opposing the pact not because they oppose free trade but because they were against a flawed agreement.

"It is a step backward for workers in Central America and a job killer for here at home," she said.

"I wish that the CAFTA bill . . . was an agreement that opened markets, included basic labor standards and protected our environment. This type of an agreement would have lifted the economies of both the United States and Central America. It would have attracted support from a large number of Democratic members."

While the amount of trade involved in CAFTA is small in comparison to the overall U.S. economy, the pact ran into strong opposition from organized labor, which pressed its Democratic allies to vote against it. Also, GOP lawmakers from states that produce textiles and sugar were concerned about the agreement's possible impact on their local industries.

One of those lawmakers, Rep. Walter Jones, R-North Carolina, told his colleagues that 200,000 jobs in his state have been lost since in the decade since passage of the North American Free Trade Agreement, and "CAFTA is NAFTA's ugly cousin."

Trying to overcome those local concerns, Bush, during his visit, "reminded us that we come here not only to represent our districts, but to represent the nation," said House Majority Leader Tom DeLay, R-Texas.

"It is in the national interest that CAFTA passes. It is good for our national security in supporting these fledgling democracies at our back door. It is good for our effort against illegal immigration. It is good for our economy," DeLay said.

But Democrats charged that CAFTA didn't do enough to protect the environment and workers' rights and would further erode America's manufacturing base.

Pelosi predicted that Bush's win on CAFTA "will be a Pyrrhic victory for him, because we will take our message to the American people that we are the ones looking out for them."

Bush's painting of CAFTA as a national security issue "clearly resonated with members of the House," White House spokesman Scott McClellan said.

McClellan said Bush also told the group that once trade expands and lifts people out of poverty, CAFTA will address the problem of illegal immigration into the United States because "families will be more willing to want to stay home to support their families because they'll have more opportunities at home."

DeLay, too, said he thought the national security argument might have swayed some GOP lawmakers.

"There is no question that these democratically elected governments, asking collectively to increase the economic security of those countries, could make it a national security vote if we turn our backs on them," DeLay said. "Why in the world should people stick to the path of democracy if supposedly the richest, most generous democracy in the world rejects a trade agreement with these countries?"

But later in the night during the final debate, Pelosi scoffed at the GOP strategy of wrapping CAFTA in the cloak of national security.

"Trade alone, devoid of basic living and working standards, has not, and will not, promote security, nor will it lift developing nations out of poverty," she said. "Our national security will not be improved by exploiting workers in Central America."

--CNN's Ed Henry and Ted Barrett contributed to this report.

3.

CENTRAL AMERICAN FREE TRADE AGREEMENT APPROVED BY HOUSE
By Mark Drajem

Bloomberg News
July 28, 2005

http://quote.bloomberg.com/apps/news?pid=10000006&sid=a_jPv1.KeLjQ&refer=home

The U.S. House of Representatives approved the Central American Free Trade Agreement, overcoming objections by unions, sugar producers and textile makers in what became the most contentious trade fight in Congress in a decade.

The vote was 217-215 in favor of Cafta and was held just after midnight Washington time. With only a minor procedural step in the Senate ahead, today's vote effectively completes what was more than a yearlong process for U.S. ratification of Cafta.

The agreement ends most tariffs on more than $33 billion in goods traded between the U.S. and Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. It also makes permanent the duty-free access to the U.S. that most products from Central America now have.

President George W. Bush, who reached agreement with the first of the six nations in 2003, made Cafta the centerpiece for his trade agenda this year. He primarily sold the measure to lawmakers on the premise that it would solidify democratic gains in a region wracked by civil war, curb the threat of terrorism, and build momentum for a World Trade Organization accord.

The administration was able to garner just enough votes by pledging to maintain caps on sugar imports, getting commitments from Central America to renegotiate some textile export provisions, and by meeting with U.S. lawmakers at least twice this week about Cafta's "geopolitical" necessity.

The administration won't continue to "expand this energy and capital on these smaller agreements," said former U.S. Trade Representative Clayton Yeutter, a lawyer at Hogan & Hartson LLP in Washington. "There will be a great deal more attention paid" to the WTO now, he said.

COMPANY SUPPORT

Cafta was backed by most U.S. companies such as computer-chip maker Intel Corp., software developer Microsoft Corp. and pharmaceutical company Pfizer Inc., which say the trade deal will open up markets for their products and create momentum for further trade liberalization in this hemisphere and globally.

Legislatures in El Salvador, Guatemala and Honduras have already passed Cafta, while governments in Costa Rica, the Dominican Republic and Nicaragua are still debating the measure.

Most of the Democrats and some of the Republicans who opposed the agreement today, did so as part of a broader critique of Bush's trade policy. The U.S. trade deficit widened to a record $612 billion last year, driven partly by the largest bilateral gap in history with China.

Democrats, who met earlier today to ensure a united front against the agreement, also argue that Cafta wouldn't improve workers' rights and incomes in the region.

"Cafta is a step backward for workers in Central America, and a job killer for Americans," House Democratic Leader Nancy Pelosi said in a speech on the floor. "Nothing in the agreement will help raise sub-standard wages in the region."

4.

Commentary

Opinion

CAFTA NOT MERELY ABOUT FREE TRADE
By Liza Grandia

Seattle Post-Intelligencer
July 28, 2005

http://seattlepi.nwsource.com/opinion/234211_cafta28.html

At 2,400 pages, the Central America Free Trade Agreement isn't really about trade. Frankly, you don't need 2,400 pages to eliminate tariffs and regulations on exports and imports. But you might need 2,400 pages to smuggle through a new set of transnational corporate rights disguised by complicated legalese. I wonder how many in Congress will even bother to read this trade tome before voting?

I recall in 1994 that only one senator, Republican Hank Brown of Colorado, accepted Ralph Nader's challenge to win $10,000 for charity by taking a simple 10-question quiz on the World Trade Organization agreement. After studying the agreement, Brown announced to the media: "I am a Republican, pro-business and a proponent of the free market economy . . . I am here to speak out against the WTO. For when you read this text . . . you will understand that the WTO is fundamentally undemocratic."

Any naïve Congress member who thinks CAFTA is merely about free trade should look carefully at its provisions on government contracts and corporate lawsuits.

Government contracts. For any purchases of more than $117,000 (eventually to be lowered to $58,000), CAFTA forces governments to open bidding to transnational corporations. That means that states will no longer be able to give preference to home-based businesses, and so mom-and-pop stores in Central America and the United States will suddenly be competing with the Bechtels and the Halliburtons of the world.

Corporate lawsuits against governments. Perhaps CAFTA's most worrisome provision expands the rights that corporations received under NAFTA to challenge any laws they perceive as barriers to trade and foreign investment. For instance, when California banned a carcinogenic gasoline additive called MTBE because it was seeping into the state's drinking water, the chemical manufacturer, Methanex, sued California for infringing on its trade rights under NAFTA and demanded $970 million in compensation. Such suits are a direct threat to democracy because they prioritize the profits of foreign corporations over a country's own environmental, social and labor laws.

Already corporations are planning more such lawsuits. If CAFTA passes, a subsidiary of Harken Energy (on whose board George W. Bush once served) has said it will demand $58 billion from Costa Rica (whose entire GDP is only $37 billion) in compensation for hypothetical future lost profits, if the company is not allowed to drill offshore in Costa Rica's protected Talamanca region -- one of the planet's richest marine ecosystems.

CAFTA also encourages privatization, especially for government services in health, water, energy and social security. In agriculture, it will allow transnational agribusiness cartels to dump food commodities at below-market prices. It will forbid the public health sector from buying life-saving generic drugs for such diseases as AIDS.

Far from a free trade agreement, CAFTA is rather a corporate trade agreement that transforms foreign investment from a privilege to an inalienable right.

It's like having a house guest who cleans out your refrigerator, claims your nicest bed, takes exclusive control of the television remote control and then -- like Paris Hilton -- demands that you pay for the pleasure of her company and writes you off as a business expense.

The United States has a perfectly sound trade agreement with Central America called the Caribbean Basin Initiative, which makes most of our trade with Central America duty-free. Congress should defeat CAFTA and send the Bush administration back to negotiate a real trade agreement that every U.S. and Central American citizen can read in less time than the pages of "Gone With the Wind" and the King James version of the Bible combined.

--Liza Grandia is an anthropologist who has lived and worked in Guatemala for more than six years. Her dissertation concerns the impacts of trade and globalization on the agrarian situation of the Q'eqchi' Maya people.