President Bush sent formal implementing legislation for the proposed Central American Free Trade Agreement (CAFTA-DR) to Congress last Friday after two key Congressional Committees gave their preliminary approval of the agreement in a process called a “mock markup” the prior week. The President’s action triggers a legislative clock for a Congressional vote on the agreement. Under “trade promotion authority” procedures, the two houses of Congress must approve the implementing legislation for a proposed trade agreement by a simple majority, and on a straight “yea” or “nay” vote without amendment. If either the House or the Senate vote against the implementing legislation, the proposed agreement will be dead.
It is uncertain at this time whether the proposed agreement will reach the floor of one or both houses before the Congress recesses for the 4th of July holiday on Friday. CAFTA supporters would like to see a quick vote, i.e., before this recess, in order to capitalize on any momentum generated by the “mock mark-up” process two weeks ago, and to preempt organized opposition efforts to pressure vacillating lawmakers during the recess. In any case, most observers conclude that at present, a vote is too close to call in both the House and Senate (although the Senate, as the body less tied to “parochial” interests, is considered the safer bet). It is generally considered unlikely that CAFTA will gain House approval in the absence of some type of deal that would address the concerns of representatives from sugar and sugar beet producing states, most notably Florida, Minnesota and Michigan. As noted by one Congressional aide, “striking a deal with members with sugar interests is probably a necessary prerequisite to a successful House vote.” One idea floated by the Administration is to impose a 1.5 million ton limit on overall sugar imports through September 2007, when the current farm bill expires by compensating foreign producers. However, even this may not be enough to assuage the most ardent opponents. As stated by Rep. Dennis Rehberg (R-MT), “CAFTA will be forever if I vote of it, but the {proposed} agreement is only for the life of the farm bill.”
China is another factor in the mix. There is a general perception that some Members of Congress will vote against CAFTA, not for any reason connected to Central American trade in and of itself, but for reasons having more to do with a general uneasiness about this country’s growing trade deficit and persistent concerns regarding trade with China. To address these inchoate concerns, House Ways and Means Committee Chairman Bill Thomas (R-CA) has stated that he may introduce legislation this week that will authorize enhanced enforcement efforts by the Office of the U.S. Trade Representative, and address continuing problems regarding the collection of antidumping duties on Chinese imports. However, with China trade now a “hot-button” issue, it is possible that legislation that seeks, in effect, to “buy” votes for CAFTA will only serve as a lightening rod for the many proposals swirling in Congress on the overall issue of China, which could ultimately complicate the CAFTA passage.
And although no one on Capitol Hill would ever be quoted as saying so, there is a perception in some quarters that a vast number of Democrats may simply want to deny President Bush an important legislative/international relations victory. (Lately, there may be one or two Republicans as well that would like to send a shot across the bow of the headstrong Bush Administration.)
Although the CAFTA has limited direct relevance to most AFI members, its long-term consequences will impact nearly everyone’s interests. It is quite possible that a defeat for CAFTA will mean the end of this Administration’s free trade agreements agenda, including a proposed Andean and Thailand FTA. It would be difficult to imagine a consensus for continuing multilateral negotiations on a Free Trade Agreement of the Americas or the Doha Round of talks under the WTO in the wake of a CAFTA defeat. In other words, CAFTA has been transformed into the proverbial 800-pound gorilla because of what it portends down the road.
It is in this Association’s interests to lend its public voice for CAFTA approval. Attached to this ALERT is a draft “political action letter.” Members are urged to transmit the letter by email or fax under your company’s letterhead to your Representative and Senators. A mailing list for Representatives in New Jersey, the metropolitan NYC area, Connecticut and Massachusetts is also attached. If you do not know who your Congressman is, or your company is outside the geographic areas noted, please contact Jeff Levin by email at jsl@saslaw.com, and I will provide the necessary information to you directly.
We will continue to keep Members advised.
