The free trade agreement with most Central American countries passed the U.S. Senate late Thursday and was approved by a key committee in the House of Representatives. The measure, known as CAFTA, is a priority on the Bush administration's trade agenda.
Approval by the House Ways and Means Committee improves the chances for CAFTA when the full House considers it after the Independence Day congressional holiday.
However, it still faces strong opposition in the House, much more than in the Senate.
The focus of intense lobbying, CAFTA seeks to bring down tariffs between the United States and five Central American countries -- Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, and includes a separate pact with the Dominican Republic.
Just as it is supported by a coalition of businesses which argue the pact will help fledgling democracies and their workers. It is opposed by many labor and other groups.
In an effort to pick up votes, the Bush administration provided assurances of millions of dollars in financial help for CAFTA countries to strengthen and enforce labor and environmental laws.
Bill Thomas, the Republican chairman of the House Ways and Means Committee, responds to critics. "You have to look at the countries, their intent, and their commitment. I think it is quite telling that some of our colleagues are looking for things that would stop people from doing some things they are concerned about, and not looking at the changes that have been made," he said.
Democrat Congressman Ben Cardin says CAFTA does not do enough to require improvements in labor standards in the countries concerned. "If this bill becomes law, the United States will not be able to use trade sanctions or threat of trade sanctions, as we can today under [the Caribbean Basin Initiative] to press these countries to improve their labor standards and enforcement practices. Instead, the only inquiry we will be able to make is whether a country is enforcing its own labor laws, however weak they may be," he said.
CAFTA produced a split among lawmakers over sugar, with U.S. producers opposing the pact on grounds higher quotas for CAFTA countries will harm the industry.
The Bush administration worked hard to ease concerns on this issue as well, winning support from key Senate and House Republicans.
Republican Mark Foley, who represents areas in Florida with many small sugar producers, voted for the pact in the committee, but hopes more can be done to address concerns before the full House votes in July to address concerns on this issue. "I ask my industry groups to re-think, reflect, and try to see if there is any way in which we can all accord an agreement which will provide opportunities for all agriculture to embrace this agreement,' he said.
At present, it's estimated that are enough opponents of CAFTA in the House for it to be rejected there, a matter of concern for the White House.
During debate in the Senate Thursday, Democrat Kent Conrad argued CAFTA would contribute to worsening U.S. trade deficits as happened with Mexico under the North American Free Trade pact.
"We went from a two-billion dollar trade surplus with Mexico, to a $45-billion trade deficit. And the very people who negotiated that agreement are now going all over town telling us that this next one is another great success," he said.
CAFTA debate also touched on another sensitive issue: China's growing economic influence in the western hemisphere, and its trade surplus with the United States.
Congressman J. D. Hayworth says he will vote for CAFTA to underscore displeasure with China's trade practices. "It is important to hold [China] in check, to demand that that nation play by the rules. And I believe this agreement provides a serious and significant geopolitical and economic counterweight to growing influence from the People's Republic of China," he said.
Republicans and Democrats who ended their opposition to CAFTA say the pact isn't perfect, but contains enough positives, after administration steps to address concerns over sugar, to win their support.
