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Free Trade with Central America Gets Skeptical Hearing in US Congress

U.S. lawmakers are voicing concerns about a proposed free trade agreement with Central America (CAFTA), suggesting the Bush administration has an uphill battle to get congressional passage of the accord.

Acting U.S. Trade Representative Peter Allgeier came to Capitol Hill to urge lawmakers to approve the trade agreement, which would lower tariffs on products traded between Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, the Dominican Republic and the United States.

Testifying before the Senate Finance Committee, Mr. Allgeier said while nearly all goods from the six countries now enter the United States duty free, the same cannot be said of U.S. goods going to those nations. He said that would change under the trade agreement:

"More than 80 percent of consumer and industrial goods from the United States will become duty free in CAFTA and Dominican Republican on day one of the agreement,” he said. “More than half of our current farm exports to Central America will become duty free immediately."

Mr. Allgeier said the pact would nearly double agricultural exports to the region by $1.5 billion a year.

The chairman of the committee, Senator Chuck Grassley of Iowa, agreed, and warned his colleagues against opposing the accord, known as CAFTA.

"A vote against CAFTA is a vote for the status quo; it is a vote to maintain unilateral trade, keep our trade barriers to our exports to those countries very high," he explained.

But the accord is opposed by labor unions, concerned about labor practices and lower wages in Central America, and the U.S. sugar industry, because the pact would increase the amount of sugar that could be imported into the United States.

The top Democrat on the Finance Committee, Senator Max Baucus of Montana, says he has heard concerns about the trade deal from a number of constituents in his state, which produces agricultural products, including sugar beets.

"Some of the farmers and ranchers of my state say they have misgivings about this agreement," he said.

Jack Roney of the American Sugar Alliance said the pact could devastate the U.S. sugar industry.

Mr. Allgeier responded that there is a provision in the agreement under which the United States can compensate Central American exporters in place of imports of sugar.

Other Senators are concerned about the impact of the agreement on U.S. jobs. Some believe their states lost jobs when the North American Free Trade Agreement (NAFTA) was enacted a decade ago, and they fear more will be lost under a Central American trade pact.

Senator Olympia Snowe, a Republican from Maine, says she believes the Bush administration has not done enough to enforce trade agreements to prevent job losses.

"We do not know what our government is doing to enforce these agreements,” she said. “That is the point. That is why you have lost trust with respect to these agreements, because so many jobs have been lost. Certainly Maine is an example of that, with manufacturing, textile and apparel. We have been devastated over the last four years. It has been alarming. And that has been true across the country."

Mr. Allgeier argued the United States is serious about enforcing trade pacts, and said the administration is willing to work more closely with Congress on the issue.

Central American trade issues were also discussed at a House International Relations Committee hearing Wednesday.

The House and Senate could vote on the Central American Free Trade Agreement in the coming months.