Inside US Trade


Date: June 24, 2005

Amid signs of negotiations on labor rights, textiles and sugar, the White House yesterday (June 23) sent to Congress the final legislation implementing a free trade agreement with the Dominican Republic and five Central American countries.

This could set the stage for action in the House Ways and Means Committee as early as June 28, sources said. Senate Finance Committee Chairman Charles Grassley (R-IA) said this week he was planning to have a formal committee markup on June 28 or 29.

Under this timetable, the House could vote on DR-CAFTA as early as June 30, but a U.S. trade official said on June 23 no final decisions have been made. There are on-going discussions between the congressional leadership and the Administration, he said.

He said the Senate seems to be more willing than the House to go to a floor vote, probably because the vote is more certain in the Senate. But a Democratic Senate aide said a Senate floor vote was unlikely next week.

The trade official also said with the formal implementing legislation submitted he had no doubts that the DR-CAFTA would ultimately be passed. Under the fast-track procedure, the House has 60 legislative days to act on the bill.

House Majority Whip Roy Blunt (R-MO) did not mention the possibility of having a House floor vote next week during a June 23 meeting with business lobbyists supporting DR-CAFTA. At the same meeting, House Ways and Means Committee Chairman Bill Thomas (R-CA) said he wants to move as quickly as possible and in close coordination with the Senate but without mentioning a timetable, sources said.

Blunt and the Deputy Whip Eric Cantor (R-VA) earlier this week told business representatives that they had begun a formal vote count on June 21, in the hope of having it completed this week, they said. A delay until after the July 4 recess would give the House leadership and the administration more time to analyze the results of the formal whip count and to determine what if any other deals need to be made with members to secure their votes.

Opponents and supporters said last week that the votes were 20 to 30 short of passage (Inside U.S. Trade, June 17, p. 1).

Both Blunt and Thomas signaled in the June 23 meeting that legislative business has to deal with the breaks of congressional recesses, sources said. This may have been a signal that the vote would not occur until after the July 4 recess, one business source said.

Similarly, President Bush in a June 23 White House event called on Congress to pass CAFTA, but did not indicate any timetable for doing so.

President Bush and other administration officials have been active this week in meeting with undecided members of the House and Senate on DR-CAFTA. On June 21, 14 undecided Republican House members met Bush at the White House to discuss DR-CAFTA. Members attending included Reps. Bob Inglis (R-SC), Howard Coble (R-NC) and Shelley Moore Capito (R-WV).

Inglis told Inside U.S. Trade he will not vote for DR-CAFTA unless the five Central American countries and the Dominican Republic make a binding commitment in writing that they will not use three provisions in the DR-CAFTA to incorporate inputs from China into apparel that will enter the U.S. duty-free under the deal. This commitment would cover a cumulation provision that allows Mexican fabric to be included in DR-CAFTA garments that enter the U.S. duty-free; a tariff preference level (TPL) for Nicaragua that allows a limited amount of third country fabric to be included in eligible garments that would have duty-free access to the U.S.; and non-visible pocketing and linings that.

Under the DR-CAFTA as now written, this fabric and components could be sourced from China and other countries for DR-CAFTA garments that would get duty-free access in the U.S.

These three provisions were covered in an agreement the administration worked out with the National Council of Textile Organizations to get that group’s endorsement of DR-CAFTA. In that deal, the administration committed to seeking an agreement from the six DR-CAFTA countries that only U.S. or regional non-visible pocketing and lining would be used in apparel that gets duty-free access.

The U.S. also promised to put off implementing the cumulation provision effectively for two years and received a commitment from Nicaragua that the third-country fabric benefits it receives from the TPL will not reduce U.S. fabric exports to that country (Inside U.S. Trade, May 13. p. 1).

Inglis said U.S. Trade Representative Rob Portman in particular has been engaged in pursing a solution to the issue and that he would likely meet with Portman on June 23. He said other members with textile constituents in North and South Carolina as well as Georgia and Virginia were also interested in the issue and that the administration could likely win a number of votes with a commitment. But he did not provide an indication of how many votes could be secured by meeting these demands.

He also said he had met with the ambassadors to the U.S. of Nicaragua and El Salvador, and that they had indicated they wanted to work with members of Congress to prevent their countries from being used as portals for Chinese fabric to enter the U.S.

A House aide said this issue is not one that has been mentioned by Coble, the chair of the House Textile Caucus, who is set to meet with Portman today (June 24). Coble remains undecided on DR-CAFTA, the aide said.

Rep. Walter Jones (R-NC) this week said 30 Republicans are solidly against the DR-CAFTA deal. Among the prominent Republican opponents is Rep. Phil English (R-PA), who said this week he did not anticipate changing his no vote against the draft implementing bill in the Ways and Means Committee during the House floor vote.

English has been demanding that the White House back a bill that would allow the Commerce Dept. to impose countervailing duties on non-market economies, but the Bush Administration has argued that this is possible to do without legislation. English this week also introduced a bill that would lead the U.S. to impose surcharges against Chinese imports for its currency manipulation.

In a related development, House Ways and Means is considering a China bill that would make it easier to collect assessed antidumping duties from Chinese importers and to bolster USTR’s enforcement budget (see related story).

The administration is lagging on Republican votes, which means it has stepped up its effort to secure more Democrats, sources said. This involves efforts to try to shore up the labor rights in Central America, which largely focus on Sen. Jeff Bingaman (D-NM), sources said. He has asked the administration for more funding on trade capacity building, and an independent report by the International Labor Organization on the status of labor rights in Central America (see related story).

The administration’s talks with Bingaman have attracted the interest of some House Democrats who may be inclined to vote for the agreement if they could get some comfort on labor issues, a Senate aide said.

Inside US Trade