The Chicago Tribune reports that the House of Representatives approved Central American Free Trade Agreement ("CAFTA").
The 217-215 vote gave President Bush more of a political victory than an economic victory. Both President Bush and Vice President Cheney lobbied Representatives to vote for approval. In order to get the approval The roll call was held open for more than an hour - instead of the usual 15 minutes - while the necessary votes were rounded up. The Senate approved the trade agreement in June 54 to 45.
The vote was mostly along party lines. 25 Republican voted against it and 15 Democrats voted for it. Two Republicans did not vote, and the lone House independent voted no.
CAFTA will eliminate tariffs on 80 percent of U.S. exports to Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. Most imports from these countries now enter the U.S. duty-free.
According to the Los Angeles Times, CAFTA's political symbolism loomed large.
Congress has not rejected a major trade pact in more than four decades, and CAFTA's defeat could have undermined Bush's efforts to encourage the spread of democracy to combat terrorism, and to negotiate bigger hemispheric and global trade agreements.
CAFTA was also seen as an important test of Bush's ability to steer major legislation through Congress in his second term.
The CAFTA vote was much closer than the 1993 approval NAFTA, which passed the House 234-200 (132 Republicans and 102 Democrats voting in favor) and the Senate by 61-38.
President Bush praised the CAFTA approval:
I am proud that the House of Representatives has acted to advance America's economic and national security interests by passing the CAFTA-DR agreement. CAFTA helps ensure that free trade is fair trade. 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 agreement is more than a trade bill; it is a commitment of freedom-loving nations to advance peace and prosperity throughout the Western hemisphere. We have a moral obligation and a vital national security interest in helping the democracies of Central America and the Dominican Republic succeed, and CAFTA furthers that goal. I look forward to signing this important legislation into law.
The President is to be congratulated on his political victory. I sometimes wonder if these free trade agreements are truly in our best interest. My misgivings stem from the negative effects of globalization, such as the continuing loss of manufacturing jobs in the U.S. But we aren't going to stop globalization so it makes sense to manage it through these free trade agreements.
The White House argues CAFTA will promote freedom and democracy and expand economic opportunity and security in our hemisphere:
CAFTA Is Essential To The Stability Of America’s Neighbors. The young democracies of Central America still face forces opposed to democratic government and economic freedom, such as the leaders of Cuba and Venezuela. By supporting CAFTA, the United States can stand with those in the region who stand for democracy and freedom, who are fighting corruption and crime, and who believe in the rule of law.
CAFTA Is Essential To U.S. Influence in the Region. CAFTA, by integrating the Central American economies together with our own, will strengthen America’s influence in the region. Failure to move forward with CAFTA could create a vacuum that China, with its growing economic weight, might use to expand its political influence in the region.
Expanded Trade Opportunities Will Improve Life In Central America And The Dominican Republic. CAFTA will buttress democratic reforms, give the United States more leverage in improving labor conditions, and boost economic growth throughout the region.
CAFTA Will Benefit American Workers, Farmers, And Ranchers By Leveling The Playing Field And Opening Up New Markets.
CAFTA Will Level The Playing Field For American Workers, Farmers, And Ranchers. Eighty percent of imports from Central America and the Dominican Republic, including 99 percent of agricultural imports, already enter the United States duty free. CAFTA will level the playing field by reducing hefty tariffs and burdensome regulations.
American Sales Will Grow By Billions. CAFTA will allow the people of Central America and the Dominican Republic to buy even more from the United States across a broad range of agricultural, manufacturing, and service sectors. The U.S. Chamber of Commerce predicts U.S. sales to the region could expand by more than $3 billion in the first year, and the American Farm Bureau estimates U.S. farm exports could grow by $1.5 billion per year.
U.S. Manufacturers Also Stand To Gain. CAFTA will instantly eliminate tariffs on 80 percent of U.S. manufactured goods, and the remainder of tariffs will be phased out within a few years. As a result, manufacturers and workers will benefit from increased sales of information technology; farm, construction, medical, and scientific equipment; paper products; and pharmaceuticals.
CAFTA Will Cut Foreign Taxes For U.S. Products. U.S. businesses export more than $15 billion per year to Central America and the Dominican Republic, but because of high tariffs, U.S. companies and farmers pay out more than $1 billion per year in foreign taxes to do business in that region. CAFTA would be a tax cut for our small businesses and farmers.
CAFTA Will Help The United States Compete. America exports more to the six nations participating in CAFTA than to Russia, India, and Indonesia combined. By removing tariffs and other barriers, CAFTA makes trade between the United States and participating countries less expensive.
CAFTA Will Strengthen The Western Hemisphere And Allow Us To Better Compete In The Global Economy.
CAFTA Marks The Foundation Of A Lasting Partnership. In Europe and Asia, many nations have organized to reduce the cost of doing business by consolidating their economies. CAFTA will help further integrate the western hemisphere so U.S. companies are in a better position to compete against foreign competitors in markets around the world.
CAFTA Will Strengthen The U.S. Textile Industry’s Ability To Compete. Most apparel manufactured in Central America and the Dominican Republic uses American materials. Everything from the fabric to the thread to the elastic is made by workers in the United States. According to a recent poll by the American Apparel and Footwear Association, without CAFTA, more than 53 percent of apparel investors in Central America say they will go elsewhere to buy these raw materials. CAFTA will keep these manufacturing jobs in our region.
You will find more information about CAFTA at the U.S. Trade Representative's CAFTA Briefing Book.
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