Central American Trade Agreement Moving In Congress

The Central American -Dominican Republic Free Trade Agreement (CAFTA-DR) is moving through
Congress on an uncertain course for textile manufacturers and the agreement itself. The House Ways
and Means Committee and the Senate Finance Committee have held an initial round of hearings that
underscored the vast amount of disagreement about the pact that would grant duty-free access to the
US market for products from Costa Rica, El Salvador, Nicaragua, Guatemala and the Dominican
Republic. Under procedures covering the legislation, Congress must either approve or disapprove of
the agreement without the right to amend it.

At the moment, the role of textile lobbying organizations is uncertain. The National Textile
Association and the American Manufacturing Trade Action Coalition are flatly opposed to CAFTA-DR,
while the National Council of Textile Organizations, which has expressed concerns about the
agreement, does not have an official position. This could lead to a split similar to what happened
in connection with the North American Free Trade Agreement (NAFTA). Retailers and other textile and
apparel importing organizations, while not entirely pleased with the agreement, are supporting it.
They believe it will provide them with more flexibility in their sourcing of clothing and

At a House Ways and Means Committee hearing, the head of a manufacturing coalition that includes
some textile companies launched a scathing attack on the agreement. George Shuster, CEO of Cranston
Print Works, who, along with Roger Milliken ,CEO of Milliken & Company, co-chairs of the
American Manufacturing Trade Action Coalition, told committee members voting for CAFTA-DR is a vote
for China and a vote against American manufacturing. Shuster, Milliken and other AMTAC officials
have been highly critical of NAFTA, contending that it has not benefited US textile manufacturers,
and they say CAFTA-DR will be a similar failure. In his testimony, Shuster said: “From surpluses
before NAFTA we have gone to continuous deficits. Over this period, hundreds of US factories have
closed and relocated south of the border in order to take advantage of low productions costs in
Mexico.” He said CAFTA-DR makes it easier for US companies to outsource high-paying manufacturing
and service sector jobs by guaranteeing investment rights and access to the US import market.
Charging that the CAFTA rule of origin requirements are riddled with loopholes that allow US
duty-free treatment for the assembly of components parts from every corner of the globe, Shuster
said CAFTA-DR is worse than NAFTA.

Meanwhile, House democrats accused Ways and Means Committee Chairman Bill Thomas and the acting
US Trade Representative of excluding them from deliberations on the agreement. Committee Ranking
Member Charles Rangel (D-NY) said the administration has refused to address labor and environmental
issues that are being raised by democrats, and he warned that is discouraging bi-partisan support
for the bill. House Majority leader Tom Delay (R-TX) has set a deadline of the end of May for the
House to vote, but Speaker Dennis Hastert ( R-IL) has simply said he would like to see a vote soon.
On the Senate side, republican leaders don’t foresee an early vote, as they have encountered more
opposition than expected, and they are seeking more time to lay the groundwork for a successful

April 2005