Bloomberg News

Bush Faces Hostile Lawmakers on Cafta in Carolinas
2005-07-15 09:56 (New York)

By Mark Drajem and Roger Runningen

July 15 (Bloomberg) -- President George W. Bush, seeking to
overcome opposition from textile makers to the U.S.-Central
American Free Trade Agreement, will take his campaign for the
accord out of Washington for the first time and onto the front
porch of one of its fiercest opponents.

Bush today will tour a yarn-spinning plant of R.L. Stowe
Mills in Belmont, North Carolina, and give a speech at Gaston
College outside of Charlotte. So far, Republican Sue Myrick,
whose district includes Charlotte, is the only lawmaker of the 11
Republican representatives of North Carolina and South Carolina
who has come out in support of Cafta.

``They need to round up more Republicans,'' said I.M.
Destler, a fellow at the Institute for International Economics in
Washington and author of the book ``American Trade Politics.''
The Carolina delegation ``is in a swing position, but the big
question is how many of them are still movable.''

Of the 10 other House Republicans in the Carolinas, six say
they oppose Cafta, two are undecided, and two -- including House
Textile Caucus Chairman Howard Coble -- are leaning against it.
The administration is negotiating with some of those undecided
lawmakers to provide new rules that will protect markets for the
U.S. textile industry in Central America.

``We've had some members express specific concerns that
we've been able to simply accommodate within the existing
agreement,'' U.S. Commerce Secretary Carlos Gutierrez said in an
interview. ``In the end we are going to get this through because
the facts are so compelling.''

Presidential Involvement

Corralling each of those Republicans is crucial as only five
of the 202 Democrats in the House of Representatives have
announced support for Cafta. Opposition from the sugar industry
has already sapped Republican support in Florida and Louisiana,
as well as in beet-producing states such as Minnesota. The
Republicans hold the majority in the House with 231 members.

The administration is still at least 20-25 votes short of a
majority in the House for Cafta to pass, according to Mary Kay
Thatcher, director of public policy for the 5.8 million-member
American Farm Bureau Federation.

``It's going to require presidential involvement,'' she
said. ``We're not there yet.''

A Split Industry

Cafta would end tariffs on more than $33 billion in goods
traded between the U.S. and Costa Rica, the Dominican Republic,
El Salvador, Guatemala, Honduras, and Nicaragua. The Senate
passed the agreement on June 30 by a vote of 54-45, the smallest
margin for a trade agreement since at least 1993. The House is
the final hurdle and is planning to vote this month.

The largest U.S. textile organization, the National
Coalition of Textile Organizations, endorses Cafta, while
competing groups such as the National Textile Association oppose
it. Some companies say a market for yarn and fabric in Central
America is the best hope U.S. companies have to survive increased
competition from China; others say Cafta is the continuation of a
failed strategy of trade agreements that have led to U.S. job
losses.

``The textile industry is split, and the legislative
delegation reflects that,'' D. Harding Stowe, chief executive of
R.L. Stowe, said in an interview.

Textile production mills have had the most severe losses of
any manufacturing sector in North Carolina, dropping 14 percent
in the past 12 months and by about half since 1995, according to
the U.S. Bureau of Labor Statistics. South Carolina hasn't fared
any better, losing 47 percent of its textile jobs since 1995.

Exporting

Bush's visit will focus how important Cafta is to the
textile industry, White House spokesman Scott McClellan said July
13. The goal, he said, is to support democracies in Central
America and create parity on U.S. exports, which face stiff
tariffs.

Stowe, 49, who gave the maximum allowable contribution of
$2,000 to Bush's campaign last year and sits on the president's
council that promotes manufacturing, said one-third of the yarn
spun at the factory Bush will tour goes to Central America.

The Cafta region is North Carolina's second-largest export
market after Canada, and the U.S. Chamber of Commerce has been
promoting the idea that the trade accord will lead to a $3.9
billion increase in North Carolina's economy within nine years.

``Most members of Congress understand that we have to export
to be profitable,'' Thatcher said.

Compromises

Still, convincing lawmakers of the importance of the
agreement has proven a heavy lift for an administration and
Republican leadership in Congress that have been able to rely on
near unanimous support from Republicans on other measures.

The Bush administration late last month reached a deal with
lawmakers that placated some concerns about a potential surge in
sugar imports from Central America. And yesterday House Ways and
Means Committee Chairman Bill Thomas threw his support behind a
measure that would widen the scope for companies to seek duties
on Chinese products -- a gesture Thomas said is intended to
address lopsided trade balances and round up support for Cafta.

Representative Bob Inglis, a South Carolina Republican, said
he is working with U.S. Trade Representative Rob Portman to get
three specific changes on Cafta that would ensure that any duty-
free apparel exports from Central America are made with U.S.
fabric, according to a letter he sent to constituents.

``Hopefully, they will secure suitable assurances that Cafta
will not become an open door for duty-free Chinese imports,''
Inglis wrote. ``If they do, I'll vote for Cafta.''

A spokeswoman for Portman declined to comment.

End of an Industry

North Carolina Republican Robin Hayes, whose district abuts
Myrick's, opposes Cafta and won't be at the president's event
today because of a previous commitment. Hayes fears Cafta will
allow China to subvert import caps the U.S. imposed on its
clothing by using Central America as a backdoor to get Chinese
goods into the U.S., said Carolyn Hern, his spokeswoman.

Coble, whose district includes Greensboro, is leaning
against Cafta and told the White House not to bother having Bush
visit, according to Ed McDonald, Coble's spokesman.

``Cafta is being used by the largest corporations so that
they can outsource their operations to those Latin countries,''
said Nimrod Harris, president of Pickett Hosiery in Burlington,
North Carolina, which is in Coble's district. ``It may be the
very end of the textile industry in this country.''

--With reporting by Michael McKee in New York. Editors: Bostick,
Todd, Bostick