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House Committee Backs Cafta; Senate Prepares to Vote (Update 1)



June 30 (Bloomberg) -- A U.S. House of Representatives panel voted in favor of the Central American Free Trade Agreement, clearing the second of four final hurdles for getting the trade- and-investment accord approved.

The House Ways and Means Committee voted 24-11 in favor of Cafta, which will now move to the House floor for consideration by all 435 representatives sometime after July 11. The Senate Finance Committee approved its Cafta legislation yesterday, and the full Senate is expected to vote later today.

Cafta's future largely hinges on the House where the vote is viewed as a toss-up, with supporters and opponents saying the Bush administration is short of the votes it needs.

``There will be a firming up of the vote count,'' House Ways and Means Committee Chairman Bill Thomas said. To help secure the votes, Thomas said he is pulling together legislation that addresses the widening U.S. trade deficit with China.

Cafta would end most 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. It would also allow a 50 percent increase in sugar imports into the U.S., phased in over 15 years, and make permanent the duty-free access to the U.S. that most products from Central America have.

Under rules of Trade Promotion Authority passed in 2002, Congress can't amend trade bills when they come up for a vote.

Cafta is backed by companies such as computer-chip maker Intel Corp., software developer Microsoft Corp. and pharmaceutical company Pfizer Inc., which say the trade deal will open up markets for their products and create momentum for further trade liberalization in this hemisphere and globally.

Democratic Opposition

President George W. Bush, who reached an agreement with the six Central American nations more than a year ago, hasn't been able to convince lawmakers to ratify Cafta because of opposition from unions, textile producers and sugar makers.

All but two Democrats on the Ways and Means committee voted against Cafta, making this the closest vote in that committee on a trade agreement in at least a decade. Democrats say Cafta isn't strong enough to improve labor conditions in the region.

The administration proposed an extension of funding to monitor and improve workers' conditions in the region, but Democrats dismissed those commitments.

``There has been nothing that has been put on the table that will change the vote,'' said Representative Benjamin Cardin of Maryland, the top Democrat on the trade subcommittee of the Ways and Means Committee. ``If this were voted on the way members feel, it would fail.''

The administration did get the votes of three Republican representatives from sugar-producing districts -- Jim McCrery of Louisiana, Dave Camp of Michigan, and Mark Foley of Florida -- after pledging to cap imports of sugar through 2007 and study a proposal to use sugar to make ethanol. Foley said he was still looking for a deal that the sugar industry could support before he will decide how to vote when the bill comes to the House floor.

To contact the reporters on this story:
Mark Drajem in Washington at mdrajem@bloomberg.net

Last Updated: June 30, 2005 15:07 EDT