Reynolds' 'compromise' bill may save CAFTA

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Reynolds' 'compromise' bill may save CAFTA
By DOUGLAS TURNER
News Washington Bureau Chief
7/24/2005
WASHINGTON - Fair trade legislation that Rep. Thomas M. Reynolds, R-Clarence, is backing is drawing praise and criticism as a crucial House vote on the administration's Central American Free Trade Agreement draws near.

The Senate passed CAFTA by only nine votes in June. A House vote could come on Wednesday or Thursday.

The House Republican leadership may offer the Reynolds bill first as a means of drawing more support for CAFTA by addressing widespread bipartisan resentment over China's trade behavior.

The Bush administration's CAFTA legislation would lower trade taxes between the United States and the Dominican Republic, Guatemala, El Salvador, Honduras, Costa Rica and Nicaragua. Amendments are acted on prior to the vote on a parent bill.

Called the U.S. Trade Rights Enforcement Act, Reynolds said the bill he is co-sponsoring with Rep. Phil English, R-Pa., is intended to counter unfair trade practices, especially those of China.

English and Reynolds are members of the Ways and Means Committee, which reviews all trade bills.

Reynolds said the measure would combat predatory trade practices abroad, "and level the playing field for American companies and workers here at home. It is a welcome addition to our fight against unfair trade."

The bill would permit the U.S. to impose duties on imports of state-subsidized products; establish a system for monitoring Chinese compliance with international trade law and obligations; mandate that the Administration report regularly to Congress on enforcement on international trade law, and increase funding for the U.S. Trade Representative to monitor and combat unfair trade practices.

Reynolds said the countervailing duties provision in his bill is important for local manufacturers. "Currently, there are a number of countries, such as China, who are exempt from countervailing duty laws because they are classified as non-market economies," Reynolds said.

However, a group affiliated with small manufacturers, including about two dozen companies in central New York, announced its opposition the Reynolds's bill.

The U.S. Business and Industry Council criticized "the bill's disingenuous approach with the insignificant 2.1 percent revaluation of China's currency," which the Chinese Central bank put into effect last week by allowing the currency to float in value within a narrow range.

"H.R. 3283 offers no real help for U.S. manufacturers attempting to compete with China," said USBIC president Kevin Kearns. "It's a watered-down effort designed to buy votes for CAFTA. The same approach is being used by the People's Bank of China to mollify the Bush administration and Congressional critics."

"The Chinese government figures it can placate its critics by budging the currency just a hair, but again this insignificant step is of no help to American's domestic manufacturers. Hopefully, the majority of Congressmen will not be fooled by either the (English-Reynolds) bill or the phony revaluation and will vote against CAFTA and keep the pressure up on China for meaningful action on their currency," Kearns said.

Kearns called the legislation a "watered-down hodgepodge" and urged a vote against Reynolds-English and CAFTA.

The National Association of Manufacturers voiced strong support for fair trade enforcement bill.

"This bill would give U.S. companies the ability to offset unfair subsidies that benefit many of their competitors in China and other nations," said NAM President John Engler.

"For the first time, it will give Americans the same trade rights guaranteed to others under World Trade Organization rules," Engler said.

One difficulty facing the English-Reynolds bill, H.R. 3283, is what happens to it even if it does pass the House. There is no current consensus in the Senate on what to do about China.

The House Democratic leadership is hoping for a party-line vote against CAFTA next week, but has no announced a party position on English-Reynolds.

Their bill was introduced only last Wednesday.

The AFL-CIO is urging a no vote on CAFTA, but so is the ultra-right John Birch Society claiming that CAFTA will be a threshold to "one world government."

Meanwhile, Reynolds has collected wide support from groups in upstate New York for CAFTA. The supporters include the Amherst Chamber of Commerce, the Rochester Business Alliance, the New York Farm Bureau, N.Y. State Dairy Foods Inc., Dairylea Cooperative, and the officers of Delphi Thermal and Interior, the Lockport auto parts maker.

The management of the Kraft Foods plant in Avon said "the elimination of import tariffs will make our products far more competitive" the new free trade area."

Kraft plant manager Gregg Manning said Costa Rica now imposes a 66 percent tariff on American cream cheese, and El Salvador charges 40 percent on processed cheese from the U.S.


e-mail: dturner@buffnews.com