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Senate panel approves Cafta trade pact

By William L. Watts, MarketWatch
Last Update: 11:34 AM ET June 29, 2005


WASHINGTON (MarketWatch) - The Senate Finance Committee put its stamp of approval on the Central America Free Trade Agreement Wednesday, an important symbolic victory for President Bush as he presses for congressional passage of the controversial trade pact.


The Senate panel, by voice vote, "favorably recommended" legislation that would implement the trade pact with the Dominican Republic, Nicaragua, El Salvador, Honduras, Costa Rica and Guatemala. The move, which clears the way for a full Senate vote as early as this week, came despite the lack of a final deal designed to assuage the sugar industry's concerns that the pact will result in a significant spike in U.S. sugar imports.

Administration officials, lawmakers and representatives of the sugar industry have begun meetings designed to address the lobby's objections to the pact.

Hopes for full Senate passage of the trade pact were boosted when Sen. Jeff Bingaman, D-N.M., who was previously undecided on the pact, told fellow Finance Committee members he would back the agreement despite misgivings over labor standards and other components of the deal.

Bingaman said the administration had given him assurances it would spend around $40 million over the next 10 years to promote labor laws in the region, and would spend additional funds to help Central American subsistence farmers adjust to an expected influx of U.S. agricultural products.

On sugar, the administration has offered a plan that would keep sugar imports below a certain threshold set in the current farm bill by paying the Cafta countries in cash or commodities not to ship sugar to the United States.

Sugar-state lawmakers have said the plan doesn't go far enough.

The Cafta agreement is backed by most major industry trade groups, but has faced stiff opposition from sugar producers, some textile manufacturers and labor unions. Opponents contend the pact gives Central American nations an advantage due to lax labor and environmental standards.

The House is expected to present the toughest hurdle to the agreement, which would establish a Nafta-style agreement between the United States and the Cafta nations.

The House Ways and Means Committee plans to take up Cafta on Thursday.

Under the fast-track trade negotiating authority that Congress granted the White House in 2002, trade agreements can't be modified by the House or Senate. Lawmakers can only vote up or down on legislation that would implement trade agreements negotiated by the administration.

The White House formally submitted the legislation to Congress last week. Under fast-track, that gives Congress 90 working days to approve or reject the legislation.

William L. Watts is a reporter for MarketWatch.