The Senate last night approved the Central American Free Trade Agreement, sending the pact to the House for a vote still too close to call.
The Senate voted 54-45 in favor of CAFTA, handing President Bush a victory on his top trade priority. The 435 members of the House likely will vote on the deal after July 11.
“It’s halfway to becoming the law of the land,” said Sen. Charles E. Grassley, Iowa Republican.
CAFTA would have little impact on the U.S. economy, but it has become a political testing ground for Bush administration trade policy and the fiercest battle over a free-trade agreement in more than a decade.
The deal would bind the United States, Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua to a set of trade and investment rules. The pact is “likely to have a minimal impact on production, employment or prices” in the United States, the U.S. International Trade Commission (ITC) said in an analysis released last year.
But the Bush administration and a broad alliance of businesses and retired statesmen say CAFTA would open new markets for U.S. exports, support democratic and free-market reforms in a former Cold War battleground, and signal U.S. economic leadership in global and other regional trade negotiations.
“It was initially an uphill climb, but once the facts were out, members could see the agreement was very much in our economic and national security interests,” Mr. Grassley said after the vote, which was a narrow victory compared with historic Senate margins on trade agreements.
The Central American countries have lobbied especially hard for CAFTA, sending their six presidents, various ministers and business groups to the United States to argue for the deal.
But unions, U.S. sugar farmers, some domestic manufacturers and their allies in Congress have lined up in opposition. Organized labor is worried CAFTA does too little to protect workers in the United States and Central America, while producers say imports from Central America will run them out of business.
Some lawmakers also are trying to derail the free-trade model embodied in agreements like the North American Free Trade Agreement, signed with Canada and Mexico more than a decade ago.
“CAFTA promises more of the same devastation brought by the agreements that have come before it — putting our businesses, workers and farmers at a competitive disadvantage, while also undermining the economic development that might benefit workers, farmers and small businesses in Central America,” said Sen. Russell D. Feingold, Wisconsin Democrat.
The administration is negotiating trade deals at the World Trade Organization, among 34 countries in the Western Hemisphere, and with individual countries in Latin America, Africa and Asia.
To build broader support for CAFTA, the administration has had to make last-minute, narrowly focused deals, including promises to spend more money monitoring labor rights in Central America and keeping foreign sugar from hurting U.S. farmers.
“When the story of CAFTA is written — whether it passes or fails — the theme will be the politics of the last minute. Because even as we bring this bill to the floor, parts of the CAFTA package are still being negotiated,” said Sen. Max Baucus, Montana Democrat and a CAFTA opponent.
The vote also marked an erosion of support for White House trade policy in Congress. The Senate, for example, voted 61-38 for NAFTA.