The Central American Free Trade Agreement, a Bush administration priority passed by the House in July after a bruising political fight, will not take effect New Year’s Day, the target date set by the White House.
House Democrats, who voted overwhelmingly against the pact, latched on to the delay as a sure sign of a flawed trade policy.
“This is a stunning failure for the Bush administration. … CAFTA was their No. 1 trade priority for the year and it has fallen victim to the inconsistencies of their negotiating positions,” Rep. Charles B. Rangel, New York Democrat, said yesterday. Mr. Rangel is the ranking Democrat on the Ways and Means Committee, which oversees trade.
The administration downplayed the delay in implementing the pact, which would lower trade barriers among the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.
“It has nothing to do with flawed policy,” said Steve Norton, spokesman for the U.S. Trade Representative’s Office (USTR).
“It would be irresponsible to implement the agreement unless our trading partners were fully ready. We’re hoping to be able to implement February 1 or March 1 … depending on the country,” said Mr. Norton, who added that no firm date has been set for any of the nations, but that the administration was pressing for implementation as soon as possible.
House lawmakers in July narrowly approved CAFTA 217-215 in one of the toughest votes of the year. The administration portrayed the trade pact as a matter of national security and economic urgency amid a history of insurgency and instability that plagued the region through the Cold War.
“These are small nations, but they’re making big and brave commitments, and America needs to continue to support them as they walk down the road of openness and accountability,” President Bush said in May while shoring up support.
Those commitments have fallen short of U.S. expectations. The six other nations still have not written, reformed or repealed laws to comply with the deal’s strict terms on government procurement, customs rules, telecommunications services, public health policy, treatment of foreign companies and other matters.
Five of the six Latin American countries have approved the overall pact. Costa Rica has not, and therefore cannot take up the rights and responsibilities of the deal regardless of its rules and regulations.
“It’s certainly somewhat of a disappointment. This had been the planned time,” said Peter Hakim, president of Inter-American Dialogue, a Washington think tank. “But I think it is a momentary setback more than anything long term. And I think the Democrats were wrong to oppose CAFTA in the first place, and wrong to take pleasure in this setback.”
The administration faced similar delays with Morocco. The House, with bipartisan support, approved the U.S.-Morocco Free Trade Agreement in July 2004, but the pact will not take effect until Sunday.
House Democrats have not criticized the Morocco timetable, but seized on CAFTA’s problems as a sign that the administration is forcing reluctant Latin American countries to adopt laws that benefit multinational companies but hurt workers in Central America and the United States.
“Is it any wonder that USTR now finds itself with an agreement that not a single one of the six CAFTA countries is prepared to implement? I cannot recall a similar embarrassment to the USTR or a president in international trade,” Mr. Rangel said.