- The Washington Times - Tuesday, June 7, 2005

Rep. Bill Thomas yesterday linked passage of the Central American Free Trade Agreement with congressional action to address concerns that China is not playing by global trade rules.

“The all-purpose scapegoat for anyone’s [trade] problem is currently China,” said Mr. Thomas, California Republican, chairman of the Ways and Means Committee, which has jurisdiction over trade law.

CAFTA would bind the United States, Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua to a set of rules governing trade and investment.

President Bush has made the deal a near-term priority, but broad opposition from Democrats, organized labor, sugar producers and some domestic manufacturers, coupled with concern over a trade deficit that hit a record $666.2 billion last year, has made passage uncertain at best.

Mr. Thomas, speaking at a U.S. Chamber of Commerce breakfast, downplayed China’s contribution to U.S. trade woes, but said that congressional leaders may have to back efforts to confront the country in order to win votes on other trade issues, such as CAFTA.

The United States ran a $162 billion deficit in goods with China last year.

The Bush administration has repeatedly told China that its currency, which is pegged to the dollar, is undervalued and must be allowed to rise. An undervalued currency would make China’s exports cheaper at the expense of American companies.

“We have to let China know, probably from a legislative position, that the administration’s recent exhortations are supported by the Congress,” he said.

Mr. Thomas said if the yuan were delinked from the dollar, “I don’t think you’d see a significant change.”

Mr. Thomas also said funding to support labor law enforcement in Central American might be necessary before CAFTA can pass.

Lawmakers can only vote yes or no on the trade deal; they cannot amend it. A simple majority in each chamber prevails. Congress is expected to vote in June or July.

The administration in May ramped up efforts to win approval, and this month Mr. Bush renewed his push for the deal, citing national security and broad strategic goals for a region that was a Cold War battleground in the 1980s.

“CAFTA is more than just a trade agreement. It is a signal of the U.S. commitment to democracy and prosperity for our neighbors — and I urge the United States Congress to pass it,” Mr. Bush said Monday at an Organization of American States meeting.

But at a Senate Agriculture Committee hearing yesterday, lawmakers warned administration officials that the deal faced stiff opposition.

“This free trade agreement will be perhaps one of the most difficult votes in the 109th Congress, and as with all agreements, it will have repercussions that we cannot fully predict,” said Sen. Saxby Chambliss, Georgia Republican and committee chairman. Mr. Chambliss opposes CAFTA.

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