- The Washington Times - Wednesday, March 9, 2005

Keith Crisco believes the Central American Free Trade Agreement would be good for his company, his industry and the Latin nations that would enter into the pact.

“In the big scheme of things we need to approve this and make the region more competitive,” said Mr. Crisco, president of Asheboro Elastics Corp., an Asheboro, N.C., manufacturer that knits elastic fabrics and ships them to Central America to be sewn into products such as Fruit of the Loom underwear.

But Mr. Crisco’s voice is in the minority among the companies that spin yarn and weave fabric, an industry central to the debate on the biggest trade agreement expected to come before Congress since NAFTA won approval in 1993.

CAFTA would include Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic, which are five developing countries in Central America and a Caribbean nation that shares an island with Haiti.

Though CAFTA was signed last year, the Bush administration has not sent it to Congress for ratification because approval is, at best, uncertain. The administration and Latin American nations are making a concerted effort to sell the agreement in textile industry strongholds such as North Carolina, in the hope of swaying public opinion and, potentially, congressional votes.

Textile mill products are the leading U.S. export to the six CAFTA countries, reaching $2.6 billion in 2004, the Commerce Department said. The American fabric is cut and sewn into garments and household products in the Latin nations, then returned to the United States for sale to American consumers. Imports of such products from the region reached $3.7 billion last year.

U.S. textile mill exports to China, by comparison, were $255 million while imports of apparel and other products made of fabric were $11.7 billion. Instead of buying U.S. textiles, China uses its own or products from nearby Asian nations

The administration is touting CAFTA as a way to bolster economic cooperation between highly automated U.S. fabric companies and labor-intensive Central American clothing operations, and head off the intense competition from Asia.

“A vote against CAFTA is a vote against U.S. textiles and a vote for China,” said Christopher Padilla, an assistant U.S. trade representative and the office’s CAFTA point man.

But he hasn’t convinced most textile companies or many of the politicians who represent them in Congress, such as Rep. Howard Coble, North Carolina Republican and co-chairman of an informal House textile caucus.

“If there were a vote held today, he would probably be a no vote,” Ed McDonald, chief of staff for Mr. Coble, said last week. “He is worried there would be a negative impact on the textile and apparel industry in North Carolina.”

North Carolina exported $695 million in fabrics and yarns to CAFTA countries last year, more than any other state. But many feel burned by past agreements, such as NAFTA, which hastened a shift of textile and apparel jobs to Mexico, and China’s entry into the World Trade Organization, which allowed it greater access to the U.S. market.

Textile and apparel mills nationwide have shed almost 36 percent of their jobs in four years, and now employ 673,400.

“[CAFTA is] just another way to give away U.S. jobs,” said Roger Chastain, president of Mount Vernon Mills Inc., a Mauldin, S.C., company that manufactures and exports denims, twills and fabrics used to make pockets and other garment linings.

The company, with 4,200 workers in the Carolinas, Georgia, Mississippi and Texas, exports about half of its wares to CAFTA countries.

But Mr. Chastain is worried that U.S. exports to the region will be displaced because of CAFTA. The agreement would allow some non-U.S. fabric to be sewn in CAFTA countries and shipped duty-free to the United States, a precedent-setting loophole that doesn’t exist today and one that would open the door to competitors in Asia and the Americas, he said.

The agreement also allows nonvisible linings — like the pockets Mount Vernon makes — to originate outside the United States.

“A vote for CAFTA is a vote for China,” Mr. Chastain said,

It is not clear when the administration will send the agreement to Congress. Under current law, legislators can only vote yes or no on the pact — they cannot amend it. The system worked well during Mr. Bush’s first term, when he won passage for trade deals with Singapore, Chile, Australia and Morocco.

But CAFTA will be a more difficult test. The pact has become a referendum on broader trade policy that many House Democrats, organized labor and some Republicans believe is fueling a growing trade deficit and harming U.S. workers.

The opposition, so far, has been too much for the administration to overcome.

“I can’t see the president taking it to Congress until he has the votes. If he had the votes, he would have sent it already,” Mr. Chastain said.

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