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Washington Outlook Archive
James A. Morrissey, Washington Correspondent

Regional Trade Pacts Face Rocky Road

James A. Morrissey, Washington Correspondent

F ollowing the collapse of the World Trade Organization’s (WTO’s) recent trade liberalization talks, Bush administration trade officials are zeroing in on efforts to negotiate regional and bilateral trade pacts — but that may be a lot easier said than done. Some of the issues that caused the breakdown of the WTO talks are at the heart of the proposed regional pacts.

The question of agricultural subsidies looms large, and organized labor is conducting a major grass-roots effort to block some of the proposed free trade pacts. Further complicating matters is the insistence by textile industry lobbyists and their supporters in Congress that rules of origin for textile products should require apparel to be made of yarn and fabric manufactured in participating countries. In addition, they don’t want any tariff preference levels that permit a given amount of apparel to be made from inputs from non-participating countries. Those measures are strongly opposed by retailers and other importers of textiles and apparel.

Number one on the administration’s agenda is a Central America Free Trade Agreement (CAFTA). Negotiations are underway with Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. US Trade Representative Robert B. Zoellick hopes to conclude these negotiations by the end of this year so Congress can vote on an agreement in early 2004. Obviously, this push is an effort to move a vote as far as possible from next year’s election campaigns, as votes on trade issues are not popular in election years. CAFTA enjoys considerable support right now, but the fallout from the WTO negotiations could cause problems as some of the CAFTA countries were not exactly supportive of the United States during the recent WTO meetings.

Another of the administration’s high-priority items, a Free Trade Area of the Americas (FTAA), is in for much rougher sledding. The target date for FTAA is January 2005, when all quotas on textiles and apparel are scheduled to expire. Already, an alliance of labor unions, environmentalists and farm groups has organized a nation-wide grass-roots campaign to oppose FTAA. Dubbed the “Blue-Green Machine” to signify the joining together of blue-collar workers and environmentalists, this effort will culminate in a major protest surrounding a FTAA ministerial meeting in Miami. Further complicating this issue is the fact that Brazil is a co-chair with the United States on FTAA negotiations, and the recent WTO meetings underscored sharp differences between the two countries on agricultural issues. In addition, the powerful sugar lobby has urged the administration to go slowly with FTAA.

Despite all of these difficulties, administration officials remain optimistic that the regional pacts can be concluded on schedule.

Bush's Plan To Revive Manufacturing Unpopular
The Bush administration’s highly touted plan to revive the manufacturing segment of the country has gone over like a lead balloon with textile manufacturers and some of their supporters in Congress. With a good deal of fanfare, Secretary of Commerce Donald L. Evans unveiled a five-step plan to “rescue” American manufacturing that calls for: establishment of an Unfair Trade Practices Team to track and confront unfair trade competition and practices; creation of an Office of Industry Analysis to assess the economic impact of new rules and regulations; consolidation of all Commerce Department export promotion functions under a new assistant secretary for trade promotion; an effort to expedite implementation of standards to ensure that American manufacturers are “export ready” to sell into global markets; and continuation of consultations with manufacturing industries with respect to their trade problems.

Auggie Tantillo, Washington coordinator for the American Manufacturing Trade Action Coalition, said that while he welcomes the fact that manufacturing trade problems have “finally gotten attention” at the highest levels of the administration, he does not think the Bush plan is the answer. “We don’t need more statistics and reports,” he said. “What we need are direct policy initiatives that will lead to a very specific plan to deal with China and other trade problems.”

Cass Johnson, interim president of the American Textile Manufacturers Institute, was even more critical. He said the plan shows the Bush administration “simply does not get it.” He said assigning the responsibility to a “fourth-level bureaucrat will not get the job done.”

New Coalition Strengthens Textile Trade Efforts
Textile industry lobbyists and industry leaders believe a newly formed manufacturing trade coalition will strengthen their efforts to stem the tide of growing import competition, which they say is causing massive plant closings and job losses. The Free Trade For America Coalition (FREETAC) includes farmers, cattlemen and agribusiness; chemicals; metals; all of the major textile and fiber trade associations; and steel, paper and textile unions. Its members represent some 3,000 corporations and 2 million employees.

FREETAC is the creation of Wilbur L. Ross Jr., who, among other things, is set to acquire control of Burlington Industries Inc. and Cone Mills Corp. and has been a leader in the effort to limit steel imports. Ross claims the American standard of living is "being systematically destroyed" in the international trade arena, and he says the American public and its elected representatives must be made aware of what he says is "an economic disaster."

Although the various textile and fiber associations have been actively involved in textile-specific trade issues, they feel they have much in common with FREETAC and believe it can help them reach a broader audience, and presumably gain more political support for their efforts. Like the textile associations, FREETAC will conduct public education and lobbying efforts to call attention to the basic causes of the growing US trade deficit, such as foreign currency manipulation, evasion and circumvention of US trade laws, and what it sees as "unfair trade agreements." In addition, the coalition will focus on what its members see as US laws that "deny timely relief" to injured industries, their employees and communities.

With the 2004 presidential and congressional election campaigns underway, there is little doubt that international trade already has surfaced as one of the major issues.

November 2003