WASHINGTON – The Bush administration is hailing its new free trade agreement with Central America as an important milestone toward the even bigger prize of achieving a hemisphere-wide free trade area.
But labor unions are vowing an all-out effort to defeat the measure in Congress.
Judging from the initial reaction from unions and such politically sensitive sectors of the economy as textile makers and sugar growers (search), President Bush could be facing a major trade battle on Capitol Hill in the midst of next year's presidential campaign.
The Central American Free Trade Agreement (search) would be the United States' sixth free trade agreement, all modeled along the lines of the 10-year-old North American Free Trade Agreement (search), which links the United States, Mexico and Canada.
The CAFTA pact announced Wednesday would cover Guatemala, El Salvador, Honduras and Nicaragua. A fifth nation, Costa Rica, abruptly dropped out of the talks on Tuesday. However, administration officials said they hoped further negotiations in coming weeks would persuade Costa Rica to join the agreement before it is sent to Congress.
U.S. Trade Representative (search) Robert Zoellick called CAFTA "an important milestone" along the way to the administration's big prize of a 34-nation Free Trade Agreement of the Americas (search), covering all countries in the Western Hemisphere except Cuba.
While the administration won easy approval earlier this year of two other free trade deals with Singapore and Chile, CAFTA is shaping up as a much bigger battle.
American unions, and their Democratic allies in Congress, were upset that the agreement does not include stronger labor protections.
AFL-CIO (search) President John Sweeney said lax enforcement of weak laws on the books of the Central American countries meant young women were forced to work long hours in unsafe conditions for poverty wages and workers trying to form unions faced threats and intimidation.
"We will do everything in our power to defeat this deeply flawed agreement," Sweeney said in a statement.
Rep. Dick Gephardt, who is campaigning for the Democratic presidential nomination, called CAFTA "yet another example of the Bush administration selling out American workers with a bad trade deal."
Several other Democrats questioned whether the administration really had a finished deal, noting that certain provisions on service sectors were yet to be completed, and the negotiations with Costa Rica were still ongoing.
In addition, the administration has said it hoped to add a sixth Latin American country, the island nation of the Dominican Republic, in talks early next year in hopes of picking up votes among lawmakers whose districts include large numbers of Dominican immigrants.
Sen. Max Baucus, D-Mont., called the administration's announcement "premature. Too many important issues remain open to declare these negotiations successfully concluded."
Key Republicans in Congress and U.S. business groups generally expressed support for the deal. Senate Finance Committee Chairman Charles Grassley, R-Iowa, said he believed the deal would boost exports of Iowa farm products.
Trade is expected to be a major issue in next year's presidential race with Bush's Democratic opponents charging that the administration has failed to provide help to a U.S. manufacturing sector that has suffered 40 consecutive months of job losses that have wiped out 2.8 million jobs.
The success in reaching the Central American deal gave the Bush administration a badly needed victory after a series of setbacks in trade, including the collapse of global trade talks in Cancun, Mexico, a forced compromise with Brazil over the areas that will be covered by a Free Trade of the Americas Agreement and Bush's about-face earlier this month in deciding to withdraw protective tariffs on steel in the face of threatened European and Asian retaliation.
The administration did negotiate special provisions to protect domestic textile manufacturers and sugar beet and sugar cane farmers, but officials in both industries said they were concerned that the deals still went too far in opening their sectors to foreign competition.
Lawmakers from sugar states said they viewed the CAFTA increase as a dangerous precedent for future free trade deals being negotiated with such countries as Australia and Brazil.
Textile manufacturers were concerned about what they saw as potential loopholes that will provide duty-free access to the United States of some clothing assembled from textiles produced outside the CAFTA countries.