New Trade Deals Unlikely to Go Far

In his first three years in office, President Bush fulfilled a major commitment to business community allies by pushing free trade bills through Congress. But extending that streak into this election year may not be in the cards.

As Democrats put an election-year focus on the deals as culprits in the loss of U.S. jobs - and a small but crucial number of Republicans try to protect sugar and textile producers - recently negotiated trade accords with Central America, Australia and Morocco stand almost no chance of being ratified this year.

Success on any of them would follow passage of the Jordan free trade agreement (search) in 2001, a hard-fought victory in 2002 giving Bush "fast track" authority to negotiate trade deals without congressional interference and passage of free trade accords with Chile and Singapore last year.

Rep. Kevin Brady, R-Texas, the administration's point man on the Central American Free Trade Agreement (search), said it was "embarrassingly good" for the United States.

More than 80 percent of consumer and industrial goods exports to Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua would become duty-free immediately, with the remaining tariffs phased out over 10 years, according to the office of the U.S. Trade Representative (search). More than half of current farm exports to the region would become duty-free immediately, and the rest over 15 years.

Brady conceded "it's going to be a challenge" to win approval this year, "for reasons unrelated to the agreement itself."

"My gut feeling is that we are short of the votes right now," he said in an interview.

One reason is that many Democrats see free trade deals, particularly the 1993 North American Free Trade Agreement (search) with Mexico and Canada, as causing the loss of American manufacturing jobs.

Rep. Sander Levin of Michigan, a Democratic leader on trade issues, said his party was united in its concerns about the failure of the pending Central American pact to include "core labor standards," such as rights to bargain collectively and prohibitions on child labor.

"CAFTA is destined to become the lightning rod for debate over international trade policy," Levin said. Unless it is changed before coming to a vote, "it will be defeated in Congress," he predicted.

"CAFTA was always a bit dicey because of the labor standards question," said I.M. Destler, professor at the University of Maryland school of public policy and a trade expert. "If the Bush administration wants to show that it isn't running away from the trade issue, it might put up Australia and not Central America."

Australia could be an easier sell because it is just one country and has labor and income standards similar to the United States. Manufactured goods account for 93 percent of U.S. exports to Australia, and the pact would immediately end duties on almost all those goods.

But even it is controversial. Free traders chafe at the success of the U.S. sugar industry in winning exemptions from quota and tariff reductions. The Motion Picture Association of America (search) is unhappy with language giving Australia the right to restrict American-filmed entertainment on Australian airways.

No congressional action on trade this year could cause a future logjam as other negotiations are completed. Negotiations are proceeding, if slowly, on a free trade zone for the entire Western Hemisphere outside Cuba, and other potential partners include Thailand and Bahrain.

CAFTA is slightly ahead in the legislative process, with Bush on Feb. 20 notifying Congress of his intent to sign the agreement as part of his goal "to expand economic opportunities and to promote economic growth and prosperity."

The president can't actually sign the agreement for at least 90 days after notification, giving Congress the chance to review it. Even then, he can sit on it until he feels Congress is ready to act. His signature sets other legislative clocks running that add months more to the process. Still, nothing can be implemented until Congress formally approves it.

"The prevailing wisdom out there is that Congress doesn't want to pass a trade agreement this year," said Bill Morley, the U.S. Chamber of Commerce's vice president for legislative affairs. "I think that's wrong. This is precisely the time we need a free trade agreement to knock down trade barriers."