The Senate Finance Committee overcame sugar industry concerns about a free trade agreement with Central America on Wednesday and voted to approve the pact after the Bush administration pledged to support more funding to promote workers' rights in the region.
The panel's voice vote set the stage for the full Senate to take up the US-Central American Free Trade Agreement, or CAFTA, possibly in coming days. The Ways and Means Committee in the US House of Representatives was scheduled to vote on the controversial agreement on Thursday.
"Step-by-step we're making good progress and building momentum for (CAFTA's) successful passage," US Trade Representative Rob Portman said. "Another CAFTA-DR (Dominican Republic) hurdle is successfully passed and we look forward to the full Senate approving this agreement soon."
The pact would eliminate tariffs on US exports to Costa Rica, El Salvador, Honduras, Nicaragua, Guatemala and the Dominican Republic, while locking in and expanding the duty-free access those countries already have in the United States.
CAFTA faces a bumpier ride in Congress than any other free trade agreement the Bush administration has negotiated since taking office. While Senate approval was expected, the outlook was far less certain in the House, where most Democrats are opposed on the ground that the pact's labour provisions are not strong enough for a region with a poor record on workers' rights.
Sen. Jeff Bingaman, a New Mexican Democrat who serves on the Finance Committee, said on Wednesday he had decided to vote for CAFTA after the administration pledged to support $40 million in annual funding through 2009 to help the CAFTA countries enforce their labour and environmental laws.
The administration also pledged to support $30 million in funding to help subsistence farmers in El Salvador, Guatemala and the Dominican Republic who might be hurt by increased imports of US farm products and said more aid was possible for those countries in the future under the Millennium Challenge Account, the administration's flagship foreign aid program.
Sen. Jim Jeffords, a Vermont independent who, like Bingaman, was earlier opposed to CAFTA, now also plans to support the trade pact, a Jeffords spokeswoman said.
But Rep. Sherrod Brown, an Ohio Democrat, predicted the full House would reject the agreement next month.
"When CAFTA comes to the House floor, it will come in the middle of the night, under cover of darkness, and will face fierce opposition," Brown said. "And even after they hold the roll call open for hours, we will vote CAFTA down."
NO DEAL ON SUGAR
Meanwhile, sugar industry representatives said they had rejected a "final offer" from the Bush administration aimed at reducing their opposition to CAFTA. However, a US trade official said the administration would continue talks with sugar-state lawmakers in hopes of getting their support.
An agreement that gave Republicans from sugar-producing states like Florida, Louisiana, Minnesota, Montana and Idaho the political cover they need to vote for CAFTA would have given a big boost to the pact's prospects in Congress.
The sugar industry has fiercely opposed CAFTA, which opens the US market to additional imports from the six countries. It wants the administration to back a plan for converting sugar imported under trade pacts like CAFTA and the North American Free Trade Agreement to ethanol, a renewable fuel now made mostly from corn in the United States.
Phillip Hayes, spokesman for the American Sugar Alliance, told Reuters that Senate Agriculture Committee Chairman Saxby Chambliss had presented the industry with a proposal after meeting on Tuesday evening with some other lawmakers and administration officials. Portman and Agriculture Secretary Mike Johanns were present at the meeting.
"The offer was again to use a compensation mechanism to pay countries not to ship us the sugar we don't need. The only new thing on the deal was a promise to conduct a study to examine the feasibility of a sugar-ethanol program," Hayes said. "We've got a long-term problem, and that's a short-term solution," Hayes said.
The sugar industry's continued opposition prompted Sen. Craig Thomas, a Wyoming Republican, to oppose CAFTA in the committee on Wednesday after voting "yes" on a draft implementing bill two weeks ago.