Voting for the Central America Free Trade Agreement ought to be a no-brainer for Adam Smith. The Democratic congressman represents Tacoma...
Voting for the Central America Free Trade Agreement ought to be a no-brainer for Adam Smith.
The Democratic congressman represents Tacoma, the busiest seaport in the nation’s most trade-dependent state.
Over the years, he has backed a string of similar trade treaties.
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Even his name says free trade: His coincidental Scottish namesake authored “The Wealth of Nations,” which has defined the benefits of the unfettered market for more than two centuries.
But after a year of indecision, Smith says he’ll vote against CAFTA, the proposed trade-liberalizing treaty with Costa Rica, El Salvador, Honduras, Guatemala, Nicaragua and Dominican Republic.
“It’s a different agreement,” Smith says, reeling off a list of concerns he has after comparing CAFTA with the North American Free Trade Agreement (NAFTA) and other trade treaties he’s supported.
Washington’s 11-member congressional delegation is divided over the Central American Free Trade Agreement, suggesting a stiff battle in Congress. The delegation has supported prior trade pacts. But in a remarkable break, three Democrats recently declared their opposition to CAFTA. Here’s how the votes stand currently:
Rep. Dave Reichert, R-Auburn
Rep. Doc Hastings, R-Pasco
Rep. Norm Dicks, D-Bremerton.
Rep. Adam Smith, D-Tacoma
Rep. Brian Baird, D-Olympia
Rep. Rick Larsen, D-Lake Stevens.
Sen. Patty Murray
Sen. Maria Cantwell
Rep. Jim McDermott, D-Seattle
Rep. Jay Inslee, D-Bainbridge Island
Rep. Cathy McMorris, R-Spokane.
“When we have a balanced trade policy that tries to advance worker rights and other goals, then I’m there.”
Fear of failure
Much more hangs in the balance with CAFTA than a trade pact with six tiny countries and a few million more dollars a year in exports.
In Washington state, a vote against CAFTA could put lawmakers on the wrong side of an issue that companies such as Microsoft and Boeing support passionately. Yet Smith isn’t alone: Two other Washington congressmen oppose CAFTA, and nearly half the state’s delegation is on the fence.
Nationally, failure to pass CAFTA in Congress this summer would signal a rethinking of the nation’s five-decade push for loosening global trade barriers. Experts fear such a shift could undermine talks at the World Trade Organization, which already are behind schedule. It also could weaken U.S. efforts to forge more regional and bilateral trade deals.
According to vote-counters, CAFTA stands a chance of failing. Currently, some 190 House Democrats and perhaps 40 Republicans oppose CAFTA, including 14 members of the 21-member Congressional Hispanic Caucus.
Last week marked a year since the treaty was signed. If it comes to a vote in Congress by July 4, as some predict, it will have languished 13 months. By contrast, treaties with Singapore, Chile, Australia and Morocco, won Congress’ approval within two months of being signed by the president.
The White House has yet to send CAFTA to Congress for ratification. Some think the Bush administration may never do so.
“They haven’t got the votes,” says Jim McDermott, D-Seattle, “and that’s precisely why they’re waiting.”
High stakes for state?
Washington’s stake in CAFTA reaches across the state — from the apple orchards of Yakima and wheat fields of the Palouse to Microsoft’s high-tech campus in Redmond and the bustling ports along the coast.
By dropping high tariffs in the developing countries, the treaty would boost exports from the U.S., which already has cut its tariffs.
The impact, however, could be largely symbolic, not economic.
CAFTA would boost Washington’s farm exports to the six countries by an estimated 58 percent by 2024, when fully phased in, according to a forecast by the American Farm Bureau Federation.
That’s a gain of $39 million a year for all export crops. Even if that long-range forecast is accurate, Central America, which currently buys just 2 percent of Washington’s farm output, would likely remain a tiny export market for the state.
Similarly, Microsoft values CAFTA more for its strong intellectual-property protections than for the tiny Central American software market.
CAFTA will “reinforce high-level trade standards that the United States has pursued around the world,” Microsoft Chief Executive Steve Ballmer said in a letter to Congress earlier this year.
A copy of Microsoft Office costs eight months’ wages for a Guatemalan worker — well beyond his means, according to Rep. Sherrod Brown, D-Ohio, a CAFTA opponent.
But Microsoft sees sales potential eventually.
Shipments to Central America and other poor countries will rise if trade brings greater wealth to their citizens, as Adam Smith theorized two centuries ago. In April, Microsoft Chairman Bill Gates traveled to Washington, D.C., to meet with the state delegation and seek their support on CAFTA.
“He certainly sees opportunities that CAFTA presents for world economies,” says Rep. Dave Reichert, R-Auburn. Microsoft is “not going to go to Central America and sell Windows right away, but there’s an opportunity to build an economy there.”
Markets and labor
Growing markets has worked before. In the late 1980s, Bill Bryant worked to open Mexico to Washington apples. “People said, ‘That’s nice, but how many apples are Mexicans going to be able to buy?’ ” recalls Bryant, chairman of Bryant Christie, a Seattle consultancy.
A decade after NAFTA’s passage, Mexico has become the largest foreign market for Washington apples, he says, worth about $80 million a year.
“We need to be looking at what those economies are going to be like in 10 or 15 years,” says Bryant. “Do we want them integrated with U.S. producers and suppliers, or integrated with producers and suppliers in other parts of the world?”
Critics, for their part, say CAFTA benefits companies over workers. The record and fast-rising U.S. trade deficit has stoked concerns about trade agreements shipping well-paying factory and white-collar jobs to China and other developing countries.
“This is a vote that totally divides business and labor,” says Marcus Courtney, president of WashTech, a union of high-tech workers based in Seattle. “There’s no wiggle room for legislators on this one. That’s why they hate these votes.”
Smith and others say the U.S. isn’t doing enough to help its own workers compete in the global economy, citing cuts in funding for education and other programs to help workers shift jobs.
At the same time, they say CAFTA lacks meaningful protection for workers in developing countries. The treaty allows countries to be fined up to $15 million if they don’t enforce their labor laws. The money goes to that country’s labor department to pay for labor-law enforcement.
Supporters say that’s precisely the kind of policy needed — directing funds to the problem. Critics say it’s shifting money from one government pocket to another without helping workers.
“What kind of a fine is that?” says Rep. Brian Baird, D-Olympia. “Conservatives would laugh hysterically if a Democratic administration negotiated an arms agreement with this kind of enforcement.”
Lax labor conditions in Central America also matter, critics say, because they can erode U.S. standards. “Adam Smith would be totally with me” in opposing CAFTA, Rep. Smith says. “It’s not the job of business people to make sure workers get a decent wage. The job of business is to grow their business. So you need a balancing force.”
On a recent red-eye flight to Seattle, Rep. Jay Inslee says, he sat with his nose in the fine print of CAFTA Chapter 10. More than a decade ago, he voted for NAFTA, which had a similar chapter permitting investors to sue another country’s government when its actions harm their interests.
In one pending NAFTA case, Canadian cattlemen are suing the U.S. for $325 million for closing its border after the discovery of mad-cow disease in Canada.
“I was looking at the intricacies because the language has changed from NAFTA,” Inslee says. Even with the modifications, he adds, “It could be a very troublesome provision.”
Meanwhile, CAFTA opponents have been riding the ferry to Bainbridge Island, where Inslee lives, asking commuters to sign petitions urging the congressman to oppose CAFTA. It’s a sign of how far into the grass roots the fight has gone. Last week, activists staked out Inslee’s Montlake Terrace office. Their banner said: “Earth to Inslee: Stop CAFTA.”
But Inslee’s district includes Microsoft, which likes the trade sanctions and other penalties CAFTA provides for those violating intellectual-property protections.
The pro-CAFTA campaign has been going on for months. Central American ambassadors gave impassioned speeches for it in Seattle and other cities. President Bush recently welcomed to the White House the presidents of the six CAFTA countries to support it. Three of the countries — El Salvador, Honduras and Guatemala — have ratified it.
But Democrats say the administration has largely excluded them from the blitz. “There are a number of us that are willing to support trade agreements,” says Baird. But the administration hasn’t asked for Democrats’ input. Instead, it is “placing us unnecessarily in a position where inclusion of some good elements are outweighed by some very bad elements.”
McDermott voted for NAFTA in 1993. But he says he is still undecided on CAFTA.
As the ranking Democrat on the Ways and Means Committee and a member of the trade subcommittee, “you have a responsibility to say, ‘I want to hear from all sides,’ ” he explains. “This is complicated stuff.”
Staying undecided, he says, also gives him political leverage.
“I was one of the last votes on NAFTA,” he said. “You have more influence if don’t declare. If you make your decision early, you become irrelevant to the process.”
Alwyn Scott 206-464-3392 or email@example.com