Free Trade Slip-Sliding Away? Congress Becoming Protectionist over Trade Imbalances

Article excerpt

Byline: Tony Blankley, THE WASHINGTON TIMES

The Central American Free Trade Agreement (CAFTA), President Bush's modest little trade bill that would benefit the U.S. economy at least as much as Central America's, is edging toward defeat in Congress. It is a sign of the precarious political position of the entire post-World War II free-trade regime that such a bill might be unpassable in the capital of the world's pre-eminent free-trading nation.

If the American political system is driving even free-trade believing congressmen to vote "nyet" on CAFTA, it is "adios" to globalized trade and "welkommen" to protectionist principles of international economics. (I thought I would start using up my foreign vocabulary as there may soon be a glut in the market for foreign words of salutation.) The bill itself is a model of practical utility. It eliminates almost all the trade barriers between the United States and Central America (Costa Rica, El Salvador, Honduras, Dominican Republic, Guatemala and Nicaragua), America's second-largest Latin trading block after Mexico.

Because of NAFTA and the Caribbean Basin Initiative, our economy is already open (barrier-free) to most of Central America's likely imports to us. On the other hand, their economies will provide new export opportunities for American business and agriculture - which is why CAFTA is endorsed by most manufacturing and service-sector producers, as well as dozens of American farm organizations, such as fruit, pork, chicken and dairy producers.

Passage of the treaty by Congress would have the added political advantage of bringing some economic growth and stability (and competitive trade parity with Mexico, which under NAFTA already has more open trade relations with the United States) for a region that has been ripped by violent Communist revolution and violent right-wing counter-revolution for two decades. It is just now settling down to something resembling normal life for the long-suffering citizens of Central America.

The treaty is vigorously opposed by the American sugar producers, the textile industry and the normal assortment of anti-globalists of the left and right. The treaty would allow an extra 109,000 metric tons of imported sugar - which would bring sugar costs down slightly, but would not undermine the massive American sugar industry.

The textile industry is concerned that the new "rules of origin" would establish a bad precedent, as well as allow more foreign fabrics to be imported into the United States from Central America (although most economists point out that Central America is likely to continue importing our textiles for finishing work and re-importation into the United States for sale). …