May 13, 2005

A Push for a Central American Trade Pact

By ELIZABETH BECKER

WASHINGTON, May 12 - President Bush tried to kick-start his campaign to win passage of a stalled free trade agreement on Thursday by welcoming the presidents of five Central American countries and the Dominican Republic to the White House.

Mr. Bush praised the economic pact with Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua as essential not only to expanding trade among free markets but also in strengthening democracy and security in the Western Hemisphere.

"Today a part of the world that was once characterized by oppression and military dictatorship now sees its future in free elections and free trade," said Mr. Bush, standing with the leaders.

The six countries, since the end of civil wars of the late 1970's and 1980's, have moved closer to the United States, with some sending troops to Iraq. In promoting the Central American Free Trade Agreement, or Cafta, the administration is underlining what it sees as its importance for national security.

Secretary of Defense Donald H. Rumsfeld told the Central American leaders at a meeting on Wednesday that he appreciated their military cooperation.

"Today, the threat to Central American and Caribbean security comes from an antisocial combination of gangs, drug traffickers, smugglers, hostage takers, and terrorists," Mr. Rumsfeld said. "It is increasingly clear that they can be effectively combated and are being combated only by close cooperation among nations."

The visit with the president on Thursday was the high point of a unusual weeklong lobbying effort by the nations' leaders who traveled around the United States and to Washington.

At the same time, the World Bank released a report prepared at the request of the United States and the countries, showing the benefits of the trade agreement for all signatories but warning that on its own Cafta "is unlikely to lead to substantial economic development."

According to the report, Cafta would increase the levels of trade and should promote greater levels of foreign and domestic investments. Especially attractive for foreign investors would be the changes in regulations covering trade in services, government procurement and intellectual property rights in Central American countries and the Dominican Republic. But to ensure substantial gains in development, the report said, these countries would have to make major investments in ports, roads and education.

Creating a free trade zone for textiles stretching from North Carolina through El Salvador is part of the allure of Cafta. Textile exports are larger now than the region's shipments of traditional products like coffee and sugar. This week the administration won support for Cafta from a United States textile trade association but it has failed to crack the opposition of the sugar industry.

Even with this top-level push, Cafta faces an uphill battle. The administration does not have the votes to pass the trade pact even though the agreement was signed a year ago.

Democrats say they want the administration to renegotiate the accord to include labor and environmental provisions, saying that workers need greater assurances that trade will not undercut them. Others said they want the administration to come up with a clearer vision of how the United States can be more competitive.

Some Democrats have questioned why the administration is putting such an emphasis on a trade deal with six small, mostly impoverished countries when the United States' major trade problems and disputes are with China, Europe and Japan.

The administration views such talk as protectionism and says Cafta will increase American exports of manufactured goods and agricultural products. The agreement would eventually eliminate or cut tariffs on American exports to the region while making permanent the tariff-free status of the Cafta countries.

Rob Portman, the new United States trade representative, said this week that the momentum in Congress was turning in favor of Cafta.

Democrats and some Republicans disagreed.

At a news conference on Thursday, Senator Byron L. Dorgan, Democrat of North Dakota, described the visit of the Cafta leaders as "unprecedented and desperate lobbying."

Pointing to the nation's record trade deficit, Mr. Dorgan said, "Cafta is where Congress draws the line on America's failed trade policies."

The A.F.L.-C.I.O. sent workers from the Cafta countries on a tour across the United States mirroring the one undertaken by the leadership. Using the slogan "Cafta We Don't Hafta," the workers said the trade deals would push down wages in the region and the United States.