Support Growing for CAFTA

Two large cotton groups announce support for trade pact with Central American nations. Compiled by staff

Published on: May 10, 2005

Up to this point, the cotton and sugar industry have brought the most opposition to the Central American Free Trade Agreement. But in recent days both the National Cotton Council and the National Council of Textile Organizations boards approved to support the trade pact.

The textile support may help bring several House and Senate members on board for CAFTA passage. Trade Ambassador Rob Portman commended NCTO for taking "a bold step in seizing the opportunity that this agreement provides to an industry that needs a boost."

"NCTO recognizes the strong and important ties between the domestic industry and the DR-CAFTA countries," says Allen Gant, chairman of NCTO. "The DR-CAFTA region is a very important part of the domestic industry's supply chain and we need this DR-CAFTA to ensure that the U.S. textile industry can remain competitive against China. The U.S. textile industry exported more than $5 billion a year in yarns, fabric and component parts to the region last year."

The NCC board adopted a resolution that urges Congress to endorse the current DR-CAFTA and recognizes that the "agreement should provide the United States the best opportunity for supplying apparel manufacturers and other end-use manufacturing industries in the western hemisphere" with U.S. cotton fiber and U.S.-produced cotton textile products. In addition, the resolution urges the Administration to continue to address the trade priorities of the U.S. cotton industry, including taking appropriate action regarding increased competition for U.S.-produced textiles.

U.S. raw cotton exports to DR-CAFTA countries in 2004 totaled more than 200,000 bales, accounting for more than 90 percent of raw cotton consumption in those countries. U.S. exports of yarn and fabric totaled more than 2.5 million bale equivalents of cotton textile products accounting for more than 50 percent of total U.S. cotton textile exports in 2004.

American Cotton Producer Chairman John Pucheu, a Tranquility, CA, cotton producer, notes that, "It has been the longstanding view that a good Western Hemisphere trade agreement is vitally important to the U.S. cotton and textile industries. Already, some 80% of the cotton consumed by U.S. mills depends on cut-and-sew operations outside the U.S., primarily in Central America and Mexico, and that dependence will continue to grow The DR-CAFTA agreement will certainly improve our competitiveness in the textile and apparel arena."

On Tuesday, Senate Finance Committee Chairman Chuck Grassley and other senators will participate in a briefing with Secretary of Agriculture Mike Johanns and members of the food, beverage and consumer products industry via the Grocery Manufacturers of America regarding the importance of the trade agreement for American agriculture and American businesses. The Senate Finance Committee has Senate jurisdiction over trade agreements.

The next step for Senate consideration of the United States-Central
America-Dominican Republic Free Trade Agreement is informal committee consideration of draft implementing legislation. A timetable for informal committee consideration of the draft implementing legislation has not yet been set.

The Dominican Republic Senate began consideration of CAFTA-DR on May 3. Having already achieved approval in El Salvador, Guatemala, and Honduras, the agreement still must be passed in Costa Rica, Nicaragua, and the United States, in addition to the Dominican Republic. The United States does not like approving a measure until all the other nations have passed the measure, to make sure U.S. interests are preserved.

This week leaders from all six CAFTA nations will be in D.C. meeting with top legislators on Wednesday and with President Bush on Thursday.