Free Trade Agreement Creates Uncertainity in the Carolinas
Following a show-stopping appeal by President Bush for support of a new trade agreement with Central America and the Dominican Republic, industry and labor groups are scrambling to articulate their positions as US lawmakers try to figure out how to vote.
CAFTA, or the Central American Free Trade Agreement, was signed by Bush and the presidents of Costa Rica, Nicaragua, El Salvador, Honduras and Guatemala in May 2004 but the trade agreement has yet to be ratified by the US Congress. The Dominican Republic has also joined the original six countries in the trade pact.
Flanked by the presidents of the other six member countries, Bush made a pitch on May 12 for Congressional approval of the trade pact, which would eventually eliminate tariffs between the countries, strengthen intellectual property laws and limit regulations on investment.
‘“For the newly emerging democracies of Central America, CAFTA would bring new investment that means good jobs and higher standards for their workers,’” Bush said. ‘“By transforming our hemisphere into a powerful free trade area, we will promote democratic governance, human rights and economic liberty for everyone.’”
Members of the North Carolina congressional delegation are cautiously examining arguments on both sides, mindful that some of their constituents remain bitter over the legacy of the North American Free Trade Act, or NAFTA, a similar agreement concluded in 1993 between the United States, Canada and Mexico that is thought to have contributed to the devastation of the North Carolina textile industry.
CAFTA is unlikely to come up for a vote before June, said Ed McDonald, an aide to Rep. Howard Coble, a Republican who represents North Carolina’s 6th district. He said Coble, who is a co-chair of the Congressional Textile Caucus, wants to get more input from industry groups before he makes a decision, but would probably oppose the trade pact if a vote were taken today.
Rep. Mel Watt, chair of the Congressional Black Caucus and Democratic representative of the 12th district, also remains ambivalent.
‘“This is a more difficult evaluation for me than NAFTA was because the dynamic has changed so much in the last 12 years ‘— much of it because of NAFTA, but it’s changed nonetheless,’” Watt said. ‘“I’m still listening to all the arguments pro and con, trying to evaluate its impact on the 12th district and North Carolina. The textile people, the furniture people, Dell, FedEx, ambassadors from the countries, employees and labor organizations ‘— I will continue to hear from them as long as I continue to say I’m undecided.’”
Watt said representatives of Dell and FedEx ‘— companies that respectively plan to set up manufacturing and distribution facilities in the Triad ‘— have urged him to support CAFTA. They argue that there is little risk in their jobs being outsourced to Central America, Watt said, and that reducing trade barriers would allow them to export personal computers and handle packages with more ease.
Some representatives of the textile industry have urged Watt to oppose the agreement, arguing that it would lead to even more job losses in an already beleaguered industry.
‘“Others are making this argument that if you have the suppliers of the material in North Carolina and the cutters and sewers of the material in South America, that increases the likelihood that you’ll have a force that is effective against China,’” Watt said. ‘“That is the bad guy on the block, according to the arguments I’ve heard.’”
Spokespersons for Senators Elizabeth Dole and Richard Burr said May 13 that the two Republican legislators have not yet decided where they stand on CAFTA. Spokesman Doug Heye said Burr is talking to North Carolina textile producers and President Bush about the possibility of adding provisions to the trade agreement that would protect North Carolina textile jobs.
The Bush administration was cheered on May 9 when the National Council of Textile Organizations, described as the leading association of American textile producers, endorsed CAFTA. The council is chaired by Allen Gant Jr., CEO of Burlington-based Glen Raven Mills. Neither Gant nor the council’s president and vice president returned phone messages on May 13.
VF Corp., a Greensboro company known as the world’s leading jeans producer, is also lobbying for the passage of CAFTA, spokesman Tim Pittman has said. But some smaller textile companies do not share the enthusiasm of VF’s corporate leadership for the trade pact.
‘“It allows the multinationals and the apparel companies to outsource for cheap labor,’” said Charles Saunders, CEO of Saunders Thread Co. in Gastonia. ‘“All it’s going to do is take the remaining jobs in these industries and ship them to Central America.’”
Saunders’ factory produces industrial sewing thread for emergency protective wear, military flight suits and gloves, and other durable apparel items. He said he employs 39 people, down from about 100 in previous years. While he said he doesn’t believe CAFTA will adversely affect him personally, he objects to easing trade barriers as a matter of patriotic principle.
Saunders said his company pays $12 to $15 per hour and offers group health and retirement plans to its employees.
‘“It’s probably going to drive down the Central American wages, with these big companies moving in and setting up apparel factories,’” he said. ‘“I’m getting tired of the greed and Wal-Mart mentality of this country. I’m sick and tired of the US trade rep and all these politicians saying how well and good it’s going to be when we ship all the jobs overseas.’”
The trade agreement has prompted opposition in Central America as well. Ratification of CAFTA was met with violent street protests in Guatemala in March, according to news reports.
Activist groups in Central America oppose the trade pact on three grounds, said Stephanie Weinberg, a policy advisor for the international development and relief agency Oxfam America in Washington. CAFTA’s gradual elimination of tariffs would put small farmers in Central America out of business, its strict intellectual property rules would stifle the production of cheap generic drugs and make healthcare more expensive, and the agreement would prohibit governments from regulating speculative capital in the event of a financial crisis.
‘“We hear from the [Bush] administration that CAFTA is good for our hemisphere, and good for democracy, and good for security,’” she said. ‘“We think it’s precisely the opposite, that it could really undermine democracy and cause more social unrest.’”
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