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DR-CAFTA: NAFTA's ugly stepsister?

A trade deal to erase tariffs between the United States and the Dominican Republic as well as Central America is in trouble, hurt by comparisons to NAFTA.

By DAVID ADAMS
Published April 11, 2005

MIAMI - Florida business leaders who have long advocated free trade with Latin America as the key to the state's economic future are gearing up for what may be a decisive battle.

But victory is far from assured.

The trade agreement that would erase tariffs between the United States and the Dominican Republic as well as Central America, opening the prospect of a vast exchange of crops and goods, once seemed to be the inevitable next step after NAFTA.

But now, a mix of influences has President Bush contemplating a losing fight for congressional approval. The problem is that the agreement's heavy tilt toward agriculture has cost DR-CAFTA, as it is known, some key GOP votes, including those of several Floridians. In addition, this latest free-trade proposal seems to be more harmed than helped by the record of the North American Free Trade Agreement, which opened economic borders between the United States, Mexico and Canada in 1994.

Influential business leaders across Florida who favor the agreement are so alarmed they are warning that the free trade movement could be brought to a grinding halt. If that happens, Florida could be in danger of losing a key export market for its products, they warn.

"We have a lot riding on this," said Jorge L. Arrizurieta, president of Florida FTAA Inc., a nonprofit partnership between the state and private business that is at the forefront of promoting free trade with Latin America.

Arrizurieta rallied Florida business groups on Capitol Hill last week to push for passage of DR-CAFTA.

"If Florida doesn't send a strong message, and DR-CAFTA isn't passed, the free trade movement is effectively stalled," he said. "We won't have any moral authority if our numbers aren't there."

Free trade with Latin America is not just an issue limited to the strategic position enjoyed by South Florida, according Robert Abberger, who heads the international committee of the Greater Tampa Chamber of Commerce.

"It's critically important to the bay area," he said, noting that the port of Tampa handles the largest volume of trade with the DR-CAFTA members, mostly bulk cargo including phosphate-based chemicals that are exported and gypsum rock that is imported.

He echoed Arrizurieta's "call to action," saying that if DR-CAFTA dies it would doom negotiations to create a much-vaunted Free Trade Area of the Americas (FTAA), uniting 34 nations in the largest trading block in the world.

Since it was signed at a hemispheric meeting of heads of state in 1994, the FTAA has long been considered one of the state's principal economic goals. The state created FTAA Florida Inc. in 1998 to promote a bid by Miami to become the headquarters of a future FTAA secretariat. The governor sits on the FTAA Florida board, and the state Legislature funds about half of its $1.3-million budget.

FTAA Florida was so confident of its bid, an architectural rendering of the new FTAA headquarters was drawn up. Last year, state officials went as far as trademarking Miami's self-declared title as the "Gateway of the Americas' with the U.S. Patent and Trademark Office.

But the early hype has vanished. Business leaders recognize that free trade faces an uphill battle. Besides opposition from labor and environmental groups in Florida, DR-CAFTA also faces a fierce challenge from the powerful sugar industry.

Though DR-CAFTA was signed by country leaders in May last year, the Bush administration has delayed sending a bill to ratify it in Congress. Under special fast-track authority, the White House can speedily push through trade agreements, bypassing often lengthy committee proceedings that would try to amend the agreement.

"They haven't pulled the trigger because they don't want the embarrassment of losing," said Lori Wallach, a former trade lawyer and DR-CAFTA opponent who is director of Public Citizen Global Trade Watch. "There's never been a situation where an agreement has sat around this long."

Analysts say the blame lies with the poor track record of DR-CAFTA's big brother. NAFTA, which took effect more than a decade ago.

"It's very hard to make a case that NAFTA has had any benefits," said Mark Weisbrot, an economist at the Center for Economic Policy and Research in Washington, which is critical of U.S. trade deals.

Indeed, it's hard to pin down conclusive data on NAFTA's effect. Business interests highlight increased cross-border trade and a boom in the garment assembly industry in Mexico. But grass-roots activists stress job losses in the United States. Tomato and pepper farmers in Hillsborough County were among those hardest hit.

Whatever the truth, most agree there is a widespread perception that NAFTA has failed to live up to expectations. As a result, new agreements are met with less enthusiasm.

Several key Hispanic groups who backed NAFTA in the '90s are opposed to DR-CAFTA or have declined to support it.

"These agreements are a very hard sell," Weisbrot said. "They are incredibly unpopular."

Even so, the Bush administration says it intends to proceed as early as late May. "Over the next few months, one of our trade priorities will be the free trade agreement with Central America and the Dominican Republic," Commerce Secretary Carlos Gutierrez said at a March 30 board meeting of the National Association of Manufacturers in Miami-Dade County.

But it remains doubtful that the deal has the votes in Congress. A number of Republican members have broken ranks with the White House, including Rep. Ginny Brown-Waite of Crystal River and Rep. Mark Foley of West Palm Beach.

"There's no question that members remain concerned over the impact of NAFTA," Foley said after a committee hearing attended by Central American trade and labor ministers Thursday. "It's one of those steep inclines for the administration to climb."

Even so, the battle in Congress is just getting started, and there is time for compromise.

"There's maybe some tweaking that could be done" to make it more palatable for Floridians, said Foley, who represents a heavy sugar-growing constituency. "We'd like to be helpful. If they took sugar off the table, it would certainly help."

On the other hand, Democrat Rep. Jim Davis of Tampa says he is inclined to support free trade with Latin America. DR-CAFTA presents "important business opportunities" for Tampa Bay. "It's important to have ties with these countries," he said.

It is vehemently opposed by a statewide coalition of farm worker, labor, environmental and church groups. Labor activists say the deal fails to offer protection to workers in countries where workers rights are not enforced. Cheap U.S. exports could wipe out Central American farmers, raising unemployment and migration.

"Our opposition is based on the human factor and the practical effects of NAFTA," said Eric Rubin, state coordinator for the St. Petersburg-based Florida Fair Trade Coalition. The coalition has campaigned statewide via hundreds of thousands of mailings and weekly speaking engagements.

Rubin says DR-CAFTA enjoys little public support. "It's only a small and powerful segment of the business community that back it."

Opening up the United States to foreign sugar could cost thousands of jobs and lost revenue, the sugar industry adds. "There's a lot of people (who) feel gouged about this and are willing to go to war," said Robert Coker, spokesman for U.S. Sugar in Clewiston.

Backers of DR-CAFTA say its potential benefits far outweigh the negative criticism. Within 10 years, it is estimated 36,000 jobs will be created in Florida, generating $1.2-billion in personal income, according to the U.S. Chamber of Commerce. The state's economic output is predicted to grow by $5.1-billion within nine years.

If DR-CAFTA is not passed, the consequences will be dire, supporters say.

"I think Floridians have cause to worry," said Abberger, head of Florida operations for the commercial real estate firm Trammel Crow. Unless Florida cements its trade relationship with DR-CAFTA countries, "we'll lose jobs as China and other countries take over these markets," he said.

The DR-CAFTA countries collectively make up the world's largest market for Florida exports, accounting for 20 percent of the state's cargo trade. Some 55 percent of U.S. trade with Central America, plus 45 percent of Caribbean trade, moves through Florida ports.

If DR-CAFTA is passed, trade with those countries at the Port of Tampa is calculated to double over the next 10 years, according to the U.S. Chamber of Commerce study. Exports are dominated by fertilizers. Companies in the Tampa Bay area also conduct trade through other ports in a wide variety of goods, from automobiles to frozen poultry and fishing nets.

But Abberger admits that backers of DR-CAFTA have had a hard time drumming up support. Opponents of free trade have been more effective in getting their message across to elected representatives. "In our conversations, they tell us they hear 20 negative voices for every positive one," he said.

Free trade also faces other, larger political hurdles. FTAA negotiations are way behind schedule and snarled in seemingly intractable differences. South American countries with large agricultural interests, such as Brazil and Argentina, are demanding the United States do away with protectionist farm subsidies.

The rallying cry of Florida's business leaders for free trade may be a case of too little, too late.

"It just shows you how out of touch they are with this thing," said John Price, president of Infoamericas, a Miami market research firm. "FTAA has been dead for more than a year."

David Adams can be reached at dadams@sptimes.com

[Last modified April 9, 2005, 07:10:29]