Emad Mekay

WASHINGTON, Jul 1 2005 (IPS) — A controversial trade deal between the United States and six Latin American nations cleared a major hurdle late on Thursday when the U.S. Senate passed the agreement against opposition from labour groups, environmentalists and anti-poverty campaigners.

The deal, one of the most divisive proposed by the White House since Pres. George W. Bush took office in 2001, will have to pass its final crucial test in July when it comes to a vote on the floor of the House of Representatives, the lower chamber of the U.S. Congress.

The trade agreement with Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua and a linked pact with the Dominican Republic was completed a year ago but has met stiff opposition because of what many say is its negative impact on both the U.S. workers and some sectors of the economy, and the potential it could further impoverish the Latin American nations.

Still, the Senate approved the Central American-Dominican Republic Free Trade Agreement (CAFTA-DR) by 54 to 45 votes, prompting applause from proponents of the deal.

"I appreciate the bipartisan support in the United States Senate for the CAFTA-DR agreement, which is good for American workers, good for our farmers, and good for small businesses," Pres. Bush said in a statement Thursday evening.

Advocates of the deal say that it will eliminate trade barriers immediately on 80 percent of U.S.-made goods and 50 percent of agricultural products, and the rest within a few years. This, they say, will boost U.S. sales abroad and job creation at home as it opens a market of 44 million consumers.

"This agreement will create American jobs, lower the (617-billion-dollar) trade deficit, help us win the textile war against China, and provide security and stability in our hemisphere," said Congressman Kevin Brady, a Republican from Texas, who as a member of the Trade Subcommittee has been spearheading Congressional support for the agreement for the last two years

The White House argues that the agreement is also a boost for "young democracies" in the Western hemisphere, whose success is important for U.S. national security and for reducing illegal immigration.

"While the momentum for CAFTA-DR is clearly building, and we’re drawing more and more support from all sides, the debate will continue when the House returns after the July 4th recess," said U.S. Trade Representative Rob Portman.

CAFTA critics, who include powerful labour groups, say that the Senate failed to address the main defects of the pact. They also point out that the deal passed by one of the slimmest margins of any trade vote in recent Senate history and vowed to continue to fight it.

Advocates for labour protections have been infuriated by what they say are a lack of protections in the deal.

"America’s working families want fair trade that lifts living and workplace standards in the U.S. and in Central America, not another give away to giant corporations that will sell out America’s jobs while accelerating the deterioration of wages and working conditions in Central America," said John Sweeney, president of the AFL-CIO, a federation of unions representing more than 13 million workers.

"CAFTA is a step back on protecting the rights of workers and represents a dangerous precedent for future deals," he said.

The administration responds that the pact’s labour and environmental provisions meet guidelines set by Congress in 2002 and are as strong as those in free trade pacts with Morocco and Jordan.

Another coalition that is working to bring down CAFTA has vowed to oppose it in the U.S. House, home to some its harshest critics.

"We’ve always known that the real battle would be in the House," said Tom Ricker of the Quizote Center, a faith-based social advocacy group. "The Senate vote was expected. Certainly we are disappointed but we will continue to work against the passage of the accord in the House."

Theses groups point to recent press revelations that reports on CAFTA’s negative impact on workers were suppressed by the U.S. Labour Department.

Civil society groups fault the deal on another count. They say that under CAFTA’s provisions on intellectual property rights, it will be nearly impossible for Central American governments to make affordable medicines available to their people.

"Drug costs will increase under CAFTA resulting in life saving drugs being priced out of reach of many Central Americans, most of whom pay for medicine out of pocket," said Healy Thompson of Student Global AIDS Campaign.

Opponents say that beginning Jul. 11, when Congress reconvenes, they will have a permanent presence lasting until Jul. 28 on Capitol Hill.

Environmentalists have also assailed the deal. They say that like the North American Free Trade Agreement (NAFTA), which covers the United states, Canada and Mexico, CAFTA will expand the ability of multinational corporations to fight legitimate environmental and public health measures in secret trade tribunals if they interfere with profits.

While its supporters say NAFTA has created jobs in Mexico, foes argue that after 10 years, it has not improved the lives of millions of poor people there and also has cost the jobs of thousands of workers in Canada and the United States.

"We want trade agreements that open new markets while raising environmental standards and safeguarding our precious natural resources," said Brent Blackwelder, president of Friends of the Earth. "Unfortunately, CAFTA puts special interests before the public interest, and we will be fighting to ensure that the House defeats it."

Those groups say that contrary to the administration’s claims, the deal exemplifies a model of trade that exploits both human and environmental resources and that will result in increased poverty, displacement and ecological destruction.

However, business groups are also stepping up their lobbying in support of the pact.

"We will now further intensify our efforts to support approval of the DR-CAFTA by the U.S. House of Representatives, starting with work in districts throughout the United States during the July 4th district work period," said Calman Cohen of the Business Coalition, a business lobbying group.

"Given the commercial, economic and broader hemispheric importance of this Free Trade Agreement, we cannot afford further delays," he said.