Tuesday, June 19, 2007

CAFTA's Upshot More Political Than Economic

By Paul Blustein and Mike Allen
Washington Post Staff Writers

The grand debates about open markets, workers' rights and U.S. interests in the Western Hemisphere don't matter much anymore. Within days, and possibly hours, the Central American Free Trade Agreement is likely to face an exceedingly tight vote in the House, and its fate hangs on issues of less than cosmic import -- such as pockets and linings.

To a handful of Southern Republicans with textile mills in their districts, it is no small matter what sort of fabric is used in the interior portions of garments that would enter the U.S. market duty-free under CAFTA. So the Bush administration essentially promised this week that the fabric in such pockets and linings will be from the United States -- and that pledge won the support for CAFTA of at least five Republican lawmakers in the past two days

Cajoling, deal-cutting and browbeating were always in the cards for CAFTA because it is by far the most controversial trade agreement in years. While Congress easily approved recent pacts eliminating trade barriers between the United States and middle-income countries such as Australia and Singapore, the administration's proposal for a similar deal with six low-wage Latin American nations has drawn overwhelming rejection from House Democrats, mainly on the grounds that labor rights are inadequately protected in those countries. Several dozen Republicans, many of whom face hostility toward free trade in their districts, also are refusing to or are reluctant to cast pro-CAFTA votes.

Administration officials and House Republican leaders are scrambling to ensure that they are at least within striking distance of a one-vote majority when the roll call begins, on the assumption that a number of lawmakers from their party can be persuaded to vote yes if their support is essential. House members said yesterday that some of the incentives for votes are being hidden in huge energy and highway bills now in conference committees and that the full cost of those incentives will not be known until that legislation is later scrutinized.

Asked yesterday whether he had the CAFTA votes, House Speaker J. Dennis Hastert (R-Ill.) said: "Still working on it." But his office and that of House Majority Leader Tom DeLay (R-Tex.) said they plan to start debate on the treaty as soon as tonight, with a vote possibly tomorrow or Friday.

Although opponents hold out hope that they can defeat the treaty, they have increasingly acknowledged in recent days that the determination of the agreement's backers may be too much for them to overcome.

At an anti-CAFTA rally yesterday, Rep. Sherrod Brown (D-Ohio) cited a statement by Rep. Jim Kolbe (R-Ariz.) that the House leadership will "twist some Republican arms until they break in a thousand pieces." Brown also predicted: "This will be a vote in the middle of the night. They'll keep the vote open for several hours, in violation of the rules. If it passes, it will be by fewer than five votes."

Whether that scenario materializes or not, it highlights the stakes in the fight. CAFTA's economic ramifications are minor: The markets of the countries involved -- Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica and the Dominican Republic -- are too small to register more than a blip in the $11 trillion U.S. economy. But the political implications are huge.

A defeat would deal a major setback to President Bush's second-term agenda, exposing him as vulnerable to Republican defections at a time when his political clout has increasingly been called into question. It would also deepen doubts about the ability of DeLay, who has been hobbled by ethics charges, to keep his troops in line.

Congressional rejection of CAFTA could also severely diminish the chances for negotiating much more significant trade deals, in particular the ongoing Doha round of negotiations for a global accord among the World Trade Organization's 148 member countries. Foreign governments would be less willing to offer concessions to Washington if U.S. lawmakers balk at approving a trade pact with six small nations. For that reason, many free-traders are sympathetic with the administration's efforts to corral the last few CAFTA votes.

"These things like the deal on pockets and linings -- it's incredibly petty," said Claude E. Barfield, a trade specialist at the American Enterprise Institute. "But at this point, to have CAFTA go down now would really be a blow psychologically. The world economy would not change, but it would hurt other trade initiatives."

The pro-CAFTA forces hit a snag yesterday when House Democrats blocked a bill that would strengthen monitoring of China's trade practices and allow U.S. companies to seek duties on goods found to be receiving subsidies from the Chinese government. The bill was brought up under special rules that require a two-thirds vote, in accord with a promise by House leaders to Rep. Phil English (R-Pa.) and a few industrial-state allies in exchange for CAFTA support.

House leaders vowed to bring the bill up again today under normal rules.

"I don't think that will slow up the process," said U.S. Trade Representative Rob Portman. But, he said, "it's pretty much member-by-member now. We're building momentum one vote at a time."

CAFTA Reflects Democrats' Shift From Trade Bills

By Jonathan Weisman
Washington Post Staff Writer

Twelve years ago, amid heated rhetoric over job losses and heavy union pressure, the House passed the North American Free Trade Agreement with 102 Democratic votes. This month, as President Bush pushes the far less economically significant Central American Free Trade Agreement, he will be lucky to get more than 10.

A long, slow erosion of Democratic support for trade legislation in the House is turning into a rout, as Democrats who have never voted against trade deals vow to turn their backs on CAFTA. The sea change -- driven by redistricting, mounting partisanship and real questions about the results of a decade's worth of trade liberalization -- is creating a major headache for Bush and Republican leaders as they scramble to salvage their embattled trade agreement. A trade deal that passed the Senate last Thursday, 54 to 45, with 10 Democratic votes, could very well fail in the House this month.

But the Democrats' near-unanimous stand against CAFTA carries long-term risks for a party leadership struggling to regain the appearance of a moderate governing force, some Democrats acknowledge. A swing toward isolationism could reinforce voters' suspicions that the party is beholden to organized labor and is anti-business, while jeopardizing campaign contributions, especially from Wall Street.

Without control of the White House or either chamber of Congress, the "competition for the microphone" has intensified in the party, said Dave McCurdy, a former Democratic congressman from Oklahoma who heads the Electronic Industries Alliance. And the moderates are losing.

"It's difficult for Democrats to get through a message that we're pro-trade when we're voting no," said Rep. Benjamin L. Cardin (D-Md.), who plans to vote against a trade agreement for the first time in his nearly 20 years in the House. "That is a clear risk that we're running, but I don't think we have the opportunity to avoid it."

Cardin and other free-trade Democrats concede that many of the Democratic opponents are motivated by partisan politics: They want to see Bush lose a major legislative initiative or, at the very least, make Republicans from districts hit hard by international trade take a dangerous vote in favor of a deal their constituents oppose. Dozens of Republicans in districts dependent on the textile industry, the sugar growers or small manufacturers have already said they will vote against the bill. House Minority Leader Nancy Pelosi (Calif.) privately warned Democrats last month that a vote for CAFTA is a vote to stay in the minority.

"This is hardball," said Rep. James P. Moran Jr. of Virginia, one of only five Democrats publicly committed to voting for the agreement. "I feel like chopped liver with the [Democratic] caucus."

The four other committed Democrats are Reps. William J. Jefferson (La.), John S. Tanner (Tenn.)., Henry Cuellar (Tex.) and Norman D. Dicks (Wash.).

But a core group of as many as 50 pro-trade Democrats are voting against CAFTA; those lawmakers say the agreement is a step backward on labor standards after years of steady gains under previous trade accords.

They complain that the administration failed to consult them during negotiations, taking their votes for granted. And they say past trade agreements were accompanied by increased support for worker-retraining programs, education efforts and aid to dislocated workers -- support that the president has not provided.

"Free and open trade is an important component to widening the winner's circle for all Americans, but it's not a Johnny One Note part of the puzzle," said Rep. Ellen Tauscher (Calif.), a co-chairman of the centrist New Democrat Coalition, who voted for the most contentious trade bills of the past half-dozen years.

The steady erosion in Democratic support for free-trade deals has been dramatic. NAFTA, negotiated by President George H.W. Bush and pushed to a vote by President Bill Clinton, passed the House 234 to 200, with 102 Democratic votes. Among them were today's House Democratic leadership, Pelosi and Minority Whip Steny H. Hoyer (Md.).

When Clinton pushed permanent normalized trade relations with China in 2000, he secured the support of 73 Democrats, including the party's point man on trade, Rep. Sander M. Levin (Mich.). By 2002, the final vote to grant Bush the ability to negotiate "fast-track" trade deals that cannot be amended by Congress garnered 25 Democrats. The tally on CAFTA, expected after the Fourth of July recess if the White House can find the votes, could yield just 10 Democratic supporters.

The trade deal would create a NAFTA-like free-trade zone between the United States and six countries -- Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua -- that would wipe out most of the quotas and tariffs on imported goods and services. Those countries' economic power is tiny -- their combined gross domestic products are still smaller than the Czech Republic's -- but the deal has provoked big claims from both sides.

Proponents say CAFTA is especially beneficial to the United States, which has already eliminated most trade barriers with the countries. But opponents say the deal steps back from previous commitments to stronger environmental and labor standards, relying instead on existing statutes in CAFTA countries that are modest and weakly enforced.

Some textile firms fear that the deal will afford Chinese textile makers a backdoor avenue to export to the U.S. market duty-free, whereas U.S. sugar growers say even the modest export allowance to Central American sugar growers would undermine the existing price-support system and invite future trade deals to dismantle the system altogether.

Such fears are not new, but the political response to them -- especially from Democrats -- is unprecedented. That has pro-business Democrats worried. During the 1990s, party leaders used pro-trade positions to show moderate voters and business interests they are willing to stand up to their labor union backers and govern from the center, said Marshall Wittmann of the centrist Democratic Leadership Council. For fear of handing their GOP adversaries a short-term victory, he said, they are jeopardizing all that work.

"If the Democrats want to stay competitive on the national political stage, they can't retreat from global engagement," McCurdy agreed.

"I really believe our challenge is to be competitive and win in the world economy, and it's hard to assume national leadership if you have a protectionist bent," said Al From, the Leadership Council's chief executive.

Administration officials are inoculating themselves against Democratic attacks with a letter from former president Jimmy Carter imploring support for CAFTA. "Some improvements could be made in the trade bill, particularly on the labor protection side," Carter wrote, "but, more importantly, our own national security and hemispheric influence will be enhanced" by passage.

Other Democratic supporters include a who's who list from the Clinton administration, including former national security adviser Samuel R. "Sandy" Berger and Cabinet members Warren M. Christopher, Henry G. Cisneros, Dan Glickman, William J. Perry and Donna E. Shalala, not to mention the presidents of the CAFTA countries.

"We have to listen to our neighbors who say this is important to them," Jefferson said. "We've had five presidents come to plead with us to do this for them."

Perhaps more troubling may be the business interests that have promised to withhold support for CAFTA opponents. Two business lobbyists -- one Republican, one Democrat -- said some corporate groups will be sympathetic to the Democrats' position.

In a highly charged partisan atmosphere, Republicans intentionally marginalized free-trade Democrats during negotiations and then presented them with a take-it-or-leave it deal, goading them to oppose it, said the lobbyists, who spoke on the condition of anonymity to avoid harming relationships on Capitol Hill. They contend that the Republicans set the trap into which the New Democrats are walking.

But many other business groups with strong ties to the GOP will see the shift on trade as confirmation of their suspicions about New Democrats' business commitments, the Democratic lobbyist said. What little was left of business contributions to Democrats will dwindle further.

"For some business groups, it's 'Aha. See? I told you,' " he said.

Free trade in 2005: subsidies for the richest, tariffs for the poorest

African sugar workers may be happy with their lot, but the idustry is one of many endangered by Western protectionism

SWEAT trickles down Paulo Zunguze’s face, cutting channels through a cover of charcoal dust. The sugar cane cutter is tired but eager to press on. “It’s good to have a job,” he says with a broad smile. “I came here a year ago because things were not good at my place — no work, no food, only fish to eat sometimes.”

It is early in the day but already the sugar cane fields of the Maragra plantation — the country’s largest — are hot and sultry. Black clouds of smoke from fires burning unwanted foliage drift over the fields as workers move through tall, swaying swaths of ripe green sugar cane, swinging long, wooden-handled metal cutters.

To earn £1.60 a day each, Paulo and five members of his team must clear at least six tonnes. It is seasonal and irregular work but quickly translates into food, basic education and health for families in a country ranked among the five poorest in the world.

“It is hard work but worth it,” Paulo, 24, who used to be a river fisherman, said. “Sugar has changed my life. Now I can pay for many things (which) before I only dreamt of.”

With the support of Western governments, Mozambique rehabilitated its sugar industry at the end of the civil war in 1992. About £190 million was invested in new plants, production and infrastructure.

Today it produces some of the cheapest sugar — between £60 and £80 a tonne. By comparison it costs Europe about £320 to produce one tonne.

Yet Mozambique’s sugar industry is in danger. The reason is the European Union’s highly protectionist Common Agricultural Policy, which hits the country’s sugar producers from three directions simultaneously. The CAP subsidises European producers of the much more costly sugar beet by £550 million a year. Much of this goes to companies such as Tate & Lyle in Britain, which alone is estimated to receive £120 million a year. The CAP places import tariffs of more than 200 per cent on cane products from non-EU countries, making it even more difficult for dirt-poor producers such as Ethiopia, Malawi, Zambia and Mozambique to take advantage of low wage costs.

And the CAP’s price-support system leads to over-production. As a result roughly five million tonnes of European sugar are dumped on the world market annually, driving prices downwards.

“Because of dumping, the weighted average price per tonne on the world market is now below even our cost of production. No one can compete with those prices,” says Tony Currie, a South African manager of the Maragra estate, a joint government-private sector venture of exactly the sort that is recommended by modern development gurus.

The situation may be about to get worse. To head off criticism of the subsidy system, which had gone unreformed for four decades, the EU agreed in 2001 to buy a tiny amount of sugar from the world’s poorest countries at preferential rates.

It said that the system would be reviewed in 2009. The total amount represented only four days of EU consumption but it gave Mozambique and other countries some price security.

Now, under mounting external and internal pressure to cut the costs of the system, the EU wants to slash those prices by about 40 per cent, meaning that countries such as Mozambique will receive even less income from their sugar. Luke Simbane, a team manager at Maragra, said: “They want to change rules which we had no say in making. They want to cut our throats again and make us pay hardest for their reforms. But we are still poor, they are rich.”

Next month’s G8 summit at Gleneagles will discuss ways of helping Africa. It will agree a debt-relief package worth £22 billion, and a new aid package, but one of the biggest obstacles to economic progress in Africa is the protectionism that prevents its farmers selling their products to the West. The United States, which pays millions of dollars to its cotton farmers each year, is as much a culprit as the EU. Rich countries are believed to spend as much as £560 million a day on agricultural subsidies — a huge barrier preventing even the most free-market-orientated developing country from trading its way out of poverty. Across Africa, from Zambia to Mali, it is the same story whether the produce is cotton or rice, tomatoes or fruit.

In Ghana, dumped American rice has had a devastating effect on producers. In markets outside the capital, Accra, local traders sit behind piles of unsold rice, unable to compete with subsidies that give the American farmer back 72 cents for every dollar laid out.

Cotton producers fare even worse across West Africa. Small family farms in Benin, Mali, Burkina Faso, Chad and Togo are unable to compete with $3.2 billion (£1.8 billion) in annual subsidies to American growers, a vast proportion of which goes to 27 plantations in the southern states.

Overall, the charity Oxfam calculates direct losses to West Africa as a result of combined EU and US cotton subsidies at £140 million a year, and accuses industrialised nations that preach free trade of lacking the stomach to take on farm lobbies and the vested interests of the agri-business world.

Amy Barry, of Oxfam, said: “Protectionism is the problem. Aid and debt relief are fine if they are part of a concerted policy with trade reform, otherwise it risks being wasted money. Aid and debt relief can be used to help countries like Mozambique put in the infrastructure to be able to take advantage of improved trade. If you do not manage the world trading system better, you jeopardise all that at a stroke.”

Oxfam estimates that if Africa could boost its share of world trade by 1 per cent it would result in extra funds of about £40 billion annually.

“It is a classic case of the left hand and right hand not working together. What we need is trade not aid,” Mr Currie, of the Maragra estate, said.

For Rabeca Avore Mandleia, 47, a mother of four who lost her husband in the civil war that followed Mozambique’s independence in 1975, life without her job scattering fertiliser on newly planted sugar cane is unimaginable.

“We had nothing for the family before we came here. I am alone now, but all my children go to the school,” she said.

“If sugar goes, we will return to poverty.”

For CAFTA, Party Pressure and Pork

By Jonathan Weisman
Washington Post Staff Writer

Earlier this month, at a closed-door meeting of Democrats, House Minority Leader Nancy Pelosi (Calif.) was blunt: Any Democrat who votes for the Central American Free Trade Agreement will allow an embattled Republican to squirm off the hook and vote no. A vote for CAFTA, she said, was a vote to keep the GOP in the majority.

It was a speech that was tough enough to make the party's free-traders cringe, said Rep. James P. Moran Jr. (D-Va.), but both parties are treating the coming showdown over CAFTA like a political donnybrook. Democratic leaders are leaning hard on members to keep defections to a tiny minority, while the Bush administration considers major concessions on sugar crop subsidies and China trade.

If those don't work, administration officials may have to resort to old-fashioned political pork. "With the Democrats almost united, we have to deal with the most protectionist Republicans in Congress, and that means [dealing with] textiles, sugar and whoever else comes along," said one U.S. trade official, who spoke on condition of anonymity because negotiations are ongoing. "If you take 170 Democrats off the playing field, it means we're going to have to cut some deals."

"An awful lot is stake here, and control of Congress is the grand prize," said Moran, one of only five Democrats who have publicly pledged to vote for the treaty. "The stakes are very, very high."

From an economic standpoint, the Central American Free Trade Agreement appears to be a relatively minor treaty. The accord would extend NAFTA-like trading preferences to El Salvador, Guatemala, Honduras, Nicaragua, Costa Rica and the Dominican Republic, six countries whose combined economies -- at $85 billion in 2003 -- are smaller than the Czech Republic's.

But with a growing backlash against free trade, the treaty has grown in political importance. Republican Rep. Bob Inglis, whose upstate South Carolina district includes much of the nation's decimated textile industry, said he has received more than 1,000 inquiries on CAFTA, making it the hottest issue since he returned to Congress this year.

In past trade agreements, dozens of Democrats have joined Republican majorities to help secure passage. But this time, as few as 10 may vote for it. That means Republicans from hard-hit districts representing textile mills, machine-tool manufacturers and sugar growers will have to vote yes if President Bush is to avoid a major political defeat.

"What's different is how much this has become a party-line issue for the Democrats, which has really raised the pressure on Republicans," said Rep. Peter T. King (R-N.Y.).

Administration officials had hoped to win passage of the treaty before Congress's July 4 recess, but they acknowledge they do not have the votes -- yet. Indeed, Rep. Walter B. Jones Jr. (R-N.C.) said between 20 and 23 House Republicans are solidly against the treaty.

But the White House is working hard to chip away at the opposition on both sides of the aisle. On June 15, in a letter to 14 members of the House Democratic Hispanic Caucus, Commerce Secretary Carlos M. Gutierrez tried to answer concerns over the enforcement of labor laws in the CAFTA countries, offering "a long-term, sustained commitment to labor capacity-building" in Central America as well as an international donors conference before the end of July to win aid to the countries' labor ministries and labor courts.

A U.S. trade official, speaking on condition of anonymity because negotiations are ongoing, said the White House has secured $20 million to beef up enforcement of labor and environmental laws in the CAFTA countries.

Sugar-state lawmakers late last week presented the White House with a series of demands drafted by the sugar industry to assuage concerns that the treaty would undermine the U.S. system of sugar price supports. They include government purchases of surplus U.S. sugar to make up for new imports from Central America and assurances that sugar will be excluded from future trade deals.

And yesterday, Bush invited 14 wavering House members to the White House to listen to their demands. Inglis told Bush he could vote for the treaty only if a separate, binding agreement is reached with each of the signatories to ensure that cheap Chinese textiles could not be brought into Central America, then shipped duty-free to the United States. Rep. Steven C. LaTourette (R-Ohio) said Bush is unlikely to win him over, but he wanted to hear how far the White House is willing to go to force China to float its currency.

Such overtures have some leading Democrats convinced CAFTA will ultimately pass, perhaps by a single vote. Rep. Charles B. Rangel (N.Y.), the ranking Democrat on the House Ways and Means Committee, which has jurisdiction over trade, said he has not been swayed by a personal visit from Secretary of State Condoleezza Rice and an audience with the president. But, he said, others probably will be.

"I always had thought it would be impossible to pass this thing because of the hemorrhaging of Republican votes," he said, "but that was before I saw what they were doing to get Democratic votes. If there's no limit to what they'll pay, they've got to win."

So far, trade officials concede such talks have yielded only limited results. After one conversation with Bush and three with Gutierrez, Rep. Henry Cuellar (D-Tex.) said he has been won over.

"I am interested in doing the right thing, not in making one political party look bad," Cuellar said. "We cannot politicize this type of agreement."

But Democratic leaders aren't about to bend. House Democratic Caucus Chairman Robert Menendez (N.J.) said the White House cannot cut development assistance to Latin America and allow congressional Republicans to pass anti-immigrant measures, such as the recent clampdown on driver's license issuances, then come to Latino lawmakers promising aid in exchange for their votes.

"I make of it all to be hollow promises, too little, too late and, to be honest with you, incredibly offensive," he said.

Central American Labor Pact Stirs Strong Emotions

By Krissah Williams and Paul Blustein
Washington Post Staff Writers

GUATEMALA CITY -- For 18 years, Sara Adela Rosales sat behind a small, black sewing machine in a factory here piecing together pants. Six days a week, she carefully sewed seams and hems and passed the trousers down an assembly line of about 25 other women. The factory she worked for, Automatizaciónes Industriales, then shipped the garments to their clients, mostly U.S. retailers.

Rosales, 62, said she often earned about $150 a month, less than the country's minimum wage, and was sometimes forced to work 12-hour days without full compensation. After losing her job recently, she was left with no savings, hundreds of dollars of unpaid property taxes and no hope of getting out of debt.

"For all the work we did, the salary wasn't fair," Rosales said. "They had us work sometimes into the night if they needed us to increase production. Sometimes they would pay us more, but it is what they wanted to pay. They aren't going to lose [money]. The worker loses."

Complaints by Rosales and other central American workers about abusive labor practices lie at the crux of the debate over the Central American Free Trade Agreement, an accord that would sharply reduce and in many cases eliminate trade barriers between the United States, five Central American countries and the Dominican Republic. While other recently-negotiated trade agreements with countries such as Australia, Singapore and Chile moved smoothly through Congress, CAFTA faces an uphill fight.

Sitting in her sparse cement home in a town on the outskirts of the capital here, Rosales, like many other Central American workers, has found herself intertwined in an intense trade debate with great political implications. CAFTA was negotiated with poor countries that have dismal histories of worker treatment. The pact's critics say it does not sufficiently protect the rights of workers like Rosales and as a result would provide incentives for companies to migrate to countries with the lowest wages and weakest unions. Its backers counter that by giving Central America assured access to U.S. market, workers such as Rosales would be more likely to have jobs. Rosales is also torn.

"There are advantages and disadvantages," she said of her factory job and the trade agreement that could create more such employment. The textile factory she worked for became one of 20 in Guatemala to shut down in recent months. It went broke because it could not compete with factories in other parts of the world where people work equally grueling schedules for even less.

Out of work for nearly six months now, Rosales believes more employment is what her country needs. Working at the factory helped Rosales leave an impoverished country town in the mountains outside of Guatemala City and build a life in a simple home with a corrugated roof, electricity and an eight-inch television in her bedroom. Outside her door are similar square homes with metal doors that belong mostly to others who work in the factories surrounding Villa Nueva, a town with paved streets and fast-food restaurants that grew because of the apparel industry.

Rosales also believes, however, that she and other garment manufacturers should be paid more. The average pay for manufacturing-sector workers in Guatemala was about $244 a month in 2002, according to the International Labor Organization's latest report.

Never before has the United States negotiated a free-trade deal with countries so poor. The nations that have struck free-trade agreements with Washington in recent years come mostly from the "middle income" or wealthy ranks. Even Mexico had income per capita of about $4,200 when NAFTA, the North American Free Trade Agreement, was negotiated in the early 1990s, said Sandra Polaski, a trade specialist at the Carnegie Endowment for International Peace. By contrast, income per capita in Nicaragua is about $400, while the comparable figure in Honduras is about $900, slightly less than levels in El Salvador in Guatemala.

Union leaders and labor activists here say their efforts to organize workers are often thwarted by powerful business owners. Union affiliates are sometimes threatened or fired and have their names placed on blacklists that make it difficult for them to find other jobs.

"The right that seems to be violated most often is the freedom to associate and organize," said Mary Bellman, a Guatemala-based coordinator for Stitch, a women's labor rights organization. "All of the repercussions and the ways companies respond are almost always illegal. The implementation of local labor law is so poor."

The region has a long record of hostility to unions. Last year a U.S. union official organizing workers in El Salvador was killed. No independent trade unions have been registered there in the past four years, said Mark Levinson, chief economist of Unite Here, a union representing U.S. workers in the apparel and other industries. In Guatemala, two collective-bargaining agreements exist in the country's more than 200 textile factories.

The most recent textile factory organizing campaign in Guatemala ended earlier this month after the factory closed. Nobland, a South Korean-owned company that opened here in 2001, cited continuing economic losses for the factory's closure. Leaders of the union at Nobland and labor activists say they believe the goal was to squelch the union.

Vidalia Garcia, secretary general of the union, wiped tears from her red eyes after a distraught worker called her at the union's office earlier this month to tell her the factory was closing. "What are we going to do?" she said softly.

About 350 people lost their jobs, more than 100 of them were union affiliates, she said.

"Here in Guatemala there isn't much work. It's a critical situation. Because we're union members, we're on a blacklist and can't enter other factories," Garcia said. "If you defend your rights, they try to fire you or throw pieces of fabric in your face."

Keith Kim, owner of the factory, said in an e-mail that the union's demands for double-digit salary increases and the letters and e-mails they sent to his customers asking them to stop doing business with him influenced his decision to close Nobland, but the primary cause was lack of profitability.

"Guatemala was just not competitive for our products after the world became quota-free this year," he wrote. "We have been getting less and less work for our factory in Guatemala and finally we did not have any work to put in there."

Stephen Coats, executive director of U.S./Labor Education in the Americas Project, which has a representative in Guatemala, said CAFTA will make it more difficult for the U.S. government to prod the Guatemalan government to investigate closures such as Nobland. Coats's group and others have used current laws governing trade with Central American countries to request that the United States withdraw trade benefits from Guatemala. The Generalized System of Preferences and Caribbean Basin Trade Partnership Act allows the U.S. government to rescind trade benefits from any country that is falling short in meeting its labor commitments. One appeal filed in 1992 prompted the United States to put Guatemala under review because of violence against workers there. That review ended in 1997.

Under CAFTA, the governments of Central America and the Dominican Republic would be required to enforce the labor laws on their books, and if a government is found to be derelict in enforcing its laws, that government could be subject to monetary fines, up to $15 million per violation, with the money used to help address the labor problem in question. The Bush administration contends that these protections go beyond those contained in previous U.S. trade deals with other countries. Administration critics disagree.

The Central American governments have released action plans aimed at improving their labor law enforcement, including blueprints for strengthening their labor ministries and judiciaries. U.S. Trade Representative Rob Portman, in a bid to win over skeptics, pledged in a speech earlier this month that the Bush administration will beef up efforts to help Central American governments meet those goals, and he suggested that an international donor conference should be held in coming weeks to raise money for that purpose.

Beyond the debate about whether CAFTA's labor provisions are tough enough, proponents say the main point is that by generating economic growth, CAFTA will do more for workers in Central America and the Dominican Republic than any law or regulation could achieve. That is because worker rights are more likely to be strengthened when demand for labor is strong, thereby giving workers bargaining power.

Alejandro Ceballos, lawyer for Polar Industries, one of Guatemala's largest textile factories, said CAFTA could be key to his industry's survival. The accord has won the endorsement of key congressional committees, and the White House hopes for a vote before the July 4 recess.

In the first six months of this year, twice as many factories have closed there than closed in all of 2004. They could not survive the competition with China, a low-cost, highly efficient producer, according to Guatemala's apparel industry association. Thousands may have already lost their jobs.

CAFTA is going to force Guatemalan textile companies with poor labor practices "to become formal businesses and to comply with the law and requirements," Ceballos said. "Today, not all of the companies are following the law. But when Wal-Mart comes and demands that they must obey the law, then yes, they'll obey the law."

Blustein reported from Washington. Staff researcher Richard Drezen contributed to this report.