Dominican Republic-Central America-United States Free Trade Agreement Implementation Act

By:  Lindsey Graham
Date: June 30, 2005
Location: Washington, DC



Mr. GRAHAM. Mr. President, I thank Senator Baucus. Senator Baucus made some very telling points that I think we should all listen to in trying to get a game plan.

I rise today as a ``no'' vote to CAFTA. I do not think that surprises many people. The point I am trying to make with my vote is many of the things being said about the benefits of CAFTA are very true. I think it will help the Central American countries, the CAFTA nations that are trying to emerge as democracies in some regard. There will be some benefit to the economy. There is no doubt there is some benefit in any trade agreement. But my concern is of a geopolitical concern dealing with China.

The trade agreement we negotiated with Central America, the CAFTA agreement, has many loopholes that China will exploit, just as they have exploited every other trade agreement we have done. The cumulative effect of China on our trading situation throughout the world and our relationship is becoming devastating.

In April, the U.S. trade deficit was $62.2 billion. With China it grows $7.83 billion per month. Since we gave PNTR status to China in 2001, the trade deficit with China has gone from $100 billion to $162 billion. It is 47 percent greater this year than it was last year.

It has been devastating to the textile and other industries. During the first quarter of 2005, imports from China have grown 1,250 percent for cotton knit shirts and blouses, 1,500 percent for cotton trousers, and 300 percent for cotton and manmade underwear.

The bottom line is products coming in from China are not conforming with international trade regimes. They are not conforming with the standards we would like to see throughout the world.

The bottom line is they are cheap. They take advantage of trade agreements negotiated--NAFTA and eventually CAFTA--through transshipments. What is going to happen very clearly, to me, is Chinese companies will move into the CAFTA. They will take material made in China with slave-wage conditions, horrible conditions, throw a label on it as if it were made in CAFTA, and get it into our country in a way they could not do directly from China. It is called transshipment.

Particularly, this agreement is poorly drafted. It does not realize exactly with whom we are dealing. The combined effect of the CAFTA nations, in terms of a market for us, is the size of San Diego. So those who sell this agreement as a major way to create export opportunities for America I think are not realistic. If you took all the combined countries' economic buying power, it is the size of San Diego, and that is not going to fuel the American economy.

We are going to see goods from the CAFTA nations cheaper than we can produce here. It is going to have an effect on manufacturing in my State and other States that will be part of an overall trend that is getting to be more than we can bear.

China will take advantage of this. It has many loopholes for China. The rule of origin provisions requiring a yarn for arrangement is only for the essential fabric of the garment. What that means in English is we are trying to lock down the fabric and the yarn to be tied to our country, to give a benefit to our textile manufacturers, and that is a good thing. That helps us get into that market.

It does not deal with pockets, collars, and nonvisible jacket liners. They are exempt from that yarn for arrangement. There is a side deal having to do with pockets to address what will happen in my State. I have about 500 to 600 workers who make pockets for garments. The Chinese companies are going to put them out of business because the pockets to be made in a CAFTA nation are not going to come from South Carolina or other places in the United States. They are eventually going to come from China because the pocket agreement, trying to protect the pocket part of a garment, requires all six CAFTA countries to ratify it. That is just not realistic. It is not going to happen. So there are going to be people in my State, unfortunately, if this gets passed, who are going to be put out of a job because China is going to come into the CAFTA region and they are going to put American manufacturing, when it comes to textile goods with regard to pockets, out of business.

There are other loopholes. The single transformation provision allows for pajamas, boxer shorts, and bras to be imported into the U.S. duty free regardless of origin so long as they are assembled in a CAFTA country. In other words, you can have all the material made in China for these products and do the sewing in CAFTA, and they come into our country, and that is going to be devastating to Fruit of the Loom and other people who have come by to talk about it.

This agreement, like all other agreements I have voted for, except Australia, which I thought was a pretty good deal for America, has major loopholes within it to allow China to take advantage of it even though they are not party to it.

The problem we have with China and the way they manipulate their currency, the way they have no regard for intellectual property, the way they transship by cheating, sending goods from China into other regions of the world where we have existing trade agreements, is having a cumulative effect.

We have lost 21.6 percent of the manufacturing jobs in South Carolina in the last 5 years. Some of it is due to modernization. Some of it is due to factors beyond international trade. But a lot of it has to do with international trade that is not being fairly policed.

We have a 6.5-percent unemployment rate in South Carolina. We are fifth in the Nation. Our State has a manufacturing-based economy. The side deals that are being touted for people in this agreement are going to be like most other side deals when it comes to agreements in the last 15 years. Eighty-three percent of these agreements, according to a report by Public Citizen, a watchdog group, were not kept, reversed, or became meaningless.

So my concern about CAFTA is my concern about trade in general. Until we regulate and get buy-in by the Chinese to live within the family of nations when it comes to trading and doing business, every time we expand an area of trade, it becomes another portal for China to enter into our marketplace and to do things they could not do in a direct relationship with the United States.

They will be able to do things in the area of textiles in the CAFTA countries they could not do directly with the United States. It is just not going to be textiles. Eventually it is going to be other products.

The buying power of these nations, again, combined is the size of San Diego, but what will happen is the ability of China to exploit this agreement is going to be much larger than the buying power of San Diego.

I do believe that trade can help emerging democracies and that there is a logic to the idea the President is proposing for these emerging democracies for which we could create economic opportunity.

However, unfortunately, I believe the way this deal has been negotiated, the way it will be implemented, and the way it will be exploited is not going to improve the democracies in Central America because they are going to lose jobs to China eventually. It is going to hurt the manufacturing base of this country, which is already in jeopardy. That is why I will choose to vote no.

I yield the floor and I suggest the absence of a quorum.

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