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

Location: Washington, DC



Mr. DEMINT. Mr. President, I rise to speak in favor of S. 1307, the CAFTA Implementation Act, because it advances America's economic and security interests. As someone who spent over 20 years in business before entering public service, I continue to be amazed by those in Washington who support outdated policies that make it harder and harder for American businesses to compete. Excessive taxation, regulation and litigation are driving American employers out of their minds and American jobs overseas. Yet too many politicians continue to support higher taxes, junk lawsuits, and trade barriers that effectively put signs on our beaches that say: Go do business somewhere else.

If we are going to have the best jobs in the world, we must make America the best place in the world to do business. This starts by reforming our complicated Tax Code, reducing mindless Government regulations, and eliminating frivolous lawsuits that, together, add mountains of needless costs on our businesses. Creating a pro-business environment in the United States also means we must open international markets to American exports so our workers can compete on a level playing field. CAFTA, for example, would expand the market for U.S. goods with 44 million consumers in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic.

Nearly 80 percent of goods from the six CAFTA countries currently enter the United States duty-free. Yet American exports are taxed virtually across the board when they enter CAFTA markets.

On U.S. motor vehicles and parts, CAFTA countries levy an average tariff of 11 percent, while the U.S. rate is zero. On vegetables, fruits, and nuts, the CAFTA region's average is 16.7 percent, again compared with zero in the United States. On grains, it is 10.6 percent to zero; and on meat products, it is 14.7 percent, while the U.S. rate is just 3 percent. CAFTA would eliminate these disparities.

The agreement would level the playing field by eliminating 80 percent of the tariffs on American exports immediately, with the remaining tariffs phased out over 10 years. This would help exporters in my home State of South Carolina like BMW, Caterpillar and General Electric, as well as farmers and ranchers raising soybeans, peaches, pork, and poultry. The American Farm Bureau Federation estimates CAFTA could expand U.S. farm exports by $1.5 billion a year. Manufacturers would also benefit, especially in sectors like information technology products, agricultural and construction equipment, paper products, pharmaceuticals, and medical and scientific equipment.

According to a recent economic impact study conducted by the U.S. Chamber of Commerce, in the first year alone CAFTA would increase output in South Carolina by $167 million and create over 900 new jobs. In 9 years, the study shows a potential increase in output across all industries of $701 million and the creation of over 6,000 jobs. The South Carolina State Ports Authority has told me CAFTA will contribute to greater economic development in South Carolina by stimulating commerce and the shipment of freight through the Port of Charleston. In 2004, Central America represented $359 million of the total value of the Port's business. In fact, Charleston's exports to Central America have grown faster than the average export growth. Most exporters agree: CAFTA is a great deal for South Carolina business.

Yet there is a small group in the textile industry whose opposition poses a threat to this step forward. They say CAFTA will allow China to exploit a ``loophole'' in the agreement. But they fail to recognize that without CAFTA there will be no loop at all--just one giant hole that China will use to destroy our industry. The truth is that a vote against CAFTA is a vote for China. Garment factories in Central America purchase large amounts of American fabric and yarn. In fact, the region is the second-largest world market for U.S. textile fabrics and yarns. Under CAFTA, these garments made in the region will be duty-free and quota-free only if they use U.S. fabric and yarn. In fact, more than 90 percent of all apparel made in the region will be sewn from fabric and yarn made in the United States, thereby supporting U.S. textile exports and U.S. textile jobs. This is especially important for South Carolina workers. In 2004, South Carolina's exports of fabric mill products to the CAFTA region were valued at $180 million, more than half of the State's total exports to the region.

If we going to continue to have these exports and not lose the business to Asia, we must pass CAFTA. The American Apparel and Footwear Association made this point in a recent letter to President Bush where it said, if CAFTA ``is not enacted soon, U.S. apparel and footwear companies will place more of their business outside this hemisphere.'' And the National Council of Textile Organizations recently endorsed CAFTA, saying, Central America ``is a very important part of the domestic industry's supply chain and we need (CAFTA) to ensure that the U.S. textile industry can remain competitive against China.''

The elimination of quotas on Chinese textiles has eroded the partnership the U.S. has with the Central American region. Our existing partnership is also weakened by burdensome documentation requirements and by the fact that it will expire soon. All of these factors reduce the incentive to make clothÐing in the region using U.S. inputs. CAFTA, however, will solidify and stabilize this partnership by making the current program broader, easier to use, more flexible, permanent, and reciprocal. The agreement will create new sales opportunities for U.S. textile and apparel products by providing permanent incentives for the use of U.S. yarns and fabrics in textile articles made in the region. And it will also give us new advantages over our competitors by promoting duty-free access for U.S. textile and apparel exports to local markets in the region.

I also thank the President and his administration for their efforts to make the agreement even stronger. Specifically, I have worked closely with U.S. Trade Ambassador Rob Portman to strengthen provisions dealing with textile pocketing. On May 9 of this year, Ambassador Portman wrote me about his desire to use the agreement's amendment mechanism to include pocketing in the rule of origin. He wrote:

I assure you that USTR will utilize this mechanism, working closely with our textile industry, to seek an amendment to the CAFTA so that pocketing would have to originate in one of the signatory Parties.

This is very important to textile manufacturers in South Carolina who make pockets and want to have a strong partnership with the CAFTA region.

It is time to stop saying ``no'' to every trade agreement, regardless of the benefits. We must stop acting like we are operating in the business environment of 50 years ago. We must stand up and fight for a better deal today. We can't build a wall around our country and expect to remain competitive. And we can't keep sticking our heads in the sand. Instead, we must fight back with new agreements that knock down barriers and create new markets. We must fight back and win because that is what Americans do. We have the best workers in the world and we can compete with anyone in the world.

CAFTA also provides a unique opportunity to promote democracy, security, and prosperity in a part of the world that was once characterized by oppression and military dictatorship. This agreement is critical to the economic and political stability of these young democracies, and it is a signal of our Nation's commitment to democracy and prosperity in this hemisphere. As we continue to fight the war on terrorism, America has a vested interest in making sure these countries do not turn their backs on freedom.

I had the opportunity to personally meet with the Presidents from the CAFTA countries earlier this year, and many of them are taking significant political risks to promote economic freedom. We need to stand with them. We must stand with them and pass this agreement. The benefits of CAFTA are clear. The agreement will strengthen our economic ties with our democratic neighbors, it will promote opportunity and prosperity in the United States and the region, and it will strengthen our security at home by promoting democracy and prosperity in our hemisphere. This agreement is a forward strategy for freedom, and I encourage my colleagues to support it.

Mr. President, again, I thank you for this time this morning. I do stand to speak on behalf of CAFTA, and I appreciate the Senator on the other side of the aisle yielding this morning.


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