By By Jo Bonner
This past week, the House of Representatives held its vote on a piece of trade legislation which has dominated the news in recent weeks. This act, the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA), had previously been passed by the Senate on June 30, 2005, by a vote of 54-45.
When I cast my vote in support of this agreement, which passed the House by a vote of 217-215, I did so only after carefully considering all the opinions and points of view I had received on this bill. In just the past few weeks alone, my office received numerous calls from both supporters and opponents of this bill.
In light of the public perception regarding this bill after the previous passage of NAFTA in January, 1994, I did not want to rush to judgment. The concerns raised by some constituents in south Alabama over this new trade agreement were certainly valid, and I took each one under careful consideration. However, I also received numerous calls in support of this agreement, not only from local individuals but from a wide cross-section of state and national business, agriculture, and trade interests.
The Alabama Farmers Association (ALFA), the Business Council of Alabama, the Alabama Cattlemen's Association, the National Association of Manufacturers, the National Cotton Council, and the Greater Mobile Area Chamber of Commerce – to name just a few – contacted me and my staff to express their strong support for this new free trade agreement. Each of them presented a carefully prepared explanation of why they were in favor of passage, and the benefits to each economic sector they represent were indeed strong.
The United States Chamber of Commerce has in recent months completed an impressive study of the overall economic impact on each of the fifty states resulting from the passage of the new Central American agreement. In their study of the impact of the provisions of the agreement and the new trade balance brought into play between the United States and Central America during the next decade, the chamber has determined that manufacturers, agricultural producers, and any of a number of other economic interests in this country will be in a position to not only increase their share in the global market, but will increase revenues and be in a position to expand their businesses and bring more Americans into the workplace. Within one year of the agreement being implemented, estimates show that Alabama industries will witness an estimated increase of $190 million in sales and an increase of approximately 1,500 new jobs. Over the next nine years, those same estimates show that nearly 8,000 new jobs will be created, and Alabama business sales will increase by $1 billion.
Even with all of the positive benefits this trade agreement holds for the nation, however, an even greater consideration for me was the national security issues involved. In conversations with colleagues in the House, administration officials, and even during a meeting with the president, it became clear to me that a defeat of this agreement could have a disastrous long-term impact on political stability in the Central American region. Had Congress not passed this measure and, in essence, had they turned a blind eye to Central America, some of the newer democracies in that region – such as the government of Nicaragua – would never have an opportunity to stabilize. As democracy in the United States has been historically viable because of the fact that our citizens have been provided with the jobs and economic tools to succeed, so, too, do new democracies depend on these same factors for survival.
Finally, here are a few examples of how Alabama will directly benefit from this new Central American agreement.
The Alabama timber industry, which exports tremendous amounts of lumber and wood products each year, will see an elimination of the foreign tariff averaging 10 percent on their products. Overall, 78 percent of national forest product exports to the countries participating in this agreement will receive immediate duty-free treatment.
American exporters of high-tech equipment will be saved an estimated $75 million in foreign import duties each year as a result of the reduction or complete elimination of tariffs on technology products. As one of the main national sites for this type of industry, the Mobile area will derive direct benefit for its technological products.
Agricultural exports from the United States, currently running at a nearly $1 billion deficit to Central American imports, would experience strong growth, and American farmers would find themselves in the position of operating on a level playing field with their Central American counterparts.
A large segment of the economy of south Alabama depends on the imports and exports passing through the Port of Mobile; in fact, the port ranks 16th nationally in the level of imports passing through each year. The increased traffic through this facility, as a result of this agreement, would provide even greater benefits for both the operation of the port, and the beneficiaries of its business.
The vote on this trade agreement certainly doesn't mean the end of the debate on the benefits it will have for Americans. It is my hope, and the hope of everyone who supported this measure, that the expectation for growth and equity for domestic producers will far exceed the actual results.
Jo Bonner is a U.S. congressman. His column appears weekly.