President Bush signed a free trade agreement with six Latin American countries on Tuesday, celebrating a victory in Congress so narrow and grueling that it cast doubt on the future of other trade-opening pacts the administration is negotiating.
"Strengthening our economic ties with our democratic neighbors is vital to America's economic and national security interests," Bush said at an East Room ceremony in the White House.
Bush's signature on the Central American Free Trade Agreement capped a bruising political battle.
The relatively modest agreement, which Bush first approved over a year ago, passed the House last week by just a two-vote margin, obtained only after the president and House Republican leaders cajoled and made side promises to wavering lawmakers.
The agreement — with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic — eliminates tariffs and opens up the region to U.S. goods and services. It also lowers obstacles to investment in the area and strengthens protections for intellectual property.
"CAFTA is more than a trade bill," said Bush, suggesting national security implications.
He said the agreement would help buttress still-fragile Central American democracies to help them better defend against "forces that oppose democracy, seek to limit economic freedom and want to drive a wedge between the United States and the rest of the Americas."
Critics: Agreement will cost U.S. jobs
Only 15 Democrats voted for the pact in the House, a break from the bipartisan support major trade legislation has received in the past in both Republican and Democratic administrations. The pact was approved in the Senate, which is more favorable to trade agreements, 54-45 on June 30.
Critics said the measure would cost U.S. jobs, particularly in the sugar and textile industries, a claim supporters disputed.
The closeness of the 217-215 House vote raised questions about other free trade agreements the Bush administration is negotiating, including ones with Bahrain, Thailand and the Andean countries of South America. It also cast a cloud over the fate of U.S.-backed trade talks being undertaken by the World Trade Organization to reduce global trade barriers, known as the Doha round.
Early in his first term, Bush talked grandly of a free-trade agreement encompassing the entire Western Hemisphere and another one linking the United States with Pacific ring nations. But the administration now speaks in much more modest terms.
"Where are the centrist Democrats who are committed to free and fair trade?" Bush spokesman Scott McClellan said when asked about prospects for future trade agreements.
"If you look at votes, there was strong consensus among Republicans and this time you had only 15 (House) Democrats that supported the agreement," McClellan said.
Global considerations for Chamber of Commerce
John Murphy, a Latin American expert for the U.S. Chamber of Commerce, said that, despite the relatively small economic impact of CAFTA, "concern about the U.S. trade deficit and about trade with China loomed large in the minds of members of Congress."
Compounding the difficulty was "the opposition of sugar growers and the fact that big labor targeted it for defeat more than three years ago," Murphy said.
Joining Bush at the signing ceremony were congressional sponsors, House and Senate committee leaders and ambassadors from the five Central American countries and the Dominican Republic. The East Room was packed with guests, and an overflow crowd watched the proceedings on a large-screen television set up in an adjacent hall.
"Two decades ago, many of the CAFTA nations struggled with poverty and dictatorship and civil strife. Today, they're working democracies, and we must not take these gains for granted," Bush said.
Secretary of State Condoleezza Rice and several other Cabinet members stood on the stage with Bush.
Democrats overwhelmingly opposed CAFTA, arguing that free trade agreements negotiated by both the Clinton and Bush administrations prompted the flight of American jobs overseas. They also said the labor rights provisions in CAFTA were too weak to protect workers in impoverished Central American countries from exploitation.