By Rachel Pleasant
Staff Writer

President Bush’s signature makes it official. The Dominican Republic-Central America Free Trade Agreement—so controversial it only narrowly passed a House of Representatives vote in late July—is now law.

Commonly known as CAFTA, the trade agreement would immediately eliminate 80% of tariffs on U.S. exports to Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. The remaining tariffs would be phased out over 10 years. Most imports from these countries now enter the United States tax-free.

CAFTA, though it hardly has overwhelming support, has the potential to open up a new world of possibilities for American businesses, including those based here in the Charleston area, many local officials say. However, others say some jobs could be lost to Central America.

CAFTA passed the Senate in June. Heated arguments were made from both sides prior to the pivotal house vote, which passed 217-215, with the majority of Republicans supporting and the majority of Democrats opposing.

Supporters argued that CAFTA would allow more goods and services to flow between the United States and CAFTA countries and would cut down on illegal immigration by creating more jobs in the region.

On the other hand, CAFTA could make it harder for American businesses and farmers to compete in areas where workers are paid low wages.

The South Carolina delegation was split almost evenly on the issue. The same was true of the Lowcountry’s representatives. Rep. Henry Brown Jr., R-Hanahan, whose district extends from Myrtle Beach to Charleston, voted “yes.” Rep. James Clyburn, D-Columbia, whose district includes parts of Dorchester and Berkeley counties, voted “no.”

In a statement released shortly after the vote, Brown outlined specific potential benefits of CAFTA to the Lowcountry.

“Our ports were responsible for some $359 million in exports to Central America last year. While that number is a small percentage of the overall cargo value, it is expected to grow. The ports will benefit from the increased exports to Central America that CAFTA will promote. More shipping means more jobs,” he says.

Additionally, Brown claims CAFTA will benefit South Carolina’s textile industry.

According to the South Carolina Department of Commerce, the CAFTA region is the state’s fourth largest export mart, behind Canada, Germany and Mexico. South Carolina’s major exports to that region include textiles such as fabric and yarn. Textiles have long been a major industry in South Carolina, though it has shown signs of decline. According to the U.S. Bureau of Labor Statistics, in 2004 there were nearly 51,000 textile and apparel workers in the state, down from 57,800 just the year before.

Here in the Charleston area, companies such as the Robert Bosch plant on Dorchester Road, which makes auto parts, and MeadWestvaco, which manufactures paper products, will see a boost from CAFTA says Mark Condon, executive director of the South Carolina World Trade Center in Charleston

CAFTA means MeadWestvaco will become more competitive, according to a statement submitted to the Business Journal by Laurie Koch, of the company’s public relations department.

“The passage of CAFTA ensures we are taking steps to more fully participate in the global marketplace. MeadWestvaco currently does business in Central America and CAFTA will allow us, as well as other manufacturers, to expand in this region and help us remain competitive,” the statement says.

Condon says that in any trade agreement, there are winners and losers.

Textiles and other low-skill, high-cost operations may end up being the losers in CAFTA, he says.

“Those industries could always go down there (to the CAFTA region),” he says, though he adds that so many textile jobs in South Carolina have disappeared, leaving mostly high-skill positions behind, which would be less likely to move offshore.

Amy Thomson of the South Carolina Department of Commerce agreed that CAFTA may mean lost jobs in the state and Lowcountry.

“This will ensure jobs stay in this hemisphere,” says Thomson

Rachel Pleasant is a staff writer for the Business Journal. E-mail her rpleasant@charlestonbusiness.com.

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