July 28 (Bloomberg) -- The U.S. House of Representatives approved the Central American Free Trade Agreement early today, overcoming objections by unions, sugar producers and textile makers in what was the most contentious trade fight in Congress in more than a decade.

The vote was 217-215 in favor of Cafta, in an hour-long vote held just after midnight in Washington. With only a minor procedural step in the Senate ahead, today's vote effectively completes a yearlong battle for U.S. ratification of Cafta.

Only 15 of the 202 Democrats in the House voted for the measure, a record low for a trade agreement. While Democrats objected to Cafta because of what they characterized as weak labor provisions, many in the party used the legislation to show dissatisfaction with President George W. Bush's trade policies.

Democrats ``picked this to make their stand,'' said House Ways and Means Committee Chairman Bill Thomas, a California Republican. ``When someone else decides that this is make or break, you better make sure that they are the ones that break.''

Cafta ends most tariffs on more than $33 billion in goods traded between the U.S. and Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. That includes removing duties on 80 percent of the $15 billion in annual U.S. exports to the region and making permanent the duty-free access to the U.S. that most products from Central America already have.

This ``will level the playing field and help American workers, farmers, and small businesses,'' Bush said in a statement congratulating lawmakers. But Cafta ``is more than a trade bill,'' he said. ``It is a commitment of freedom-loving nations to advance peace and prosperity throughout the Western hemisphere.''

Corralling Support

Bush, who reached agreement with the first of the six nations in 2003, made Cafta the centerpiece for his trade agenda. He primarily sold the measure to lawmakers on the premise that it would solidify democratic gains in a region wracked by civil war.

The administration was able to garner just enough votes by pledging to maintain caps on sugar imports, getting commitments from Central America to renegotiate some textile export provisions, and by meeting with U.S. lawmakers at least twice this week about Cafta's ``geopolitical'' necessity.

In the end a 40-minute delay in the vote was broken after the Republican leadership convinced Representative Robin Hayes of North Carolina to switch his vote to yes.

``Unfortunately, as with past trade votes, Republican leadership held the roll open for an hour and twisted arms,'' said Representative Sherrod Brown of Ohio, who led Democratic opposition to the agreement. ``They got people to break their commitments and go back on their word.''

The legislation must now go back to the Senate for completion in a procedural step. Senators already voted 54-45 in favor of the measure on June 30.

Legislatures in El Salvador, Guatemala and Honduras have already passed Cafta, while governments in Costa Rica, the Dominican Republic and Nicaragua are still debating it.

Labor Rights

Cafta was backed by most U.S. companies such as computer-chip maker Intel Corp., software developer Microsoft Corp. and pharmaceutical company Pfizer Inc., which say the trade deal will open up markets for their products and create momentum for further trade liberalization in this hemisphere and globally.

Democratic lawmakers argued that the agreement doesn't do enough to improve the conditions for workers in the region, and that means these countries will both take U.S. jobs and not develop into mature markets for American goods, they argued.

``Cafta is a step backward for workers in Central America, and a job killer for Americans,'' House Democratic Leader Nancy Pelosi. ``Nothing in the agreement will help raise sub-standard wages in the region.''

Unions, one of the top contributors to Democrats, threatened to cut-off support for any lawmaker that voted for the deal.

Enforcing Trade Agreements

In addition to labor rights, Republicans in Pennsylvania and other manufacturing states said they worried about the widening U.S. trade deficit and import of cheap, subsidized imports from China. To assuage those fears, yesterday the House passed a bill to expand the duties U.S. companies can seek to collect on subsidized imports from China.

Analysts said that the difficulty in rounding up support for expanding trade with Central America, a region that has an economy smaller than the state of Oklahoma, reflected a growing sense of disillusionment with trade in Congress.

U.S. Trade Representative Rob Portman has also launched a top to bottom review of U.S. trade policy toward China. Lawmakers ``are looking to be assured that we enforce these trade agreements,'' Portman said after the vote.

The administration won't continue to ``expand this energy and capital on these smaller agreements,'' said former U.S. Trade Representative Clayton Yeutter, a lawyer at Hogan & Hartson LLP in Washington. ``There will be a great deal more attention paid'' to the World Trade Organization, he said.

In fact, after the vote, Portman will be ``on the next plane'' to Geneva to meet with trade ambassadors and officials there about the flailing WTO negotiations, Yeutter said.

If Cafta had failed ``it would have made my life much more difficult'' in Geneva, Portman said.

To contact the reporters on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

Last Updated: July 28, 2005 09:50 EDT