But Governor Carcieri favors the the Central American Free Trade Agreement, and says it would benefit Rhode Island businesses.

08:43 AM EST on Friday, February 17, 2006

BY ELIZABETH GUDRAIS
Journal State House Bureau

PROVIDENCE -- Before the Central American Free Trade Agreement even takes effect, the General Assembly is considering legislation that would exempt Rhode Island from part of the agreement.

The agreement, commonly known as CAFTA, says companies based in participating countries must be allowed to bid on government contracts in the United States under the same terms as U.S. bidders. The provision is reciprocal -- the other participating countries must also refrain from restricting U.S. companies' bids on government contracts.

A group of House lawmakers, led by Rep. Edith H. Ajello, says that provision could tie the General Assembly's hands when it comes to making policy on the environment and human rights. Governor Carcieri, taking the opposite position, says the provision actually helps Rhode Island by providing business opportunities for companies based here.

While much of the debate has centered on free trade, at its heart lies a question of separation of powers. In a May 2004 letter to the U.S. trade representative -- the person who negotiated CAFTA on the United States' behalf -- Carcieri agreed that Rhode Island would give companies based in CAFTA countries an even playing field for bidding on state contracts. Ajello and other lawmakers are outraged that Carcieri submitted the letter without consulting them.

"It's not that I am opposed to free trade," Ajello, D-Providence, said during the House floor debate yesterday. "I think there ought to be public discussion about this issue before the state is committed and before our laws are at risk."

The U.S. Senate approved CAFTA last June. Of the six other participating countries, all but Costa Rica have already approved it. (The other countries include the Dominican Republic, El Salvador, Guatemala, Nicaragua and Honduras.)

Since the overall volume of trade between Rhode Island and other CAFTA signatories is low, the amount of government contracts at stake is probably "miniscule," Dennis McCarthy, business development manager at Bryant University's Chafee Center for International Business, said yesterday.

However, Ajello's bill would also apply to previous trade agreements that affect state purchasing. It would negate commitments made in a similar fashion by governors going back to Bruce Sundlun. The list includes agreements with Chile, Morocco, Australia and Singapore, as well as the World Trade Organization's Agreement on Government Procurement.

Consequently, the Ajello bill would affect all countries that are parties to those treaties, including 36 countries that are party to the WTO government procurement provision -- Canada, most of Europe, Hong Kong, Iceland, Israel, Japan and Korea, among others.

The state could not provide numbers yesterday on the value of state contracts that have gone to overseas companies. Brian P. Stern, an executive director in the Department of Administration and the person who handles state purchasing, said all state contracts amount to about $1 billion per year.

Stern said the governor's letters simply formalized practices already in place. "We don't discriminate against anyone, whether it's overseas or in other states," he said.

Jeffrey Grybowski, the governor's deputy chief of staff, said the free-trade provisions Ajello seeks to block actually help Rhode Islanders. "Frankly," Grybowski said at the bill's committee hearing last week, "the more bidders we have, the better we do in terms of getting the lowest price for projects."

The Greater Providence Chamber of Commerce, which represents more than 3,200 businesses across the state, did not send anyone to testify at the committee hearing. "We have no position on it right now, because we haven't studied it," Paul T. DeRoche, vice president for government relations with the chamber, said yesterday.

Gary S. Sasse, executive director of the Rhode Island Public Expenditure Council, also said he wasn't aware of the bill. He said he would evaluate it with two principles in mind: "You want to have state purchasing procedures that make sure Rhode Islanders are getting the most for their dollar, and you don't want to do anything that will impede Rhode Island businesses' ability to do business outside the state."

After last week's committee hearing and yesterday's floor debate, questions remained about the effect of the letter in question. Carcieri outlined certain conditions, such as preference for minority-owned businesses, and exemption of contracts for printing services, boats, automobiles, and buses. Opinions varied as to whether CAFTA itself allows Rhode Island to impose those conditions.

Ajello's bill passed the House yesterday on a 46-to-12 vote, and now goes to the Senate for consideration.

egudrais@projo.com / (401) 277-7045