Proposed trade legislation before Congress would help bolster the already substantial sales in Central America and the Dominican Republic of one Spokane-area manufacturer and open doors to that market for others, those manufacturers say.


The legislation, called the Dominican Republic-Central America Free Trade Agreement, known as CAFTA, would remove tariffs and other trade barriers between the U.S. and five Central American countries and the Dominican Republic.


A free-trade agreement gives us a leg up, says Doug Staker, vice president of the international market group at Spokane Valley-based Itron Inc., which competes with other international companies to sell its utility meter-reading equipment in the Central American market. It makes a level playing field where we can go and sell our technology.


Itron already has a strong presence in the countries that would be covered by CAFTA, racking up about $10 million of its more than $40 million in international sales last year in the CAFTA countries, Staker says.


The legislation also could help Pearson Packaging Systems Inc., the West Plains-based maker of packaging machinery, which plans to enter the CAFTA market within the next 18 months, with or without passage of the free-trade agreement, says Michael Senske, the companys CEO.


Both Pearson and Itron say the trade agreement would allow companies like theirs to compete better on price against competitors that already trade duty free in those marketsand also would make it possible for more U.S. companies to gain a foothold there.


The U.S. House and Senate both are considering CAFTA bills currently, but both bills still were being discussed in committee as of earlier this week. President George W. Bush has been outspoken in his support of the free-trade agreement, but many members of Congress, including some members of Washingtons congressional delegation, remain undecided on the matter.


The U.S. Chamber of Commerce and manufacturing associations have come out in favor of CAFTA, but some labor unions, sugar-industry groups, and cattle groups are lobbying against it.


The Washington Association of Wheat Growers has come out in favor of CAFTA, saying, Wheat growers here depend heavily on foreign trade to fuel our economy; CAFTA will help us along and all the while encourage economic development in Central American countries.


Roberta Brooke, executive director of Spokanes International Trade Alliance, says Washington state companies exported more than $113 million in goods last year to countries that would be covered under CAFTA. In addition to the Dominican Republic, those countries are Guatemala, El Salvador, Honduras, Costa Rica, and Nicaragua. The region currently ranks 33rd in volume among Washington states export markets, but its rank likely would rise with CAFTA, Brooke says.


I tend to agree that these treaties open up markets for us, says Bill Hogeboom, president of Spokane musical-instrument reed maker Jones Double Reed Inc. Hogeboom says he supports CAFTA, though Jones Double Reed doesnt have specific plans to enter the Central America market. About 10 percent of that companys sales are outside of the U.S., and its international business has sustained slow-but-steady growth, he says.


In the CAFTA area, Itron competes against a manufacturer from Brazil that doesnt pay the same tariffs as U.S. companies, and while Itron has had success winning business in that market, it can lose it on price, Staker says.


Usually, the Spokane Valley company sells its goods and services to utilities, and, Our customers often by law have to go with the low bidder. Our price differential may be that duty or tariff, he says.


At Pearson Packaging, about 15 percent of the companys sales currently are to customers outside the U.S., specifically in Canada and Mexico, but with a concerted export push planned, the company expects its international sales to account for 30 percent of total revenue within two years.


We will certainly grow there without CAFTA, but it will tend to be better with CAFTA, Senske says.


In Central America, Pearson hopes to sell its tray-forming machines, which are used to erect corrugated-cardboard boxes. Senske says box makers, which sell their unfolded boxes to fruit growers, often buy tray formers and let their fruit-producer customers use them free of charge at harvest time. The box makers typically will transport those machines from farm to farm, moving south to north during harvest.


The machines sell for about $90,000 each. Tariffs vary depending on the kinds of goods and the country in which the machinery is sold, but Senske says the tariffs on tray formers are at least 7.1 percent.


Pearsons biggest potential competitor in Central America is a Spanish manufacturer, which currently sells to Central American countries barrier-free. Senske says that as of now, the Spanish company faces an unfavorable exchange rate that would even out the tariff discrepancy somewhat, but Pearson wouldnt be able to count on that currency dynamic to keep its product price-competitive.


All of us are accustomed to currency fluctuations, which tend to be short term, he says. Tariffs arent short term and only go higher.