from The Wall Street Journal
The legislative battle over the Central American Free Trade Agreement is heating up, and if we are to believe the grandiose claims put forward by Cafta's supporters, this deal will create great jobs at home, close our trade deficit, lift Central America out of poverty, and solidify democratic reforms there. It will also boost global trade talks and allow supporters to paint themselves as "pro-growth" and "pro-jobs." Wow.
But we've heard these arguments before: 11 years ago, when Congress debated the North American Free Trade Agreement; 10 years ago, with the ratification of the World Trade Organization agreement; and five years ago, when China joined the WTO. In each instance, the American people were told the deals would open markets abroad, improve U.S. competitiveness, spur jobs and growth, and eradicate poverty.
It didn't work then and it won't work now.
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The Skinny on Cafta, The Wall Street Journal, March 31, 2005
The legislative battle over the Central American Free Trade Agreement is heating up, and if we are to believe the grandiose claims put forward by Cafta's supporters, this deal will create great jobs at home, close our trade deficit, lift Central America out of poverty, and solidify democratic reforms there. It will also boost global trade talks and allow supporters to paint themselves as "pro-growth" and "pro-jobs." Wow.
But we've heard these arguments before: 11 years ago, when Congress debated the North American Free Trade Agreement; 10 years ago, with the ratification of the World Trade Organization agreement; and five years ago, when China joined the WTO. In each instance, the American people were told the deals would open markets abroad, improve U.S. competitiveness, spur jobs and growth, and eradicate poverty.
It didn't work then and it won't work now.
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With Nafta, proponents argued that with the American market already more open to Mexican products, our workers and producers would come out on top if all trade barriers were eliminated. But since Nafta was implemented, our trade deficit with Canada and Mexico has increased 1,200%, from $9 billion in 1993 to $111 billion in 2004. Imports from our Nafta partners grew more than $100 billion faster than our exports to them, displacing almost one million decent-paying jobs here at home, in industries as diverse as aircraft, autos, apparel, and consumer electronics.
At the same time, real wages in Mexico have fallen, the number of poor people has grown, and illegal immigration flows have doubled. Trade liberalization in agriculture displaced nearly a million rural small farmers, swamping the fewer jobs created in the export processing sectors. Many in Mexico who supported Nafta 11 years ago have turned into ardent opponents.
Ratification of the WTO and the grant of permanent normal trade relations (PNTR) to China involved similarly spurious arguments. Ten years into the WTO, our trade deficit is at a record-smashing $617 billion, close to an unsustainable 6% of GDP. And just three years after China's accession to the WTO, our bilateral trade deficit has about doubled, to $162 billion. These trade deals have not, by themselves, caused the ballooning of our trade imbalance, but they sure haven't improved it, as advertised.
Nor have the trade deals improved our competitive edge in key sectors. In traditionally strong areas -- services, high tech and agriculture -- our trade balances are eroding dramatically.
Let's face it, there is something wrong with this "free trade" model. It simply fails to deliver good jobs and rising wages at home, or real development abroad. Meanwhile, intrusive limits on government's capacity to regulate in the public interest lurk in the investment, services, and government procurement chapters of these deals.
It is time for us to take a closer look at the actual content of these trade agreements and ask: "Is this the best we can do?"
Cafta extends a failed model. We should all understand by now that modern (post-Nafta) free-trade agreements are not just about lowering tariffs. They are about changing the conditions attached to trade liberalization, in ways that benefit some players and hurt others. These are not your textbook free-trade deals. These are finely orchestrated special-interest deals that boost the profits and power of multinational corporations, leaving workers, family farmers, many small businesses, and the environment more vulnerable than ever.
The lopsided tilt toward corporate interests helps to explain why Cafta is so unpopular, both here at home and throughout Central America. A recent poll by Americans for Fair Trade found widespread opposition to Cafta, with 74% of respondents saying they would oppose the pact if it caused job losses, even if it also reduced consumer prices. In Central America, tens of thousands of workers, farmers, small-business owners, and other activists have taken to the streets to voice their vehement opposition to the deal and to the lack of transparency in the negotiation process.
Cafta strengthens protections for multinational corporations, forcing draconian changes in intellectual property protection regimes, giving corporations new rights to sue governments over regulations they deem too costly or inconvenient, and limiting the ability of future legislators to place conditions on government procurement. This hurts Central America's prospects for future development, just as it weakens state legislators and erodes wages and jobs here at home.
As Guatemalan Bishop Monsignor Alvaro Ramazzini said in a statement issued on March 10, "Cafta is much more than a simple trade agreement, as it includes a range of mechanisms that combine prohibitions on governments with rights for foreign investors on such issues as investment, national treatment, intellectual-property rights, market access, public services and access to bidding on public contracts. If implemented, Cafta will transfer privileges for corporations into rights."
At the same time, Cafta actually weakens the minimal workers' rights conditions we have in place today, under existing preference programs like the Generalized System of Preferences (GSP). Instead of insisting that Central American governments must respect internationally recognized workers' rights, the Bush administration has negotiated provisions requiring only the enforcement of domestic labor laws. There is nothing in the agreement that would prevent governments from gutting or even eliminating their labor laws after signing the agreement.
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American and Central American unions have come together to oppose Cafta and to lay out our alternative vision for a system designed to eliminate social and economic inequities. A fair system must provide for, among other things, workers' rights, clear anti-corruption policies, fair environmental and agricultural rules, and debt-relief.
The Bush administration bungled an opportunity to negotiate a decent deal with Central America, one that would balance diverse interests and promote genuine development and reciprocal trade. The deal now being offered to Congress represents a setback on workers' rights and development prospects. For the sake of America's working families and our counterparts in Central America, Congress should reject it.
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Ms. Lee is the chief international economist at the AFL-CIO.
Darn, it didn't post my comment from earlier!!!
Hey Ryan, you need to grant me preferred Blogger status. I've almost been reading your blog for a year now. That should entitle me to an honorary link, or at least a coupon.
Oops, I meant to write almost a year. Come to think of it, I wonder when I did start posting. Hold on, I''ll just look in my email. Oh wait, I guess it wasn't till the end of May. But I still want preferred reader status. Maybe a little certificate with a $100 rebate coupon would be good. ;)
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