Saturday, July 16, 2005


Why have people not learned the lessons of NAFTA, its been a decade of the same old economic rhetoric and promise just over the horizon. CAFTA, the Centeral American (CA) version of the 1994 "free" trade agreement, is being advertised as the same panecea for economic and political woes. Here in the Wall Street Journal from Friday (15th) Mary Anastasia O'Grady writes,

"Th[e] hunger for goods from the outside (CA) illustrates the most important role of CAFTA for develeoping CA, and it is not access to US markets for CAFTA exporters. The treaty's main contribution to regional development is that it will help Centrals gain access to imports, thereby raising living standards and increasing the competitiveness of CA economies."

The US is currently in one of the largest trade deficits in decades, meaning that we have consumed more things from abroad than we have sold to other countries. This has been largely due to the behavior of footloose corporations who seek cheaper production conditions in the global south. However, domestic producers here in the States are begining to learn how to tap into the undocumented labor pool and lower thier labor costs. The delays in immigration reform are probably not due to the lack of political movement but the unwillingness to do anything that might jeopardize producer access to this secondary labor class. U.S. manufacturers face enormous economic pressure to become low cost producers. This trade agreement may be an effort to boost exports from this wave of production. CAFTA will not only allow US producers to sell goods to CA consumers made by the migrants, but the de-regulation that CAFTA will bring changes to thier labor markets causing further northern migration.
Bush visited North Carolina (NC) last week to pitch CAFTA to textile workers. A year ago NC exported $1.7 billion in textiles, most of which was exported to CA countries. Bush warned that if CAFTA did not go through this market would be lost to them. This productivity however is made possible by the huge influx of labor to that state. NC has seen more than a %500 increase in the foriegn born latino population there. If CAFTA is not passed then maybe Hondurans can make thier own shirts in Honduras and live normal lives. Don't get me wrong, I think migration is all good as long as it is a choice that is made out of freedom and not by deceptive policies that lead to economic desperation. Right now NC's representatives in congress are split on their support for the bill.
CAFTA is basically, promoted as a sort of "free market bliss" in which Central Americans who do end up staying home will end up being better off becasue they will have greater access to consumer goods. If well-being is defined by consumption then well yes of course they should consumer more, we should all consume more and increase our well-being, duh! What if well-being is not merely defined by material consumption of private goods but also the consumption and access to public goods; education, health care, healthy environments, and political equality. These things contribute much more to individual well-being more than material consumption can. So we all do indeed require a minimum amount of material consumption but basing continental trade policy upon such simplifications forces people to engage in the private markets in order to fulfill thier needs, while they watch thier wages fall in order to attract the corporate investors to thier country. These are contradictions that do not fall into the economic models of WSJ contributors or trade policy negotiators.
Luckily the unions all over the continent are intimately aware of CAFTAs potential impact. Costa Rica's labor unions have threatened violent uprisings if CAFTA is pushed through by thier President Pacheco. Costa Rica's heavy investments in public goods, wary acceptance of World Bank money, strong labor unions and cooperatives (worker owned enterprises) are what keeps Costa Rica slightly better off than its CA neighbors. CAFTA would effectively dismantle these social support structures and make domestic productivity more reliant upon corporate investment from abroad. In addition, Costa Rica's nationl debt is not as high a percentage of its national productivity as it is for other countries. For other countries a major percentage of the money collected as taxes goes to paying just the interet on debt from international financial institutions. Breaks are given to these countries for paying back this money when they participate in the world economy through trade agreements and allow foreign companies to setup shop on thier soil and use thier labor. Trade negotiators from these countries are always under debt pressure to participate in international trade agreements. The map below shows the amount of debt each country has accumulated in the time between 1991-2000. Check out the link to the site for this map by clicking on the title of this entry.
We still have a chance to shoot down CAFTA here before Bush gets his chance to impose it on our friends in CA. The trade agreement passed in the Senate in the closest vote on a trade bill in 40 years, 54 to 45 votes. It still has to pass the House and 190 democrats of 202 are likely to oppose it. Use this link to find your Representative ( ) and tell them that you do not support this trade agreement.


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