In Dicta

Wednesday, July 06, 2005

The CAFTA struggle

The Washington Post has an article on the difficulty of passage of the DR-CAFTA in the House of Representatives:

"Twelve years ago, amid heated rhetoric over job losses and heavy union pressure, the House passed the North American Free Trade Agreement with 102 Democratic votes. This month, as President Bush pushes the far less economically significant Central American Free Trade Agreement, he will be lucky to get more than 10."

It is significant to note that NAFTA was approved with bi-partisan support in 1993, with a Democrat as President. Additionally, it is important to note that the DR-CAFTA is much less ambitious, in terms of actual economic impact, than NAFTA ever was.

"A long, slow erosion of Democratic support for trade legislation in the House is turning into a rout, as Democrats who have never voted against trade deals vow to turn their backs on CAFTA. The sea change -- driven by redistricting, mounting partisanship and real questions about the results of a decade's worth of trade liberalization -- is creating a major headache for Bush and Republican leaders as they scramble to salvage their embattled trade agreement. A trade deal that passed the Senate last Thursday, 54 to 45, with 10 Democratic votes, could very well fail in the House this month."

I certainly hope not. The DR-CAFTA is an important step for the development of the region. I have first-hand knowledge of the importance of this trade agreement for the Central American countries and the Dominican Republic, for their development and for jobs for the people there. Some argue that this trade agreement doesn't contain enough provisions for protection of laborers, but how many of those people have actually spoken to a poor woman working in a textile factory? I have, and I can honestly say that these women, who work hard in these factories, earn more than they would in any other job, since they are poor and unschooled. In fact, many would not be able to get jobs, so in effect, these are the only jobs available to them.

The economist Jeffrey Sachs in his recent book "The End of Poverty: Economic Possibilities for Our Time" makes the same point, that this type of work is the first rung in the development ladder. This book is a must-read by the way, and certainly represents a crowning achievement for such an eminent economist like Mr. Sachs.

We cannot forget that Britain and the United States started out with a small cottage industry of textiles and other manufactured goods, which improved to large-scale manufacturing, and then services, and allowed for broad-based wealth creation. Groups who oppose this agreement may believe that they are fighting for "the little people," but in reality they are condemning people who live in developing countries to eternal poverty. Is it true that the wage levels, safety precautions and other areas are not at the same level as the United States or other developed countries? Absolutely. But why? Because these are developing countries, that do not have the infrastructure and money to allow for the same level of precautions. As the United States and Britain developed, greater precautions and worker protections were instituted. It is also important to note that these countries don’t offer “slave labor” either; the International Organization of Labor, a U.N. organism, supervises these countries and they meet the standards set by this organization.

"But the Democrats' near-unanimous stand against CAFTA carries long-term risks for a party leadership struggling to regain the appearance of a moderate governing force, some Democrats acknowledge. A swing toward isolationism could reinforce voters' suspicions that the party is beholden to organized labor and is anti-business, while jeopardizing campaign contributions, especially from Wall Street." (Emphasis added).

Last time the United States became isolationist, it culminated in World War II and the collapse of the global economy. This trade agreement is an important step in bringing development to countries that truly need it. We should not allow interest groups like trade unions who seek to protect inefficient manufacturers derail an important agreement like the DR-CAFTA.

Visit the CAFTA Corner and the U.S. Chamber of Commerce site for more information. Let your voice be heard in favor of free trade and assistance to developing nations.

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