Will the CAFTA Treaty Improve Life in the Americas?
Congress approved the seven-nation free trade deal. But is it good policy?

By approving the Central America Free Trade Agreement, the Bush administration and Republican Party representatives are making policies that promise to inflict a disproportionate amount of pain on Hispanics.

The agreement’s inadequacies regarding labor and environmental issues is of real concern to the organization I represent, the League of United Latin American Citizens (LULAC), the largest and oldest Hispanic organization in the United States. LULAC strongly supports enhanced economic opportunities for Hispanic Americans, and we have been supporters of trade agreements in the past, including the North American Free Trade Agreement (NAFTA) over a decade ago.

Unfortunately, NAFTA has done far more to hurt than help both Mexicans and U.S. Hispanics. Eleven years ago, we were promised that NAFTA would offer economic gains for U.S. Hispanics, that NAFTA side agreements would help raise labor and environmental standards on both sides of the border, and that substantial funds would be provided for U.S.-Mexico border cleanup efforts. None of these promises have been kept.

Instead, Hispanics have been disproportionately negatively impacted by these trade agreements. NAFTA decimated manufacturers and small farmers in the United States. All told, nearly a million U.S. jobs have been lost due to NAFTA trade. The loss of manufacturing jobs hit the Hispanic community particularly hard; in fact, as many as half of the people seeking federal aid after losing their jobs due to NAFTA in some years were Hispanic.

But LULAC’s opposition to CAFTA is also based on our concern for Latin American development. Despite promises that Mexico would gain under NAFTA, more than 1.3 million Mexican farmers lost their livelihoods soon after the agreement was signed, due to cheap, subsidized farm commodities from the United States being dumped on their market. Many of these campesinos migrated north to the cities looking for jobs in the maquiladoras (border factories) only to watch many of those jobs sent to cheaper labor markets in Asia. In desperation, many Mexicans fled to the United States: illegal immigration from Mexico to this country soared between 1990 and 2000, mostly after NAFTA was signed. This surge also tragically resulted in more than 2,700 deaths in failed border crossing attempts since NAFTA. Indeed, concerns about displacement and consequent mass migration are central to our opposition because LULAC is witnessing a major civil rights crisis in the United States with regards to immigrant noncitizens and their second-class treatment and discrimination.

As we all know, civil rights concerns do not stop at our borders, and these rights must be a hemispheric and global concern because our economy is global and interdependent. Here, too, CAFTA represents a significant attack on civil rights in Central America. The agreement requires the Central American countries to institute pharmaceutical regulations that will raise the price of essential medicines for Central American families several hundred percent, by limiting access to affordable and safe generics. Furthermore, CAFTA removes some of the strong mechanisms that currently allow working families in the United States and Central America to push for greater respect for labor rights.

In short, CAFTA will directly, and disproportionately, threaten the well-being of the Latinos in both the U.S. and Central America. Jobs will continue to disappear; immigration will continue to rise, with immigrants being exploited as cheap labor without rights; and our environment will continue to suffer serious setbacks as rules are first bent, then broken.

Done right, a free trade agreement should raise the standard of living for people, strengthen respect for the environment, and promote integration, social development and democracy. LULAC believes that what Hispanics need is economic opportunity, and what Latin America needs is development. There is no evidence that NAFTA has contributed in any way toward attaining this goal in the past, and there is no reason to think CAFTA will do so in the future.

The track record is clear: The NAFTA/CAFTA model for free trade has failed.

YES
The Evidence Is In: Liberalizing Trade Works.
By Julián Sánchez

Is an increasingly globalized world, a world in which borders matter less each year, a good thing? The major parties in the United States agree: It’s great! Also, it’s horrible!

Confused? So, it might seem, are Democrats and Republicans, whose opposed attitudes about trade and immigration appear equally schizophrenic.

Republicans at least pay lip service to the idea that, though more competition may be rough in the short term, greater exchange and cooperation between nations benefits everybody on the whole. When the same people we benefit by trading with want to come and work here, however, it’s another story.

Democrats are typically more hospitable to the notion that we should welcome people eager to work, that more consumers and producers—whether immigrant or native-born—don’t just compete for some small fixed number of jobs, but rather expand the pool of goods and services for everyone. But when it comes to trade, it’s clear that we’re a long way from the era of Bill Clinton, when Democrats were more consistent in applying the logic of expanded markets as a win-win proposition.

Along with a contingent of party-bucking Republicans under pressure from the long-coddled U.S. sugar industry, Democrats were staunch opponents of CAFTA, which will ease trade barriers between the United States and the Dominican Republic, Costa Rica, El Salvador, Guatemala, Nicaragua and Honduras. The agreement, which passed the House by a mere two votes in late July, will spur investment in those countries, collectively the United States’ second largest Latin American trading partner (after Mexico), and open their markets to U.S. exports.

While CAFTA was far from a perfect treaty—industry pressure prevented it from taking serious steps to open the United States’ hyper-protected sugar market—its passage should not have been such a close call. There is a widespread consensus among economists about the benefits of liberalizing trade rules. Writing in The Washington Post in June, two researchers at the Institute for International Economics projected that increased trade in the last half century—the product of both falling trade barriers and improved transportation technology—has been worth an added $1 trillion per year to the U.S. economy. And our trading partners would benefit as well: An analysis by World Bank economists found that “the vast majority of the population in Central America is likely to experience welfare gains from implementation of CAFTA, even in the short run.” That jibes with a raft of other studies showing that multinational companies, far from spurring a dreaded “race to the bottom, ” typically pay significantly higher wages and offer better working conditions than domestically-owned firms in developing countries—a fact that makes U.S. unions’ claims to oppose CAFTA out of solidarity with Latin American workers hard to swallow.

This strange combination of positions, largely incoherent from a policy perspective, makes more sense from a political perspective. Immigrants can join American unions—a major part of the Democratic base. Foreign workers don’t. And Latinos have also historically tended to vote for Democrats, albeit by declining margins in recent years. The message from Democrats might be crudely put: “Never mind job opportunities at home; come looking for work here, where you can vote for Democrats.”

There are, of course, plenty of consistent xenophobes out there, those who in one breath rail against “Benedict Arnold CEOs” who provide cheaper goods by locating production abroad, and in the next damn anyone who arrived stateside more recently than, say, their own grandparents. They want national borders to limit the boundaries of a captive market, a cage that prevents their neighbors from doing business with anyone else.

It would nice to see either party show the same degree of consistency in opposing that bleak vision.

Julian Sánchez is a writer and assistant editor at Reason Magazine.