While the Bush Administration still aspires to ward off defeat, it is becoming increasingly clear that its failure to pass the Central American Free Trade Agreement (CAFTA) represents the latest in a series of setbacks for its sputtering trade agenda. For working people throughout the Americas, this is cause to celebrate.
In the year since CAFTA was presented to Congress for ratification, the White House has repeatedly promised that it would safely usher through the treaty. Yet, one after another, target dates for passage have come and gone.
Unlike with Social Security privatization, the president hasn’t staged exhaustive "town hall" meetings in support of the trade deal, which would lower tariffs and create NAFTA-like rules to govern economic exchanges between the U.S., El Salvador, Nicaragua, Honduras, Guatemala, Costa Rica, and the Dominican Republic. Thus, many Americans haven’t heard much about the agreement.
But make no mistake: Passing CAFTA has been a significant legislative priority for the administration this year, and its inability to move it forward provides good indication that the dubious claims of "free trade" boosters have proved unconvincing.
Republican leaders have not yet called up the legislation for debate on the floor of the House for a simple reason: Supporters of CAFTA do not have the votes to pass it. Instead, a coalition of labor organizations, environmentalists, "fair trade" advocates, and health groups have persuaded sympathetic Democrats to hold firm in opposition. These legislators have been joined by conservatives whose districts are home to trade-sensitive industries like sugar and textiles, and even by the House’s typically pro-trade New Democrat Coalition, to form a bloc that would sink the agreement if given a chance.
Why has a wide range of forces allied against CAFTA? Because it’s a bad deal for people in this country and for Central Americans alike.
CAFTA’s supporters argue that it would help reduce poverty among our southern neighbors. The track record of NAFTA, however, doesn’t support their optimism. While the earlier trade accord did draw high-paying U.S. production jobs to Mexico, real wages in Mexico’s manufacturing sector actually decreased by 13.5 percent between 1994 and 2000, according to the International Monetary Fund.
One reason for this decline was the failure of NAFTA to protect workers’ rights to organize unions. In practice, the panel established by the agreement’s labor "side agreement" has failed to impose any real penalties for countries or corporations even in the most egregious cases of abuse. For its part, CAFTA weakens the labor standards put in place by the Caribbean Basin Trade Partnership Act of 2000, which includes the CAFTA nations. The new deal holds countries accountable only to their own local labor laws, which are often less comprehensive than internationally recognized standards.
The U.S. Trade Representative’s presentation of CAFTA as a tool for exporting democracy is also highly suspect. CAFTA effectively extends NAFTA’s notorious Chapter 11, which allows companies to challenge any law that infringes on their ability to procure future profits. This provision has been used to strike down environmental and public health laws, labeling them unfair "trade barriers." In this manner, democratically made decisions–including U.S. laws–become subject to review by the trade courts.
If CAFTA is not very democratic, it not very "free" either. Some of the main beneficiaries in the U.S. are likely to be large pharmaceutical companies. CAFTA’s intellectual property provisions would stop poorer countries in the region from producing inexpensive, generic drugs. Dr. Karim Laouabdia of the Nobel-prize-winning organization Doctors Without Borders–which has been providing generic antiretrovirals to Guatemalan AIDS patients–argues that new patent protections "could make newer medicines unaffordable." For his group, this "means treating fewer people and, in effect, sentencing the rest to death."
By any economic standard, such controls would signify a move toward protectionism, not "liberalization." But since they allow drug exporters–whose lobbyists have been famously influential in recent years–to reap a windfall on their monopolized goods, the trade office hasn’t dwelt on the contradiction.
Some special interests aside, CAFTA’s importance for the Bush Administration is primarily as a stepping-stone to larger goals. The White House would like to use the agreement as a sign that a hemisphere-wide Free Trade Area of the Americas might still become a reality. This deal has been put in jeopardy by a new generation of Latin American leaders who recognize that "free market" neoliberalism, over two decades of gradual implementation, has exacerbated inequality while failing to deliver on promises of increased economic growth.
In coming weeks, President Bush will continue arm-twisting in the hopes of somehow securing a majority in Congress. A more likely outcome, however, is that Americans will never see an up-or-down vote on CAFTA–and that the deal will be allowed the quiet death it deserves.
– Mark Engler, a writer based in New York City, is an analyst with Foreign Policy In Focus. He can be reached via the web site http://www.democracyuprising.com. Research assistance for this article provided by Jason Rowe.