Tuesday, May 10, 2005

I DO like CAFTA

So there is an article on the WSJ editorial page today about why the Central America Free Trade Agreement is a good thing. I've copied almost the whole thing below, because it's nice and short.

Twenty years ago, civil war was a part of everyday life in Central America. Building democratic societies and improving the economies in these countries often took a back seat to simply staying alive. But the U.S. knew that just as our trade policy after World War II helped secure democracy and hope in Western Europe and Japan, open trade policies today could play a crucial role in transforming our neighborhood.

That is why, in 1983, President Reagan introduced the Caribbean Basin Initiative (CBI) to grant one-way access for the products of Central America and the Dominican Republic into the U.S. economy. This initiative functioned as critical economic aid, and it worked. Exports to the U.S. from this region have quadrupled since 1985. President Clinton was right to expand CBI benefits in the '90s and, as a congressman from Ohio, I joined colleagues in providing strong bipartisan support for that effort.

In the space of a generation, Central America and the Dominican Republic replaced chaos with commerce. It is time, now, to take our relationship to the next level. The economic benefits of Cafta to the U.S. could not be clearer. Because of CBI and the other trade preferences we have granted these countries, 80% of their goods and services and 99% of their agricultural goods already enter the U.S. duty-free. But U.S.-made products exported to Cafta countries (worth $15 billion) still pay hefty tariffs. On day one of the agreement, Cafta would eliminate the vast majority of those tariffs, saving nearly $1 billion per year in foreign taxes on U.S. manufactured goods and farm products. Those who supported legislation to open America's market on a one-way basis now have the chance to give our workers and farmers a level playing field.

In addition to the immediate savings for Americans, Cafta expands markets for American producers of everything from apples to zinc products. America's leading farm and manufacturing groups estimate sales gains to Central America of $1.5 billion in farm products and $1 billion in manufactured goods. This is good for American workers.

Lately many of my former colleagues on Capitol Hill have focused on our trade deficit with China. I share that concern, but Cafta helps address it by allowing us to compete more effectively with China. In the clothing business, Cafta provides specific incentives to use U.S. yarn, fabric, thread and elastics in making clothes in our hemisphere. After Cafta, more than 90% of all apparel made in Central America or the Dominican Republic will be sewn from fabric and yarn produced by American workers. If we don't solidify our trade relationship with this region through Cafta, these factories are likely to move to Asia, where U.S. inputs account for less than 1% of the clothes made there.

Some say that we should not enter into a trade agreement with Central America and the Dominican Republic because labor conditions there are not good enough. I find this argument hard to follow, because Cafta will compel these countries to improve their labor conditions. There is no doubt that the region has more work to do in passing better laws and enforcing them, but this is precisely why we should pass Cafta. This agreement gives the U.S. new leverage to raise standards and ensure effective enforcement of labor protections.

By the efforts of many brave reformers, Central America and the Dominican Republic have risen from the depths of despair and now stand poised to solidify their gains through a deeper trade and economic relationship with the U.S. It would be a mistake to take for granted the recent success stories of Central America and the Dominican Republic. Democracy is still fragile in many parts of Latin America: This is the chance of a lifetime to shore it up with our neighbors to the south, while simultaneously creating new markets for U.S. workers and farmers.


Looks to me that consumers and producers alike in both regions benefit from CAFTA. Sorry, I just cannot be convinced that free trade is not a good thing.

4 comments:

Allen said...
This comment has been removed by a blog administrator.
Allen said...

First off, the WSJ has been an internationalist journal forever thus it is no surprise that it would support a socialist supra-state bureaucracy that is CAFTA and the FTAA. When I finish with finals, I will give the article my attention and respond to it.

However your concluding remark shows that you misunderstand CAFTA. As I have said before, I am in favor of free trade as well. The reason I oppose these so-called free trade agreements is because they have nothing to do with free trade. Again, the reason why some of the biggest supporters of free trade also oppose these agreements is for the exact same reason that I do. Don't be misled by the title.

Adam Scavone said...

I think this is one of those things where you've got to toss the trade bureaucrats a bone and allow them to draw up agreements and make treaties and do whatever bureaucrats do.

Free trade should be a grocer in New York calling a tomato farmer in the D.R. and saying, "Hey, I need ten thousand pounds of tomatoes in three weeks. Can you send it?"

If they need to do it in the framework of an "agreement" to calm down constituents (particularly on the other end) and assure them that there is rhyme and reason to free trade madness, that's fine with me. Seems there are bigger battles to fight than CAFTA.

Allen said...

If the effects of CAFTA were limited to what you just said, I might see your point (though I still would not agree). However, CAFTA has almost NOTHING to do with free trade. That's what I've been saying for weeks now. I just don't understand why pro-free trade people like the libertarians on this blog, cannot join together against something that is not about free trade though calls itself free trade. Don't worry, I promise I won't call you protectionists for opposing CAFTA and the FTAA.