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Central America Free Trade Agreement Centers on Job Status

Posted on: Thursday, 21 July 2005, 03:01 CDT

Jul. 21--To hear backers and opponents of the Central America Free Trade Agreement talk, you'd think they were looking at two different plans.

"It's an excellent agreement," said Walter Bastian, deputy assistant secretary for the Western hemisphere are the U.S. Department of Commerce. "We gave up very little. ... Our negotiator has done a fantastic job."

Not so, said Ernest Baynard, executive director of Americans for FairTrade.org, a nonprofit coalition of farmers, small manufacturers, faith-based groups and small businesses.

"It's a job killer," he said.

Bastian was in Memphis Wednesday with Renee Carter, senior program manager of TradeRoots at the U.S. Chamber of Commerce to speak to reporters and to meet with staffers of U.S. Rep. Harold Ford, D-Tenn.

Congress is expected to vote on CAFTA before it goes on recess at the end of next week.

Bastian and other federal officials are touring the country to tout benefits of the agreement.

CAFTA, if ratified, will liberalize trade between the United States, five Central American nations -- Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua -- and the Dominican Republic.

Some of the debate about it revolves around the 12-year-old North American Free Trade Agreement, which loosened trade restrictions among the United States, Canada and Mexico.

Bastian conceded NAFTA didn't produce the added jobs promised, but said on balance, the effect was positive.

Baynard, in a telephone interview from his Washington office, cited an Economic Policy Institute study that claimed NAFTA led to job "displacement" of nearly 900,000 workers from 1993 to 2002.

Since the Caribbean Basin Initiative became law in 1984, goods from CAFTA countries have flowed into the United States without tariffs, Bastian said.

CAFTA will provide the same deal for U.S. goods shipped to those nations, he said.

In addition, Central American manufacturers will need U.S. materials to ship goods to the United States duty-free; if they violate their labor laws and aren't punished, the United States may fine them, and intellectual property, from DVDs to prescriptions drugs, gets additional protection, he said.

The deal will create added markets for U.S. soybeans, cotton and chicken and benefit the East Tennessee technology corridor with the intellectual property protections, Bastian said.

Baynard contended the agreement doesn't require Central American manufacturers to use U.S. inputs, making CAFTA trade a possible "back door" source of goods from China.

Benefits to soybean, grain and cotton farmers will be minimal -- about $100 in added income in 10 years, Baynard said.

"We already have more than 90 percent penetration of those markets and the size of the markets are minuscule as far as buying power is concerned," he said.

Those marginal gains will be outweighed by losses in sugar and textile trade, Baynard said.

"Basically CAFTA is an outsourcing agreement," he said. "The major benefits are for large agribusinesses and corporations that can access much cheaper labor."

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Source: The Commercial Appeal

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