CAFTA: Another Failure of “Free Trade”

The same corporate interests that sold the North American Free Trade Agreement and the Central American Free Trade Agreement to the American people are hoping to expand on this model of failed trade. The next step in the process of exploiting cheap labor and destroying America’s manufacturing base is the Free Trade Area of the Americas. The implementation of the FTAA would expand the disastrous experiment to 31 additional nations in Central and South America.

The Stop CAFTA coalition released a report highlighting just what an abysmal failure the “free trade” deal has been for both America and the Central American nations that signed the agreement.

The Central American Free Trade Agreement - comprised of the U.S., the Dominican Republic, El Salvador, Guatemala, Nicaragua, Honduras, and Costa Rica - was sold to the American people as an opportunity to improve the lives of Americans and the citizens of the impoverished nations of Central America. In actuality, the deal has displaced peasant farmers, created more inequality, increased emigration to the U.S., decreased economic opportunity, drove down wages and displaced indigenous people throughout Central America.

“The articles included in the report show that the negative impacts of CAFTA in these countries are not simply ‘growing pains,’ or the inevitable transitional problems associated with altering a country’s economic system; they are fundamental flaws in the economic theory that drives CAFTA and will likely not improve,” said Elliott Jones of the Guatemala Human Rights Commission.

Although the deal has only been in place for two years it has already been disastrous, on many levels. The report details the problems faced in El Salvador to highlight the broader problems with CAFTA. In a country with a large population of farmers, one of the benefits promised to the poorer nations of Central America was a huge increase in agricultural exports. That, however, did not pan out as agricultural exports declined 3.6 percent in the first year of the deal. Overall, the nation experienced a net loss of 11,457 jobs in the first year of CAFTA. Those numbers would be exponentially higher if it were not for the increase in emigrates to the U.S. in 2005, an estimated 507 El Salvadorians emigrated to the U.S. each day. By 2007, that number increased to 740 per day.

Those destitute farmers that were promised a better life with the trade regime in place were affected the most. One of the key selling points was the idea that food products would be sold at much cheaper prices. However, with the influx of U.S. agricultural products the price of beans increased by 52 percent and the price of rice rose by 45 percent. The most revealing number is the 70 percent increase in unemployment in rural areas, where the majority of farmers live.

The numbers in the U.S. have been harder to quantify over such a short time, according to the report. However, it is clear that the increase in immigrants from displaced Central American workers entering the U.S. is a major factor in stagnating wages in America. As more and more low-skilled workers enter the U.S. workforce, it drives down the wages of the average American worker. In addition the textile industry has been hit extremely hard. In just two years, 21,500 jobs have been lost in yarn and fabric manufacturing, 7,200 jobs have been lost in textile product mills and 21,600 jobs have been lost in apparel manufacturing.

After just two years it is quite obvious that CAFTA has not had the intended effects. The only solution is to renegotiate the deal with provisions that protect workers in America and the Central American nations. At this point the U.S. should stage a complete and total withdrawal.

“We believe that the results of CAFTA demonstrate the failure of ‘free’ trade and justify a definitive split with this model by the incoming Obama Administration,” said Burke Stansbury of the Committee in Solidarity with the People of El Salvador (CISPES), a member of the coalition. “Not only should the Democratic Congress reject pending agreements such as the Colombia Free Trade Agreement, but the party in power should take this opportunity to introduce a new trade policy based on human rights, and economic, social and environmental sustainability.”

The same corporate interests that sold NAFTA and CAFTA to the American people are hoping to expand on this model of failed trade. The next step in the process of exploiting cheap labor and destroying America’s manufacturing base is the Free Trade Area of the Americas. The implementation of the FTAA would expand the disastrous experiment to 31 additional nations in Central and South America. Please contact your Congressional representatives and tell them that America cannot afford anymore “free trade” deals that put Americans out of work.

Source Public Citizen:

Front Page Photo – carlosjwj - Flickr © Some rights reserved

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