Opponents predict defeat for Central American deal

TRADE-U.S.
Opponents Predict Defeat for Central American Deal

By Emad Mekay

WASHINGTON, May 27, 2004 (IPS) - The Bush administration will sign the Central American Free Trade Agreement (CAFTA) with five developing nations Friday, but opposition Democrats and civil society groups predict the deal will fail in Congress.

Democrats say the pact is doomed because the Bush administration failed to consult with elected members in Congress and to negotiate higher labour standards to be followed by Central American governments.

Sander M Levin, the top Democrat on the Ways and Means Trade Subcommittee of the House of Representatives, said CAFTA "is on a midnight train to nowhere — in an election year or any year."

(A U.S. presidential election is scheduled to be held in November).

In a statement Levin said he could not imagine that 25 to 30 House Democrats will vote for the agreement — but that support could be essential because some Republicans are expected to oppose CAFTA because it will open up the U.S. market to more textile, sugar and citrus imports.

Representatives Charlie Rangel and Xavier Becerra also issued a statement Thursday that said CAFTA is "a lost opportunity" because it will not create jobs or help bring people out of poverty.

The trade deal — with Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua — would lower duties on U.S. products sold in those nations and promote more trade in services between the Latin nations and the United States.

CAFTA is modelled after the North American Free Trade Agreement (NAFTA) between Mexico, Canada and the United States. While its boosters say NAFTA has created jobs in Mexico, critics argue that after 10 years it has not improved the lives of millions of poor people there and has cost the jobs of workers in Canada and the United States.

CAFTA is also widely considered to be a stepping-stone to the larger Free Trade Area of the Americas (FTAA) a zone that would encompass all countries in the western hemisphere except Cuba.

The FTAA talks stalled in Miami last year after Washington refused to discuss cutting its farm subsidies, which southern nations say unfairly put their own farmers and agriculture at a disadvantage.

It is not clear when President George W Bush will submit the CAFTA to Congress (the Senate and House of Representatives), which will have 90 days to vote on it.

The deal will be signed at the Organisation of American States (OAS) in Washington, DC on Friday with trade ministers from Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.

A date for signing an agreement that includes the Dominican Republic will be announced when consultations with that nation’s government are complete.

CAFTA is the latest in a number of so-called free trade agreements (FTAs) the Bush administration has set out to negotiate. It has reached deals with Australia and Morocco, while talks are underway with the Middle Eastern state of Bahrain and with the five nations of the Southern African Customs Union (SACU). Negotiations with Thailand are expected to begin this year.

The United States currently has FTAs with Israel, Canada and Mexico (NAFTA), Jordan, Chile and Singapore.

With the Dominican Republic, CAFTA will create the second-largest U.S. export market in Latin America, behind only Mexico.

"CAFTA will promote U.S. exports to a large and important market, even as it supports continued openness and democracy in Central America," Bush’s trade representative, Robert B. Zoellick, was quoted saying in a statement earlier this month.

"The FTA will reinforce free-market reforms in the region and will also strengthen the rule of law and sustainable development," he added.

But several development and civil society groups have sounded the alarm over the deal’s possible negative impact on access to medicines, labour standards and poverty.

Groups including the Salvadoran American National Network (SANN) — the largest national association of Central American community-based organisations — as well as hundreds of civil society, labour, environmental, indigenous, women’s and student organisations in Central America oppose the NAFTA model and have rejected CAFTA as "anti-development."

Northern groups too say the pact has the potential to lead to deterioration in labour rights and environmental protection, as well as the destruction of the livelihoods of family farmers.

The groups opposed to the deal include Oxfam America, Friends of the Earth, Alliance for Responsible Trade (ART) and The Development GAP, among many others.

"Even if it is brought to Congress, CAFTA likely will be dead on arrival," said Lori M Wallach, director of Public Citizen’s Global Trade Watch.

"CAFTA is the linchpin of a trade agenda written by Bush campaign backers representing utility companies, drug companies and Wall Street, and carried out by its servants in the Office of the U.S. Trade Representative," she said.

Critics say Friday’s low-profile signing ceremony reflects the strong opposition to the deal. It will occur minus heads of state and on the Friday of a holiday weekend when Congress is in recess and when the public is not paying much attention, they contend.

Wallach says members of Congress remain in their home districts confronting job losses, a declining tax base and other harsh realities resulting from the Bush administration’s trade policies. That is why many of them are unlikely to endorse the deal, she adds.

But Nancy Birdsall, director of the Washington-based Centre for Global Development (CGD) says that while the deal will not make U.S. citizens richer, it will benefit the country in more subtle ways.

"By enhancing Central America’s prospects for economic expansion and democratic stability, CAFTA gives the U.S. stronger partners to deal with such problems as drug trafficking, violence and terrorism, environmental and health challenges, and unregulated migration," she said.

"Washington’s interests are grounded in a more prosperous, stable and reliable Central America," added Birdsall, who was executive vice-president of the Inter-American Development Bank from 1993 to 1998.

Other experts acknowledged CAFTA’s faults but said failure to adopt it could be even counter-productive, especially for the business communities in the Central American nations.

"Like all ’real world’ trade agreements, CAFTA is far from perfect," said Kimberly Ann Elliott, of the Institute for International Economics and CGD.

"But regardless of the weaknesses, if Congress rejects CAFTA, that could well make things worse for countries that have only recently emerged from violent conflict and economic instability, and that face a growing competitive challenge from China and other Asian nations."

In December, representatives from trade unions, human rights and civil society groups joined U.S. legislators to fight the deal, saying it will benefit only businessmen and major corporations.

"Because the Bush administration rejected giving workers’ rights and human rights and environmental safeguards parity with protections for corporate interests, CAFTA would benefit multinational corporations that want to manufacture goods in foreign sweatshops with low-wage labour and then sell us those goods at huge profits," said Linda Chavez-Thompson, executive vice president of the AFL-CIO, a federation of 61 unions representing 13 million U.S. workers.

Senator John F Kerry, the presumed Democratic presidential nominee for November’s election, has also opposed the deal, saying it lacks adequate protections for workers in Central America.

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- Washington Office on Latin America (http://www.wola.org/economic/cafta.htm)

- AFL-CIO (http://www.aflcio.org)
- Representative Sandy Levin (http://www.house.gov/levin/)
- U.S. Trade Representative (http://www.ustr.gov)

(END/IPS/NA/LA/IF/IP/WT/FT/SP/EM/ML/04)

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