Bush's Free-Trade Pact is a Heavy Lift

The president's push for a new agreement in Central America is meeting unexpectedly strong opposition

Mark Engler
Newsday
June 20, 2005

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 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 deal, which would lower tariffs and create NAFTA-like rules to govern economic exchanges between the United States, 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 Bush administration this year, and its inability to move it forward indicates that the dubious claims of the "free trade" boosters have proved unconvincing.

Republican leaders have not yet called the legislation up 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 industries such as 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 to vote on it.

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.

One reason for this decline was the failure of NAFTA to protect workers' rights to organize unions. NAFTA 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 of 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 international standards.

The U.S. Trade Representative's presentation of CAFTA as a tool for exporting democracy is also highly suspect. CAFTA effectively extends a NAFTA provision that allows companies to challenge any law that infringes on their ability to procure future profits, which has been used to strike down environmental and public health laws. 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's not very free, either. Some of the main beneficiaries in the United States are likely to be large pharmaceutical companies. CAFTA's intellectual property provisions would stop poorer countries from producing generic drugs. Dr. Karim Laouabdia of Doctors Without Borders, which has been providing generic anti-retrovirals to Guatemalan AIDS patients, argues that new patent protections "could make newer medicines unaffordable ... [which] means treating fewer people and, in effect, sentencing the rest to death."

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 George W. Bush will continue arm-twisting in the hopes of 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 is an analyst with Foreign Policy In Focus. Research assistance for this article was provided by Jason Rowe.

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