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June 26, 2005
CAFTA
The Central American Free Trade Agreement (CAFTA) is on the fast track, and should receive a vote in the Senate relatively soon. However, Democrats are united in opposition to the agreement, at a time when they should support it most. There are a number of reasons to oppose CAFTA, and the most popular reason appears to be that of protecting American labor. But the main reasons Democrats should rethink their position is China. As Clinton Commerce Secretary William Daley states in today's Chicago Tribune, "[t]he reason CAFTA should be enacted is not economic benefits, it is national security."
It is no secret that China is becoming an economic juggernaut, and that this has made the rest of the democratic world somewhat nervous. News coverage of China's bid for Unocal--which involved Chevron being outbid--is a small piece of evidence. China is interested in much more than oil though. The communist state is already a strong force in the textile industry thanks to sub-human work conditions, an intentionally worthless Yuan, and unrivaled productivity. In fact, as of 2004, China was the worlds largest apparel exporter, having locked up almost 20% of the total textile exports in the world.
The six CAFTA countries--Costa Rica, Nicaragua, Guatemala, Honduras, El Salvador and the Dominican Republic--are unlikely to immediately begin competing with China in terms of their ability to import textiles into the US at the same rate. The immediate economic benefit of CAFTA is unlikely to be felt by the US. However, it will place these countries on better footing to compete in a global economy, and thereby help CAFTA countries dig themselves out of poverty.
China is not the only totalitarian regime in the world. Venezuela's Hugo Chavez is dabbling with populist authoritarianism (however that works), and China has promised to dump billions of dollars into Venezuela and Argentina in exchange for friendlier trade relations. (Think: China needs oil, Venezuela has lots of it.) In Panama, where I spent a good deal of my life, Panama Law #5 created lease agreements with the discretely named "Hutchison Port Holdings" whereby China controls the Panama Canal's ports at Balboa and Cristobal--major ports at either ends of the Canal. As Latin-American countries fall deeper into poverty, the appeal of Sino-Latin relations is likely to grow even stronger, along with the appeal of authoritarian rule.
The greatest reason for supporting CAFTA is that it would send a clear signal to Latin-American news media, US news media, Chinese news media, and the rest of the world, that the US would rather cut tariffs with countries in this hemisphere than allow jobs and textile profit to concentrate in China. (China, by the way, is still oppresive and communist.) The six, small, countries that have signed on to CAFTA will be watching very closely as America responds, and these countries represent the small number of countries that remain seriously committed to the principles of democracy.
Posted by Jonathan Bunch at June 26, 2005 03:58 PM
The problem with this post is that it totally ignores each and every awful provision of CAFTA.
Yeah, it would be a nice thing given China's strength. But China itself isn't a reason to force Central American nations to essentially dismantle the labor laws that they have enacted or impose all sorts of intellectual property restrictions on those nations.
China itself is not a good enough reason to pass this thing. Dismantling the labor provisions in Central America is not the way to pull those people out of poverty.
Posted by: Balta at June 26, 2005 06:19 PM | permalink
Balta,
Could you expand on the "awful" provisions of CAFTA? You seem to have ignored them as well. The Central American nations aren't being forced to join CAFTA--they've already signed it and are asking the Congress to ratify it.
Also, what Central American labor provisions are you referring to? Having spent more than a decade in Central America I can assure you that any labor provisions that do exist, and are threatened with being dismantled, were probably incredibly relaxed and/or not being enforced. Are you saying that Central American nations should be free to violate international labor and intellectual property standards while also engaging in free trade with the US?
Last I checked each of those nations was a member of the WTO, which means that each of them is subject to international intellectual property/patent standards as it is.
Posted by: Jonathan Bunch at June 26, 2005 06:43 PM | permalink
Awful provisions? Have you read the thing? Taken for what it leaves out as much as what it leaves in the thing consists of just about nothing but awful provisions.
Posted by: buermann at August 5, 2005 07:40 PM | permalink
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