May 13, 2005
President Bush’s efforts to sign a free trade agreement, CAFTA, with five small Central American countries (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua) are in their final stages and stalling. The administration is struggling to find the votes in Congress to pass the agreement, signed over a year ago. Cafta would cut tariffs on American exports and make permanent the tariff-free status of Cafta countries on American imports.
Democrats in Congress want the agreement renegotiated to include labor and environmental protections. Several Republicans are protecting local businesses and industries from the increased competition that come from the Central American countries.
Cafta difficulties are sobering. First, these five countries have a very small part in the United States trade picture. If labor and environmentalists are stall these agreements it bodes very poorly on future negotiations with larger trading partners in this hemisphere (Brazil) and in the world at large (China and Japan). Second, the impact on these countries is dramatic: Their economies are much more affected than ours by the agreement. It could provide an economic boom in countries struggling to establish sound government and healthy living conditions for their citizens. Third, some of the Cafta provisions are in place and they will expire without the agreement. The results of the temporary provisions have not been threatening to American industry or labor.
These should be an easy call; the fact that is may not pass with a pro-trade President and his own party in control of both houses of Congress is troubling. I hope it is just a bump in the road on America’s integration into the world’s economic community but it could portend a major shift in American attitudes against free trade agreements and towards protectionism..
May 13, 2005 | Permalink
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