CAFTA: How It Passed, and What It Means for America

CAFTA: How It Passed, and What It Means for America

by Mariah Wojdacz, December 2009

The Central American Free Trade Agreement (CAFTA) passed into law last month despite heavy opposition from both parties, interest groups, unions, and citizens nationwide. After the Senate approved the agreement by a vote of 54-45, the President and his supporters began vying for votes in the House - a difficult task, since representatives were reporting their constituents were against CAFTA nearly 30-1. Why were so many Americans opposed to an agreement that the President has called vital to the security of our nation? Will passage really make our country safer by shoring up the American economy?

According to William F. Jasper of The New American Magazine, CAFTA will cost America "hundreds of thousands of jobs, billions of dollars in foreign aid, additional waves of illegal aliens, and further entanglement in sovereignty-destroying international regulatory regimes." In a petition signed by unions, labor rights organizations, economic research groups, churches, religious organizations, and ministries, CAFTA fails the standards of justice and "will harm, rather than help, farmers and workers in Central America who are struggling to overcome poverty."

How did CAFTA pass through Congress in spite of such harsh opposition? Jasper reports the President and his henchmen pulled out all the stops to "bribe and bludgeon" House Republicans to vote yes in spite of opposition in their districts. On July 27, the morning before the vote, President Bush, Vice President Cheney, and Secretary of State Rice marched up Capitol Hill in order to secure as many votes as they could muster. The Washington Post likened these negotiations to the "wheeling and dealing on a car lot."

"Rest assured that you will pay dearly for these bribes used to buy votes," writes Rep. Ron Paul (R-TX) in his column Straight Talk. "Every favor granted and every pet project funded comes on top of the pork-laden appropriations bills already passed in the House this year." Paul, one of the 27 Republicans voting against CAFTA, reports that CAFTA passage may cost the taxpayers as much as $50 billion!

More alarming is the fact that proponents of CAFTA had to break House rules in order for the bill to pass at all. After the required two hours of debate, only 15 minutes are allotted for a vote. During those 15 minutes, CAFTA was defeated, 175 in favor to 180 opposed. CAFTA proponents were so determined to pass the bill, however, that they held the vote opened for nearly an hour, a blatant violation of the rules. It has been widely reported that during this hour, Republicans pressured about 8 to 10 members and, according to the New York Times, "jockeyed over who would be allowed to vote against the bill and save face back home." The final vote, taken after midnight, was 217-215.

Proponents of CAFTA claim it will increase jobs for Americans, decrease the growing trade deficit, and decrease poverty in the Central American member nations of the Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. These promises are virtually identical to the promises of NAFTA, the free trade agreement between the U.S., Canada, and Mexico that passed in 1993. More than a decade later, NAFTA provides a model for prediction. Have the benefits that NAFTA promised yet materialized? Will CAFTA promises be kept in coming years?

Proponents of NAFTA promised the treaty would provide 200,000 new American jobs per year and a growing trade surplus with Mexico. NAFTA was touted as the solution to Mexican poverty and poor working conditions. However, ten years later, experts estimate NAFTA has cost American workers over 1 million jobs in the manufacturing sector. The trade deficit with Canada and Mexico has increased 12-fold, to $111 billion in 2004. NAFTA has done nothing to decrease poverty in Mexico; in fact, an estimated 8 million Mexicans have fallen from middle-class to poverty since NAFTA's passage. Real wages for the average Mexican worker have fallen 12 percent, and many American companies have relocated to Mexico to take advantage of the low minimum wage of a mere $5.00 per day.

NAFTA is credited with increasing U.S. agricultural exports to Canada and Mexico by $9.3 billion since 1993. Sales of U.S. corn to NAFTA partners increased 175 percent. But these numbers cannot tell the entire story. NAFTA allows the U.S. government to subsidize crops such as corn while lifting import taxes. Thus, Mexican farmers cannot compete with artificially low prices of U.S. products. Opponents of NAFTA fought for provisions that disallowed the sale of staple crops like corn, rice, and beans from being subsidized for fear that farmers in undeveloped regions would not be able to compete. Sure enough, the export of corn to Mexico alone has displaced at least 500,000 families from their farms, forcing them to become manufacturing or migrant workers.

Moreover, NAFTA provides "investor protections" which allow corporations to sue the governments of member nations for regulations that may limit their profit potential. Under this NAFTA provision, a Canadian funeral home chain sued the U.S. government for $750 million after a Mississippi court found the chain guilty of fraud. The U.S. based Ethyl Corporation forced Canada to pay $13 million in damages caused by the Canadian ban on MMT, a gas additive that is a known neurotoxin. And Metalclad Corp., also based in the U.S., sued a Mexican state for prohibiting a toxic waste dump. NAFTA ruled the Mexican government had to pay Metalclad $16.7 billion. The list goes on and on.

CAFTA is a virtual carbon-copy of NAFTA, and workers' rights groups worry that it sanctions abusive labor laws that are the norm in many member nations. Most Central American government regulations do not require businesses to provide clean, safe working environments. They do not require adequate breaks or decent wages for workers and often reprimand workers for attempting to form unions. CAFTA does not require member nations to draft more acceptable labor laws, only that they enforce current regulations, many of which are simply reprehensible.

In March, the Boston Globe reported that Guatemalan workers, teachers, and farmers were shot at while demonstrating for human rights. CAFTA affords protections to the very businesses that are violating these rights. Forty percent of Central America's workers earn less than $2.00 a day, and CAFTA does nothing to increase these wages or provide better working conditions for these people.

There is also concern that CAFTA may oppress Central American economic growth by keeping member nations in debt. Under CAFTA regulations, domestic debt cannot be paid off in disproportion to debt owed internationally. This means member nations will no longer be allowed to prioritize their debt in order to shore up their domestic economies.

What does any of this have to do with national security? According to President Bush, the U.S. must work to stabilize developing democracies, lest they fall into alliances with corrupt, oppressive governments. But there is simply no guarantee that CAFTA will improve Central American economies at all, and the history of NAFTA suggests the agreement might hurt more than it will help. The vote for CAFTA may well have been a national security vote, but in the end its passage is likely to make us less secure, not more.