The Dominican Republic-Central America-United States Free Trade Agreement Implementation Act (DR-CAFTA) implements a new trade agreement between the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. The trade agreement, modeled on the 1994 North American Free Trade Agreement (NAFTA) between the U.S., Canada, and Mexico, would eliminate most export tariffs between the included countries while also increasing protection for pharmaceutical patents and other intellectual property. The agreement also includes requirements that all public services be open to private investment and all government purchases be open to international bidders. DR-CAFTA is considered a step toward a comprehensive Free Trade Area of the Americas, which would include all of the western hemisphere with the exception of Cuba.
The Middle-Class Position:
The Middle Class Opposes. Increased international trade can contribute to economic growth, but the way trade rules are formulated in agreements like NAFTA and DR-CAFTA means that the benefits of trade are distributed very unevenly, ultimately undermining the middle class and aspiring middle class in both the U.S. and the nations it trades with. A central problem is that DR-CAFTA empowers businesses and investment capital to cross international borders more easily, providing a decisive advantage over working people who are not so internationally mobile and whose rights are not equally well protected in all of the nations covered by the agreement. One result is that CAFTA is expected to increase the outsourcing of U.S. jobs – from manufacturing to reading x-rays and operating call centers – to Central America. U.S. workers are also likely to see their wages eroded as they are placed in more direct competition with poorly-paid Central American workers who lack strong labor protections and rights in the workplace. At the same time, Mexico’s twelve years of experience with NAFTA suggest that the average person in Central America will also see their standard of living decline under these conditions. In the U.S., the experience of NAFTA also suggests that more jobs will be lost due to displaced domestic production than will be gained due to export growth.
From the Experts:
“CAFTA would reward companies that ship American jobs overseas with greater access to the U.S. market, more freedom to violate workers’ rights with impunity, and the ability to challenge government regulations enacted in the public interest. CAFTA’s rules on investment, government procurement, intellectual property rights, and services create new rights for multinational corporations, but the agreement contains no effective new protections for workers’ rights and actually removes existing protections, leaving the interests of ordinary working men and women out in the cold.” –John Sweeney, President, AFL-CIO (May 28, 2004)
“As Hispanic Members of Congress, we fully understand the critical importance of promoting economic development throughout the Americas. However, United States policy towards Latin America must promote growth that is sustainable, just and inclusive, regardless of socio-economic status... A decade after the passage of NAFTA… this model of trade has not delivered the promised benefits and has widened the gap between the rich and poor... It is our strong belief that CAFTA will only continue to broaden the gap between the haves and have-nots…We can and must do better for the Americas.” –Statement of the Congressional Hispanic Caucus (May 26, 2005)
“Over the last 30 years, the typical (median) wage in the United States has hardly grown – only about 9 percent. Productivity – output per employee – has grown 82 percent over the same period. Normally we would expect wages and salaries to grow with productivity. These trade agreements have helped keep wages from growing by increasing competition with workers making 60 cents per hour and by making it easier for employers to threaten to move when workers demand their share of rising productivity.” –Mark Weisbrot, Economist and Co-Director, Center for Economic and Policy Research (April 16, 2005)
Beyond this Bill:
Congress must act to ensure that the benefits of trade are more evenly distributed throughout our economy. Negotiating strong labor protections into our existing and future trade agreements will help to prevent a “race to the bottom” in wages and labor standards that erodes the standard of living for the American middle class.
Estimated number of U.S. jobs gained due to export activity since NAFTA took effect: 1 million
Estimated number of U.S. jobs lost due to displaced domestic production since NAFTA took effect: 2 million
Number of months after CAFTA passed the U.S. Congress that a North Carolina textile factory announced it would layoff 200 workers as it moved operations to El Salvador: 4
Amount by which CAFTA is projected to increase the U.S. trade deficit with Central America according to the U.S. International Trade Commission: $100 million
Minimum percentage of the decline in the U.S. manufacturing employment that can be attributed to the nation’s trade deficit: 34
Number of minutes the House of Representatives’ vote on DR-CAFTA was scheduled to last: 15
Number of minutes the vote was kept open so that House leadership could muster enough support to secure passage by a single vote: 62
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