CAFTA-DR: a level playing field for all, or stacked deck for a few?(INTERNATIONAL SECTION)(Central American Free Trade Agreement)

Publication: Business Credit

Publication Date: 01-OCT-05

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COPYRIGHT 2005 National Association of Credit Management

In the atmosphere of a sharply divided debate, the U.S. House of Representatives approved the Central American Free Trade Agreement (CAFTA-DR) around midnight July 27 by a razor thin margin of 217-215, after some last-minute vote switching. The U.S. Senate passed the trade agreement in June by a 54-45 vote--a slimmer majority than most recent Senate trade agreement votes. The close House vote is representative of the widely divergent views of supporters and opponents of this trade regulation. Those who favor it believe it will bring a "level playing field" to American companies that export goods and services into the affected Central American countries of Costa Rica, El Salvador, Honduras, Guatemala and Nicaragua as well as the Dominican Republic. Those who are against the agreement argue that it will primarily benefit investors and top corporate managers, while promoting a race to the bottom in terms of workers' wages in both regions.

"It's a win-win for both regions," Nicaragua's Ambassador to the U.S., Salvador Stadthagen told Business Credit. And Walter Bastian, Assistant Secretary of Commerce for the West Hemisphere, says: "We've got the best trade agreement we've ever negotiated."

Alan Greenspan, the Federal Reserve Chairman, warned in a late August speech that opposition to free trade and the large federal budget deficit were the two greatest challenges to economic stability in the U.S. Other economists and labor officials have warned that CAFTA will actually increase the U.S. trade deficit, as they contend has happened with the North American Free Trade Agreement (NAFTA) that was passed in 1993. "This kind of model of free trade is what has really worsened our trade deficit," says Elizabeth Drake, International Policy Analyst for the AFL-CIO headquarters in Washington, DC. House Minority Leader U.S. Rep. Nancy Pelosi, (D-CA) adds: "CAFTA is a step backward for workers in Central America--and a job killer here at home."

The U.S. Department of Commerce's CAFTA-DR Gateway website points out that even before CAFTA takes affect, "nearly 80 percent of products from Central America and the Dominican Republic already enter the U.S. duty-free, because of unilateral preference programs such as the Caribbean Basin Initiative (CBI) ... CAFTA opens the region's markets to goods, services, and farm products...

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