Thursday, June 02, 2005
Topic of the Day: CAFTA
The last time I discussed CAFTA (link below), it was a Friday and I was tired so it was a short post. Well now its a Thursday of a short week and I'm still tired. At least I've got a better article to discuss this time.
May 27, 2005
The NYTimes isn't exactly the newspaper Bill O'Reilly describes it as. On Tuesday, the Times had an editorial encouraging a vote for CAFTA despite its troubles. While the NYTimes is a little bit to the right of me on this issue, it is likely because they have more experience, and perhaps I should trust their better judgement. I'm going to skip around their editorial and mix my previous post in a little bit, hopefully you'll be able to follow along.
They admit the flaws of CAFTA just as I stated in my previous post. Here's how the Times put it:
A complaint that is far more worrisome is that the Bush administration didn't push the Central American countries to link labor rights more forcibly to the trade agreement. The pact does include a provision for fining countries that are not enforcing labor laws, but the administration could have done better. Nevertheless, Cafta would still be a win for Central American workers. More factory jobs in these poor countries would do wonders to provide low- or no-income people with options. Denying poor people in Central America the benefits of better access to the American market is certainly not the way to lift them out of poverty.Here's how I put it, with a slightly different angle:
But what is wrong with CAFTA as it stands? As I said, its a sell-out to the business lobby. If free trade is introduced too quickly, you get a two-class system like what exists now in China. I haven't seen any, but I'd love to see charts of the income distribution in China compared with the US and Europe. I believe they would be greatly distorted. Only now are Chinese citizens, normal citizens, building up the political power to perhaps one day change things.Since I was too tired in my original post to go into details (shame, shame on me), I wasn't able to discuss why immediate free trade doesn't immediately benefit the poor in these countries. The NYTimes hits most of it by describing CAFTA's failure as a labor issue. Specifically, these countries have no provisions to protect labor, so it could take years or longer in order for the necessary basic labor protections (safety, wages, unions, etc) to fall into place. It is furthermore likely that the people initially benefited by CAFTA (your stereotypical "factory owner") will push the government to stay out. My point was that if you ease CAFTA in slowly, the problems that occur without the necessary labor protections will still arise but the employers won't be able to have as much influence over these countries.
The Times lists the other major reason:
The most compelling argument against Cafta, however, is that it would siphon away American manufacturing jobs to Central America. That is happening anyway - industries like textile manufacturing will continue to migrate to lower-wage nations. The economic reality of our increasingly interconnected world is that countries are best off if they lower trade barriers and try to specialize in producing the goods in which they have a comparative advantage. Places like the United States and Europe have no business trying to compete with El Salvador over who can make the cheapest T-shirts.Now I really didn't go into this very much because that was all fairly obvious to me: "Free trade is a hallmark of the American Way, without it our quality of life would pale in comparison to how we live today." Opponents of free trade (my father thinks it to be absolutely vile), in my opinion, trade in the long term benefits based on the short term risks.
Perhaps this isn't the country's #1 Liberal paper:
Opponents include many Democrats, labor unions and America's sugar industry, and some of their arguments are much better than others. One of the most powerful lobbying groups, the sugar industry, complains that Cafta would bring 109,000 tons of sugar imports into the country every year to compete with the local product. This is true, and to that we say, "Bring it on." The American sugar beet industry is one of the most coddled farm sectors in the world, and that's saying something. American consumers are paying inflated prices for sugar, and it is unfortunate that Cafta won't do more to redress that situation. As it is, the new Central American sugar would account for only 1 percent of consumption here.Whoops. Seeing as how I hate the sugar industry AND when Democrats whine about free trade, I certainly like the "Bring it on" attitude. The fact that the sugar industry really didn't get that bad of a deal does, however, tell you how deep the Republican Party is in their pockets.
But have no fear, there's a zinger there for Bush:
None of that is an excuse for ignoring American workers who are hurt in the process. President Bush should, for example, couple his push for Cafta with a promise to put more money, and teeth, into America's underfinanced, lackluster Trade Adjustment Assistance program, which is supposed to help workers whose jobs shift overseas because of trade....We must also decide to help the American workers whose jobs are heading south, so that they, too, might benefit from the new world of global free trade.I did a little bit of research between when I originally wrote the article and now. It seems that if a trade agreement like CAFTA were to fail, it might not make it back on the books for decades. Simply, the business lobby thinks CAFTA is watered down enough already, and the protectionist lobby thinks CAFTA is horrendous already, so there's no room for compromise.
I guess one of the benefits of blogging is that you can watch someone's thought process evolve, and the Times has some good points. Not quite sure if my original position was wrong or not. Perhaps I'll go the way of Bill Clinton and put the decision off for a little while.