July 29, 2005 – Yesterday, the US House of Representatives narrowly passed a controversial free trade deal, highlighting differences between free trade opponents like workers, labor groups and public interest organizations, and their adversaries in the trade and manufacturing world.
A handful of Democratic Representatives joined with 202 Republicans to pass the Central American Free Trade Agreement (CAFTA) yesterday by a margin of two votes after Republican leaders held the vote open for an hour while they harangued party members to support the deal. The passage of the agreement -- which will slash trade barriers between the US, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua -- prompted immediate responses from supporters and opponents alike.
Business and business-backed groups applauded passage of the bill. In separately issued statements, the National Association of Manufacturers and American Farm Bureau Federation (AFBF) applauded the measure for what they see as the huge economic benefit the bill will bring to members.
The AFBF predicted in its statement that CAFTA is likely to bring in an extra $1.5 billion a year in export sales.
But, as previously reported by The NewStandard, many of those most affected by the trade deal in the US are worried that small farms and manufacturing jobs -- already in short supply and dwindling -- could be severely hurt by throwing open US borders to trade with nations that have few if any labor and environmental safeguards.
Advocates for small farmers told TNS in May that the benefits from CAFTA will go to large agribusinesses while small farmers will struggle. Expected to be especially hard-hit is the US sugar industry, which currently supports union jobs and cooperative farms that rely on a special price regulation system. Economists anticipate the new trade agreement will dash those protections.
The negative effect in the other member countries is predicted by CAFTAâ€™s opponents to be even more severe. Mexicoâ€™s experience under the North American Free Trade Agreement, CAFTAâ€™s big brother enacted in 1994, saw the displacement of some 1.5 million peasant farmers, according to the government watchdog group Public Citizen.
Oxfam, an international relief organization that testified in opposition to the bill earlier this year, warned that CAFTA "will force legislative changes that will erode the policy space required for national development" in poorer nations. Oxfam also joined with a coalition of groups to denounce intellectual property restrictions in the bill that could bring AIDS research in CAFTA nations to a grinding halt.
The group Tobacco-Free Kids charged in a statement that including tobacco in the free trade provisions was a dangerous move that will undermine efforts to prevent addiction and "will be remembered in lives lost and in millions of dollars in health care bills."
According to the Department of Agriculture, the countries of El Salvador, Guatemala, Honduras and Nicaragua will immediately end their tariffs on imported tobacco under CAFTA. Costa Rica and the Dominican Republic will eliminate theirs within ten years of passage. US-imposed tariffs will gradually phase out over fifteen years, the USDA noted.
In praising the trade deal, the USDA noted that Latin American countries impose tariffs as high as 14 percent on tobacco, and that the World Trade Organization authorizes 90 percent tariffs on the plant.
The trade measure has not yet passed three nations: Costa Rica, Nicaragua, and the Dominican Republic due to broad opposition. Additionally, it is under legal challenge in El Salvador, the group noted.
"I hope this CAFTA vote marks the end of political opposition to trade liberalization," National Association of Manufacturers president John Engler said in a statement, reflecting popular belief on both sides of the debate that, while small, CAFTA is a key stepping stone to larger deals of its kind planned by the Bush administration.