Senate approves CAFTA

By DON McINTOSH, Associate Editor

Voters in Oregon and Washington who dislike NAFTA-style trade agreements had no one to represent them in the U.S. Senate June 30. All four U.S. senators from the two states voted that day to approve a big-business-supported treaty the Bush Administration bargained with a group of six Central American and Caribbean nations: Guatemala, Honduras, Costa Rica, El Salvador, Nicaragua and the Dominican Republic. The treaty passed the Senate 54 to 45, and now goes to the U.S. House of Representatives, where it is expected to face an up-or-down vote by July 28.

The Dominican Republic–Central America Free Trade Agreement (known as DR-CAFTA, or just CAFTA for short) is seen by its critics as a further expansion of the trade policies that have led to America’s dramatic decline. The United States passed from a trade surplus to a trade deficit in the mid-1970s, and hasn’t run a surplus since. The trade deficit has been rising especially rapidly since 1995. Last year’s deficit of $665 billion was an all-time high, and 2005’s is on track to surpass it. The trade deficit now equals 6.4 percent of the U.S. Gross Domestic Product: In effect, the United States is spending 6.4 percent more than it’s producing, and has to borrow money from foreign pockets to make up the difference.

Anxiety about this worsening trade picture helped make this Senate trade vote much closer than other votes in recent years. NAFTA, in 1993, had 61 votes of support in the 100-member chamber, and NAFTA-like deals with other countries in 2003 and 2004 had higher levels of support: a treaty with Chile had 66 yes votes; with Singapore, 66; Australia, 80 and Morocco, 85. A 2000 vote to normalize trade relations with China got 83 votes.

In every case, supporters of the treaties talked them up with promises of new jobs in the export sector. But they ignored greater numbers of jobs lost to imports. According to the government’s own account, over half a million jobs were lost in the U.S. due to trade with Mexico and Canada through 2002, when the government stopped counting NAFTA-related job losses separately. If CAFTA passes in the House, the United States would be wedded economically to a region of 47 million people where workers earn less than $2 a day.

Most U.S.-based multinational corporations support CAFTA, and business organizations have lobbied heavily for the treaty. Labor and environmental groups oppose it because it lacks any substantive provisions for protection of labor or environmental standards.

The Senate vote on CAFTA — as with past votes on other trade agreements — divided somewhat on party lines. Forty-four of the 56 Senate Republicans voted for CAFTA, while 33 of the 43 Democrats voted against it. Oregon’s Ron Wyden and Washington’s Patty Murray and Maria Cantwell were among the 10 Democrats voting for CAFTA. Oregon Republican Gordon Smith also voted for it.

Wyden had earlier raised the hopes of CAFTA critics with bluster about the treaty’s flaws during Senate Finance Committee hearings. But two days after meeting with Oregon labor officials in June, Wyden signaled his shift back when he defended CAFTA in several town hall meetings around the state.

On the Senate floor the day of the vote, Wyden explained his decision to support CAFTA stemmed from his concern about China getting “an economic toehold in our back yard.”

“If CAFTA is rejected, China will have yet another opportunity to grow its economy at America’s expense,” said Wyden, who voted for a 2000 agreement that expanded U.S. trade with China.

Wyden has been aggressive in pushing this rationalization, said Oregon AFL-CIO President Tim Nesbitt, but competition with China doesn’t stand up as a rationale for a pro-CAFTA vote.

“It’s a new but particularly obnoxious argument,” Nesbitt said. “If anything, we’ll see what Mexico saw, which is a loss of even lower wage factory jobs to China.”

National AFL-CIO trade policy expert Thea Lee notes that the same argument was made with Mexico — that NAFTA would improve competitiveness with China. That didn’t happen, Lee said.

“To the extent we have a competition problem with China, it needs to be addressed directly with policy with China,” Lee said. “Allowing a little more market access to do low-end assembly and apparel in Central America isn’t going to make a difference.”

“CAFTA does nothing to respond to China’s predatory industrial dumping,” concurs CAFTA critic Alan Tonelson, research fellow with the U.S. Business and Industry Council — a business group that’s critical of NAFTA-style trade agreements.

In voting for CAFTA, Wyden stayed true to his self-styled status as a “free- trader.”

Critics of the term say treaties like CAFTA may be labeled “free-trade” agreements, but the freedom they tout is freedom for multinational corporations. The treaties ensure they are free to come and go with dollars, raw materials, finished products and profits. If CAFTA passes, corporations will be freer to seek the lowest wages this side of Panama, but workers won’t be free to move between countries to seek higher wages. Nor are they truly free to organize unions.

And in fact, treaties like CAFTA limit the “freedom” of democratically-elected governments to regulate trade, and they beef up legal enforcement of monopolies on new drugs and old copyrights.

Polls indicate the American public is not very aware of CAFTA. To the extent they know of it, opinions are mixed. Described as a “free-trade” agreement, most respondents say they support it. But asked whether they support it if it means jobs losses, even if it makes consumer goods cheaper, three-fourths say they would oppose it.

Despite the fact that Republicans are more inclined than Democrats to support NAFTA-like trade treaties, in the past decade the pacts have faced tougher going in the Republican-dominated House than the more evenly divided Senate. Lee points out that in the House, representatives face election every two years and have smaller districts. Local plant closures resonate more. Senators, on the other hand, face election only every six years, and they raise bigger money from bigger business to get re-elected in statewide races. And 46 of the 100 senators are themselves millionaires, including Wyden, Smith and Cantwell.

To win support in the House, the president is expected to make all sorts of promises — or threats.

In the Senate, one such promise won the votes of Washington Democrat Patty Murray and New Mexico Democrat Jeff Bingaman: That the United States would contribute $160 million over four years to promote better enforcement of labor and environmental standards in Central America. Bush also pledged $150 million over five years to help farmers in Guatemala, El Salvador and the Dominican Republic displaced by American agricultural imports.

Why would they take seriously such a promise, Lee wondered, when in the last several years, the Bush Administration proposed cuts to the very same program? This year, the Administration cut funding by 85 percent at the Labor Department’s Bureau of International Labor Affairs, which is supposed to aid enforcement of labor rights in Central America.

What’s more, Lee said, in the Bush years its programs have shifted from funding enforcement to funding “education” of management about labor law, and training of workers “to compete in the global marketplace,” such as one program that taught English to Costa Rican workers so they could do call center work.

But even more importantly, says the AFL-CIO, no amount of financial assistance can create the political will to punish labor rights violators where that will does not already exist. “If you’re going to sell out, at least get something for it,” Lee said. “The CAFTA labor provisions can only be fixed by renegotiating CAFTA, not by throwing in money to get governments to enforce their laws.”

The same day CAFTA passed in the Senate, it won approval in the House Ways and Means Committee, which means it now goes to the House floor. Under the timeline of the so-called “fast-track” legislation that governs how trade treaties are voted on, it must be get a floor vote within 15 legislative working days — by July 28.

All four Democratic representatives from Oregon — Earl Blumenauer, Darlene Hooley, David Wu and Peter DeFazio — are opposed to CAFTA. Oregon Republican Greg Walden is undecided, and is the target of a heavy opposition campaign by organize labor and others.

In Washington, of the state’s six House Democrats, Tacoma’s Norm Dicks is the only one in favor of CAFTA; Spokane Republican Cathy McMorris is also reportedly undecided as of yet.

Rick Bender, president of the Washington State Labor Council, said he was disappointed but not surprised by the Murray and Cantwell votes: Both are consistent supporters of NAFTA-style treaties, and Cantwell voted for NAFTA when she was in the House. Bender said the issue is a sore spot between labor and a pair of senators who otherwise have an overall pro-labor voting record.

At a meeting with labor officials July 7 in Portland, DeFazio said the close vote in the Senate is a good sign that passage is in trouble. “If CAFTA does pass, it will be a rubber stamp for more of the same,” DeFazio said. “The Bush Administration will use it to vault the Free Trade Area of the Americas — a hemisphere-wide trade agreement. That will happen next if CAFTA passes.”

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