CAFTA should be rejected on its demerits
David Carney’s arguments in favor of CAFTA, the proposed Central American Free Trade Agreement (May 27-June 9, New Hampshire Business Review), bear a striking resemblance to the ones made on behalf of the North American Free Trade Agreement in the early ‘90s.
“Free trade” with Mexico would create markets for U.S. products in Mexico and simultaneously create jobs for Mexican workers, thereby decreasing the flow of immigration, according to the agreement’s backers. Twelve years after NAFTA went into effect, some clear lessons can be drawn.
First, the lowered barriers to imports of agricultural commodities from the United States reduced prices for Mexican farm products and drove 1.3 million small farmers off their land. Many of them migrated with their families to zones where jobs in the export-oriented assembly factories have grown. But those jobs pay so little – in the $1-an-hour range – that assembly workers cannot become consumers of much that is produced on our side of the border. And those who cannot find work continue northward.
As the Congressional Hispanic Caucus noted in a recent statement opposing CAFTA, “the employed farmers and agricultural workers of 10 years ago have become the undocumented immigrants of today.”
Central American farmers believe the same will happen to them if CAFTA is ratified. According to Oxfam, U.S. corn exports to Central America would increase by 10,000 percent in the first year.
“What is at stake for the long term,” says Nicaraguan economist Adolfo Acevedo, “is not just the possibility of preserving a large part of the national food production … the fate of the labor force itself, and, more deeply yet, the fate of the human beings linked to this form of production.”
CAFTA’s adoption will drive farmers into the cities, where their best hope will be for the sweatshop jobs that replace living-wage jobs in U.S. factories. Their other option will be to trek northward, risking vigilantes and the U.S. border patrol in hopes of finding work in the underground economy here.
Recent announcements of Trade Adjustment Act certification for displaced workers from such New Hampshire employers as Celestica, Teradyne, Sanmina, Burnes, Molex, Codet and Amcor demonstrate that New Hampshire manufacturers continue to lose jobs to lower-wage production in other countries. Holson Burnes, which closed its Claremont plant in April and shifted 37 jobs to Mexico, is perhaps the most recent.
Don’t count on the CAFTA countries to provide a market to revive New Hampshire manufacturing. The much-heralded CAFTA market for exports – six countries with a combined GDP of $85 billion — is small, comparable in size to that of New Haven, Conn., according to the U.S. Business and Industry Council, which opposes the agreement.
Nor do lowered trade barriers rank high on the concern of local manufacturers.
At last fall’s New Hampshire Manufacturing Summit, the state’s business leaders put high insurance rates and the lack of a skilled workforce at the top of their list of complaints.
David Carney says, “Free trade is a force of the laws of economics,” which he makes sound like a force of the law of nature. If that were true, the federal government would not need CAFTA’s 22 chapters, three annexes, seven tariff schedules and 31 side letters totaling 3,746 pages to describe it.
Trade agreements, like laws, are made by people, not by nature. CAFTA is one that should be rejected on its demerits.
Arnie Alpert is New Hampshire coordinator for the American Friends Service Committee.