June 7—As the Senate Agriculture, Nutrition and Forestry Committee prepares to hold hearings this week on the proposed Dominican Republic-Central American Free Trade Agreement (CAFTA), a new report repudiates CAFTA’s promises of rapid growth in agricultural exports.
Will CAFTA Be a Boon to Farmers and the Food Industry? by the Economic Policy Institute (EPI), shows that government officials, in seeking passage of the North American Free Trade Agreement (NAFTA), made promises to U.S. farmers similar to those now being made to gain support of CAFTA. After NAFTA was implemented in 1994, U.S. farmers, ranchers and food producers suffered job loss, stagnant or rapidly worsening trade flows, falling prices and revenues, declining incomes and a long string of failed promises, according to the study.
“For farmers and food producers, NAFTA’s legacy is declining prices, shrinking revenues and rising debt burdens,” says EPI economist Robert Scott, the report’s author. “Claims of great CAFTA benefits should only be taken with a large quantity of salt.”
Unions Challenge Current CAFTA Deal
President George W. Bush has made CAFTA his top trade priority. If approved, CAFTA would cut tariffs among the United States, the Dominican Republic and five Central American countries. But the agreement does not contain adequate environmental protections or enforceable protections for such core workers’ rights as the freedom to form a union.
The House and Senate began holding hearings on CAFTA last month, but the agreement still has not been formally introduced in either the House or Senate. Congressional Republicans are pushing to meet President Bush’s stated deadline of passing CAFTA this summer. Under Fast Track trade authority, Congress only can vote up or down on the entire agreement without making any amendments.
Unions and their allies are putting working families’ concerns front and center in the CAFTA debate so Congress doesn’t just rubber stamp the administration’s anti-worker trade deal. In May, workers from the United States, Dominican Republic, El Salvador, Costa Rica and Guatemala participated in a weeklong “CAFTA—We Don’t Hafta” tour. The May 10–18 tour, which coincided with visits of Central American presidents to the White House, traveled from Washington, D.C., to New York City and San Antonio. In each city, working families took part in forums to discuss how free trade deals, such as CAFTA, bring down workplace standards and destroy economic development while lining the pockets of multinational corporations.
The new EPI report lists the claims made by NAFTA supporters to farmers side-by-side with actual outcomes. For example, the government promised NAFTA would create 54,000 new agricultural jobs in the United States. Instead, America’s farmers and food producers lost 16,000 jobs. Despite promises that NAFTA would increase U.S. farm income by some 3 percent, real farm income actually declined 3.1 percent between 1991 and 1993 and again between 2001 and 2003, according to the U.S. Department of Agriculture.
CAFTA Would Harm Workers in Many Industries
Farmers are among many U.S. and Central American workers who would be harmed by passage of CAFTA, just as NAFTA harmed millions of workers in Mexico and in this country. EPI reports that the United States lost nearly 900,000 jobs as a result of booming trade deficits under NAFTA. Despite rising exports to the United States in post-NAFTA Mexico, manufacturing wages have fallen over the past decade and the country’s agricultural sector—where nearly a fifth of Mexicans work—lost 1.3 million jobs, Scott says.
In pushing for passage of CAFTA, the Bush administration has emphasized the size of the new market—more than 40 million people with per capita income ranging from nearly $2,000 to more than $8,500—to assert that CAFTA could support growth in the U.S. food and farm industries. That claim is similar to those made by the Clinton administration’s Trade Representative in a statement before passage of NAFTA in which he asserted, “Mexico’s population [some 92 million], which is growing at more than 2 percent a year and becoming increasingly urbanized, represents a significant market for U.S. agricultural products.”
Yet Mexican demand for U.S. agricultural or food products has not changed, and the U.S. food and agriculture trade deficit with Canada increased by $4.3 billion since NAFTA was ratified.
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