Skip to comments.CAFTA: Exporting American Jobs & Industry
Posted on 04/05/2005 7:03:57 PM PDT by Coleus
|CAFTA: Exporting American Jobs & Industry
by William Norman Grigg
Allen Johnson, chief agricultural negotiator for the Office of the U.S. Trade Representative, was enjoying his vacation in late February when he received a panicky call from the White House. The mid-year meeting of the National Association of State Departments of Agriculture (NASDA) was on the verge of delivering a stinging rebuke to the Bush administration by passing a resolution opposing the proposed Central American Free Trade Agreement (CAFTA).
CAFTA would build on the three-nation North American Free Trade Agreement (NAFTA) by expanding the trade bloc to include Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, and the Dominican Republic. Congressional ratification of CAFTA is coveted by the White House, its political allies in Central America, and politically connected corporate interests who stand to profit from outsourcing production to low-wage nations in the region. It is stoutly opposed by U.S. agricultural and textile producers, who are reeling from the economic impact of NAFTA and are understandably worried that CAFTA would trigger another flood of imports and another hemorrhage of industrial jobs. Most importantly, since the agreement would further undermine our nation's ability to control its economic destiny, it has prompted opposition from Americans who seek to preserve our national independence.
As a February 26 AP report noted: "CAFTA is the most significant multilateral pact for the United States since the North American Free Trade Agreement with Mexico and Canada more than a decade ago. It is seen as crucial to the greater goal of establishing a free trade zone for all the Western Hemisphere." The supposed hemispheric "free trade zone," the Free Trade Area of the Americas (FTAA), would actually be an embryonic mega-state modeled after the socialistic European Union (EU). The EU, it is important to remember, was initially sold to the European public as a "free trade" area, as well.
Having succeeded in moving several bilateral free trade agreements through Congress in its first term, the Bush administration "faces its toughest test" in seeking approval for CAFTA. According to CAFTA supporter Rep. Kevin Brady (R-Texas), passage of the agreement is "difficult but doable."
Congressional Quarterly reported that Republican congressional leaders in both houses are preparing to hold hearings on CAFTA. The hearings would be followed by "a non-binding advisory markup" in which House and Senate committees would "draft the implementing legislation that the administration will send to Congress for an up-or-down vote." Under so-called fast track rules, noted Congressional Quarterly on March 14, "a 90-day clock for congressional approval starts ticking when the administration officially sends the legislation to Congress."
The Bush administration was painfully aware that winning congressional approval for CAFTA would require strangling the opposition before it found a public voice. Thus Allen Johnson was summoned back to Washington to address the meeting of state agriculture officials in an attempt to persuade them not to denounce CAFTA.
By the time Allen Johnson had been bundled into a Washington-bound jet to address NASDA on February 21, the group's Marketing and International Trade Committee had unanimously (with two abstentions) adopted a resolution opposing CAFTA. Although he prostrated himself shamelessly before the group's general assembly, Johnson was not successful in convincing the required two-thirds majority to overturn its Marketing and International Trade Committee's anti-CAFTA resolution. He was also unsuccessful in persuading the group to keep news of its disagreement with the White House out of the press.
"Fat chance," commented syndicated agricultural affairs analyst Alan Guebert. "The vote sent shockwaves through the usually pro-trade NASDA, whose members literally know the lay of the food and farm land in their home states. That's their job; looking farmers and ranchers in the eye every day. On February 19 almost half of them looked in the mirror and said, 'My producers are right; CAFTA is wrong.' Moments later, the White House fire bell rang." According to Delaware Agriculture Secretary Michael Scuse, vice chairman of the NASDA committee that condemned CAFTA, "we're more concerned about how CAFTA affects farmers than how it affects trade."
"Free Trade" or Foreign Aid?
Chief among the objections offered by NASDA and many other CAFTA critics is the fact that the supposed "free trade" agreement would impose what amounts to unilateral trade disarmament on U.S. agricultural producers. The six foreign nations included in the pact would be granted immediate access to U.S. food markets. However, U.S. producers would have to wait for years, or even decades, in order to be granted reciprocal access.
If, as expected, the FTAA follows the CAFTA model by opening U.S. domestic markets first, with access to foreign markets coming only years later, the results for U.S. farmers would be nothing less than devastating. During the prescribed interval, Guebert observes, "nations like Brazil, Russia and India will become food exporting powerhouses to both the U.S. and the world while American farmers become calendar watchers."
If the point of CAFTA is to promote free exchange of goods and services between producers and consumers, why is the pact designed to offer artificial competitive advantages to foreign food producers? Rather than promoting what could honestly be called free trade, CAFTA amounts to a foreign aid program using nonreciprocal access to U.S. markets as a roundabout subsidy for agricultural programs in foreign nations.
And this is hardly the only way in which CAFTA amounts to a foreign aid scheme disguised as a "free trade" initiative. The Bush administration and its pro-CAFTA allies habitually refer to the pact as a means of promoting economic "development" and building "democratic institutions" in Central America. This refrain was featured prominently in a hastily assembled nationwide tour of ambassadors from the CAFTA nations.
"Ambassadors and officials from Central America made a passionate plea in Seattle for U.S. passage of a regional trade deal they see as a vital tool to help lift their countries out of poverty," reported the February 25 Seattle Times. "While acknowledging that CAFTA isn't perfect, the officials said it is a vital tool for development and forms part of a package of government and market changes that would promote stability and democracy, and energize the economies of the Central American nations."
Roxane Premont of the Citizens Committee to Stop the FTAA (an ad hoc project of the John Birch Society, of which this magazine is an affiliate) attended a session of the "CAFTA Roadshow" in Raleigh-Durham, North Carolina, where participants preached exactly the same message. "They definitely offered the argument that CAFTA was vital as a way of promoting economic development in Central America," Mrs. Premont told THE NEW AMERICAN. "Several of the speakers emphasized the idea that we should use CAFTA as a form of foreign aid, rewarding these 'emerging democracies' in the region."
It's important to recognize that economic growth is a result of production, not consumption. Thus the logic of the "trade as foreign aid" argument dictates that CAFTA is intended to promote the importation of goods from Central America, rather than the export of U.S. goods to the region.
Pro-CAFTA Congressman Jeff Flake (R-Ariz.) describes the region as "a potentially significant trading bloc with the United States." However, the aggregate economy of the six CAFTA nations is minuscule. "Add up the six CAFTA economies and you get a market the size of New Haven, Connecticut," points out trade analyst Alan Tonelson of the U.S. Business and Industry Council.
Assistant U.S. Trade Representative Christopher Padilla insists that while the CAFTA nations are small, "they are actually very big markets for our products. In fact, we trade more with Central America than we trade with Brazil or Australia." If that claim were true, it would make CAFTA redundant assuming, once again, that promotion of free trade is the desired result.
However, as Tonelson writes, "U.S. exports to the CAFTA [nations] are dominated by what might be called 'turnaround exports.' That is to say, exports that are not final products which are actually consumed abroad, but parts and components of final products that are assembled or further processed abroad, and then shipped right back for consumption in the United States. As a result, they don't service net new demand in foreign markets which eventually would require domestic employers to expand production, hire new workers, and boost wages. They service the same old demand in the same old market America's."
Put in the simplest terms, the CAFTA nations are an economically stagnant population of 46 million people, more than half of whom live below the poverty level (as defined by their standard of living, not ours). Costa Rica, the wealthiest CAFTA nation, has a per-capita GDP of $9,000 roughly one-quarter of ours. Every nation other than Costa Rica displays net emigration, meaning that their citizens are leaving home in search of economic opportunity.
Is this the raw material of a potentially lucrative U.S. export market or a low-wage population that will act as a magnet for further outsourcing of our embattled manufacturing sector? Tonelson concludes that CAFTA is a "classic outsourcing agreement" an arrangement in which the only significant U.S. export would be manufacturing jobs to poor, low-wage nations.
According to CAFTA supporters, this is precisely why it's important to ratify the accord. Rep. Kevin Brady (R-Texas) insists that CAFTA is a proper reward to Central American nations that "have emerged from years of war and dictatorial rule to make major steps toward promoting democracy and human rights," reported the AP. "Kicking them down the ladder would be a major mistake," insisted the congressman. Rep. Jeff Flake (R-Ariz.) makes a similar point, stating that his "primary" reason for supporting CAFTA is his belief that the agreement would "spur U.S. investment and promote economic development in the region."
Of course, Reps. Brady and Flake, like scores of other congressmen who express support for CAFTA, were elected to represent the interests of U.S. citizens, not the interests of Costa Rica, El Salvador, Guatemala, Honduras, or the Dominican Republic. Nor is promoting "economic development" in foreign lands at the expense of American prosperity among Congress's constitutional responsibilities a fact that voters should impress on the minds of their representatives before CAFTA is brought to a vote. Moreover, even if the purpose were to help poor peoples in foreign lands improve their standards of living, the long-term solution can only be found in political and economic freedom, not in pulling the U.S. down.
"No" on CAFTA Is "Yes" to China?
Approval of CAFTA would offer, at best, negligible economic benefits to the U.S. and very likely inflict severe damage to our already suffering industrial sector. This much is obvious to anyone who invests a minimal amount of time to examine the mathematics of the proposition. Knowing that the positive case for CAFTA is nonexistent, the Bush administration and its allies have chosen to accentuate the negative by playing the China card. Reports CNN correspondent Christine Romans: "In Washington, CAFTA supporters call a vote against CAFTA a vote for China."
In January, the World Trade Organization (WTO) lifted the worldwide system of nation-based textile import quotas. This resulted in an immediate surge in textile exports from China, and the beginning of what the August 5, 2004 Christian Science Monitor predicted would be "a massive transfer of jobs and wealth in the developing world over the next few years." The Chinese textile tsunami stands to wipe out what remains of the U.S. textile industry, as well as thousands of low-wage jobs in the six CAFTA nations.
Assistant U.S. Trade Representative Christopher Padilla, the Bush administration's point man for CAFTA, insists that "only by uniting together through CAFTA will the textile makers in the Southeast states and apparel makers in Central America be able to face the oncoming competition from China.... A vote against CAFTA is a vote against U.S. textiles and a vote for China."
There really is no choice, former U.S. Rep. Cass Ballenger (R-N.C.) told textile manufacturers during a CAFTA tour stop in Raleigh, North Carolina. Citing the WTO's action in lifting Chinese textile import quotas, he emphasized: a vote against CAFTA is a vote for China. This refrain was immediately taken up by other participants in the nationwide pro-CAFTA tour. A vote against CAFTA is a vote in favor of China, recited El Salvador's ambassador Rene Rodriguez. A vote against CAFTA is a vote for China, echoed Costa Rican ambassador Tomás Duenas.
"The bottom line is the Chinese are eating our lunch," stated Mark Smith, managing director of Western Hemisphere affairs for the U.S. Chamber of Commerce, which favors the agreement. "They will do it with or without CAFTA. The question remains how much lunch there will be left for them to eat." According to Keith Crisco, CEO at Asheboro Elastics of North Carolina, the alternative to enactment of CAFTA would be "Asia wiping that place off the map." For this reason can you guess what comes next? "a vote against CAFTA is a vote for China."
Representative Virginia Foxx (R-N.C.), whose district is heavily dependent on the textile industry, finds the CAFTA-China refrain both tiresome and unconvincing. "I've heard that plenty of times, and I'm certainly not convinced," Rep. Foxx told THE NEW AMERICAN. "While I certainly don't want to lose our markets to China, the fact is that it was NAFTA that practically wiped us out and CAFTA would do even more damage than NAFTA did."
"Most of the people in my district are very opposed to CAFTA for economic reasons, although there are some [textile] industry people who sincerely think it represents the best of several bad options," she continued. But she opposes the pact not only because of the damage it will do to our economy, but also because of the threat it represents to our imperiled national independence. "I have concerns about our involvement in any kind of international arrangement of this sort that undermines our sovereignty whether it's NAFTA, CAFTA, the WTO, or certainly the United Nations," she explained.
Once the role that CAFTA would play in a WTO-administered global economic regime is recognized, the breathtaking cynicism of the Bush administration's pro-CAFTA "China card" becomes apparent.
During a special "lame-duck" session in 1994, Congress ratified U.S. membership in the WTO. This resulted in what GOP congressional leader (and then-incoming House Speaker) Newt Gingrich described as "a very big transfer of power" from Congress to the global trade body. In committee testimony, Gingrich who supported the WTO told his colleagues, "we need to be honest about the fact that we are transferring from the United States at a practical level significant authority to a new organization. This is a transformational moment."
The scope of that transformation was described in Our Global Neighborhood, the 1995 report of the UN-aligned Commission on Global Governance. The WTO, explained that august body, is "a crucial building block for global economic governance.... The WTO and advanced regional groups such as the EU will increasingly be faced with the issue that will dominate the international agenda in years to come: how to create rules for deep integration that go way beyond what has traditionally been thought of as 'trade.'"
The "regional groups" referred to above include NAFTA, as well as CAFTA and the FTAA, if and when the latter come into being. They would be regional affiliates of a WTO-managed global economy, in which our government would be required to implement economic policies established by unaccountable socialist bureaucrats in Geneva.
Essentially the same people who promoted the WTO are now telling us that we have no choice but to encourage Congress to approve CAFTA which would be a regional affiliate of that same WTO.
The Bush administration is clearly frantic about CAFTA's prospects in Congress. Witness Allen Johnson's hasty deployment to try to stop NASDA's anti-CAFTA resolution. Another illustration is found in the nomination of former Ohio Republican Congressman Rob Portman to serve as U.S. trade representative. A Capitol Hill source told THE NEW AMERICAN that Portman was chosen "specifically because the Bush administration believes that Portman's connections in Congress will help push CAFTA through."
This view is shared by Jamal Abu-Rashed, chairman of the economics department at Xavier University, who told the Cincinnati Post that "the push to enact the Central American Free Trade Agreement needed a congressional insider to get legislators who have become wary of job losses from sweeping trade treaties behind the pact." "Congress has been less enthusiastic about trade lately because of the job impacts," stated Abu-Rashed. "Bush wants somebody to resist Congress' efforts to resist [trade pacts]."
Congress displays remarkable composure about the loss of American jobs and the steady surrender of our sovereignty to regional bodies. However, congressmen take immediate alarm when their own jobs are threatened. Americans must make it clear to their congressional representatives that if they vote for CAFTA, they will be given the chance to explore new career opportunities in the private sector they are doing so much to destroy.
Keystone to Convergence
A keystone is the crucial piece holding together two sections of an elaborate structure. If it is removed, the structure will collapse. If it's not put in place, the structure cannot be built. CAFTA plays that precise role in the planned hemispheric merger through the Free Trade Area of the Americas (FTAA).
Through NAFTA, the United States, Mexico, and Canada are being rapidly merged into a single economic and political bloc. On March 14, shortly before President Bush met with Mexican leader Vicente Fox and Canadian Prime Minister Paul Martin at a trinational summit in Texas, the Council on Foreign Relations released a report calling for the creation of a "North American Economic and Security Community" by 2010. The key points of that report were reiterated in a March 28 New York Times op-ed by Rafael Fernandez de Castro and Rossana Fuentes Berain, editor and managing editor of Foreign Affairs en Español (a Spanish-language publication of the Council on Foreign Relations).
Invoking Jean Monnet, founder of the European Union, the Mexican authors declared: "We must move beyond just managing trade and into constructing a new relationship [intended] to bring a North American community closer to reality." Referring to the recent trinational summit, the authors predicted: "Maybe, just maybe, the men gathered at the Crawford ranch could someday be seen as the Jean Monnets of their age, the founding fathers of the North American Community."
But the vision behind the Crawford summit encompasses the entire hemisphere.
Speaking on March 23, President Bush explained: "In order to make sure the Free Trade Agreement of the Americas has a chance to succeed, it is important to show the sovereign nations in South America that trade has worked amongst the three of us." He also pointedly referred to CAFTA as "an important part" of this process of hemispheric merger, demanding that "Congress make sure that they approve CAFTA this year."
But if the CAFTA keystone isn't put in place, the grand vision of an EU-style megastate will lose its forward momentum. This is why CAFTA must be defeated.
Why CAFTA Must Be Defeated
What You Can Do
Bump for later.
I can't wait to here the spin on how this is a good thing.
No, no, we can all be a nation of pencil pushers, we don't need industry. (sarcasm)
Between environmental rules and regs and the cost of labor, I suspect many companies are actively looking for business friendly environments. Nobody wants to be branded a criminal just for trying to run a business. Heck, robbing national secrets is more honorable, if we look at the punishments - ask Sandy Berger.
Here's one back at you!
As China sews, few U.S. mills left
By Patrik Jonsson, The Christian Science Monitor
ERWIN, N.C. The town of Erwin once proudly proclaimed itself the "Denim Capital of the World."
Workers stamped "Hong Kong" and "Tel Aviv" on bolts of high-grade denim as two mills supplied the world with overalls, bell-bottoms, and hip-huggers.
Times certainly change with the fashion.
Today, the looms have fallen silent. Textile jobs here have fallen from a peak of 2,500 to zero. And as this North Carolina town struggles to define its future, its plight suggests a harsh reality: One of America's bedrock industries appears increasingly near extinction, threatening a way of life that has allowed blue-collar communities to stitch together a patchwork of prosperity.
The decline of textile jobs, while familiar, is generating fresh concern this year thanks to a flood of newly legalized imports from China. The Bush administration, responding to industry complaints and a tripling in the rate of mill closures, said this week that it will investigate whether Chinese imports are disrupting the U.S. market. The move could result in reimposed quotas.
But as that process moves forward, the case of Erwin is a reminder of the nearly inexorable nature of the challenge. The last mill here closed five years ago, long before China's competitive potential was unleashed on world apparel markets. The threat from Shanghai and Souzhou now adds to worries that many of America's remaining 677,000 textile and apparel jobs down from 1.6 million in 1994 could face a similar fate.
"Ten years ago when NAFTA and GATT [free-trade agreements] were implemented, there was a feeling of, 'We're going to fight it,' " says Mike Walden, an economist at North Carolina State University in Raleigh. "Now there's a changed view, a mixture of resignation and reality. Young people know they don't have a future going into the textile mills, and the big question is what will those towns morph into and what will those people be doing 10 years from now?"
Indeed, the end of global textile quotas in January has already prompted apparel imports from China to more than double in both volume and value from last year's pace. Americans bought some $1.4 billion in Chinese apparel in January and February. Cotton shirt imports alone are up more than 1,200% a number that reflects China's small but fast-rising share of the market. The Asian nation accounts for 2% of cotton-shirt imports, versus 23% for Honduras and 13% Mexico.
With the U.S. importing some 400 million garments in 60 days, which on average sell 78% cheaper than what a Piedmont loomshop can manage Erwin's plight takes on a new resonance.
The orderly and tight-knit "mill hills" that defined the South's densely populated rural areas became some of America's first planned communities.
In essence, this is where the Southern middle class began, as modern towns with theaters, newspapers, and conveniences cropped up around the mills, and where residents mortgaged cows to buy sewing machines.
E.M. Barefoot, now a trucking supervisor, was the last employee to walk out of a 100-year-old mill when it closed.
As he brushes his dog, Dusty, the third-generation mill worker explains that his paycheck has fallen by $20,000 a year at his new job. "Nine out of 10 people would go back to work at the mill in a heartbeat," he says.
To be sure, ever since manufacturing employment began waning after World War II, workers have been assured that new jobs and industries would replace the looms and dye rooms. Hiring by government, tourism, and biotech firms has picked up much of the slack of some 176,000 lost textile jobs in North Carolina.
But as telecommunications and tech jobs collapsed in 2001, the promise of the new jobs faded, economists say.
"Wherever you have a mill community relatively intact, the promise is there of reknitting it back together," says Lynn Rumley, the director of Textile Heritage Center in Cooloomee, N.C. "But the question is what's going to be the anchor or will there even be an anchor?"
In embattled North Carolina towns like Kannapolis, Cliffside, and Erwin, the only thing growing in the textile business appears to be historical reckoning of a trade that defined the rural South for nearly a century. The daily rites of mills were defined both by the crows of roosters and dependable bursts of factory whistles.
"There are misconceptions in Washington and nationally that these are yesterday's jobs, that better jobs are on the way," says Cass Johnson, president of the National Council of Textile Organizations in Washington. "But there's been a realization in the last five years that if someone loses one of these jobs, they get a worse job, lower wages, and less-satisfying work. It's no longer a good bargain."
Yet the larger picture is not so simple, say economists pushing free trade. Unlike Japan in the 1980s, China is importing nearly as much as it's exporting today which means many American textile firms have been able to flourish as middle men even as they close mills. And lower prices on imported goods are helping millions of American consumers.
What's more, the seeping of mill jobs is part of a global commoditization of labor that began in the mid-1800s when New England began undercutting European mills, and turning tissue de Nimes fabric from Nimes into American "denim."
China's rising role as a clothier is disrupting jobs in many developing nations, not just the U.S.. "These industries are inherently mobile over a long period of time," says Will Martin, lead economist at the World Bank. "China's done wonderfully as it's moved to a market economy and has managed to lift 400 million people out of poverty."
A U.S. interagency panel on textile trade voted Monday to launch investigations regarding China in three clothing categories: cotton knit shirts and blouses; cotton trousers; and underwear made of cotton and man-made fibers. At the same time, Congress will soon start debating a new Central American Free Trade Agreement, or CAFTA. While some say this deal will help American firms compete with the Chinese, critics say it won't level a playing field tilted steeply against American workers, both internationally and the homefront.
In the U.S., despite state offers to retrain laid-off "lintheads" for new jobs finding good matches isn't easy, especially for older workers. One of Mr. Barefoot's colleagues from the mill went back to school to become a machinist but never found work. Barefoot hired him last month to work in the trucking department he now manages. "He hadn't had a job since the mill closed."
Some mill towns have been bulldozed, others are slums. But in Cooleemee, drug stores still "carry" customers who are short on cash.
Some who left for other jobs when mills closed are starting to return home. Many older residents never left, even though they lack jobs. "The last thing you could persuade them to do is to move," says Reno Bailey, a former millworker in Cliffside, N.C. "It's a dilemma."
Yawn, those "Nawth Caroliiiiina" mill towns stole all the factories from New England. Then they went south to Latin America. Now textile mills are closing in Latin America as the industry has moved to China.
Staying in one place for one's entire life reeks of a lack of upward mobility.
Racing toward totalitarianism, control people's food, water, jobs, property, wages, and there you have it, slavery.
We have become too lazy, ignorant, and lack the will to rock our comfy little lives before the trap door slams.
Most people are just in denial, "Can't happen here" are famous last words, said by many nations and civilizations that are no longer with us.
Excellent post, hedgetrimmer!
BTW, I grew up in Gaston County, once the 'Textile Capital of the World' and it's the same there as well. As for these 'new' jobs that are being created, I just don't see them. Sure, there are enough commercials each day for this new training, government provided of course, but as the article you posted states. The salary is much lower. Of course that doesn't matter to politicians. As long as it seems they are doing something, that's all that matters.
It will free up the middle class to go fight on foreign soil.
Both sides of my family have been in this state since 1729. And each generation has built upon the foundations of the last to grow professionally and culturally. I hope my children will be able to do the same and their children after them. God willing, they will never leave this state either. While we may not reach the 'top' in your fashion, it will be done just the same. There are some things more important than 'upward mobility'
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