Posted on 04/07/2004 10:14:34 AM PDT by Willie Green
For education and discussion only. Not for commercial use.
The Bush administration is hailing its new planned Central American Free Trade Agreement as a “cutting edge” trade deal that will “expand U.S. opportunities in an important regional market.” Instead, CAFTA shows that U.S. trade policy has become completely divorced from the main needs of the U.S. economy, U.S. manufacturers, and American workers.
New markets for American products would indeed greatly benefit a U.S. economy still fragile after three sluggish years and a manufacturing sector that remains severely depressed. But the idea that the five Central American signatories of CAFTA can become these new markets doesn´t pass the laugh test.
El Salvador, Guatemala, Honduras, Nicaragua, and Costa Rica are not only among the world´s poorest countries, they´re among its smallest economies as well. Measured by their ability to buy U.S. products, their combined economic output totaled only $62 billion, according to the latest (2002) data. That´s less than the output of Orlando, Fla. or Bergen County, N.J.
The collective economies of the five Central American CAFTA countries are also half the size of San Diego and Phoenix. And U.S. Trade Representative Robert Zoellick´s decision to tack the Dominican Republic onto CAFTA doesn´t help much. Adding its $23.2 billion economy to the Central American 5 creates a total market still smaller than the economies of the metropolitan areas of Tampa-St. Petersburg, Fla., San Jose, Cal., and St. Louis, Mo. ($87.5 billion, $88.3 billion, and $92.2 billion, respectively).
How in the world can economies this small, filled with people so poor, be important markets for U.S. exports, and growth engines for the $10 trillion U.S. economy?
Recent experience, however, teaches that poor, tiny countries can become major suppliers for the U.S. market, especially if CAFTA-like trade deals attract export-oriented investment seeking penny-wage workforces lacking the right to press for decent pay and working conditions. For example, from 1996 to 2003, U.S. goods imports from the six countries in question rose by nearly 63 percent, to $16.862 billion. U.S. goods exports to these countries increased by a seemingly healthy 51 percent during this period. But many of these shipments consisted of fabric sent to Central America for sewing once done in the United States, then returned to America to be sold as final products.
Essentially, U.S. companies are exporting to Central America the materials for garment production work that used to be done in U.S. factories. The results? No new final markets for U.S.-made products, the loss of tens of thousands of working-class American jobs, and higher U.S. trade deficits and international debts. At a time when manufacturing employment is feeble, U.S. debts are nearing alarming levels, and the dollar´s future strength consequently is in doubt, these are the last outcomes America needs.
The CAFTA countries won´t benefit from the new deal, either. The U.S. market for the labor-intensive goods they need to specialize in is already saturated with the imports of all the other third world countries and regions that have recently expanded trade with America – notably China. As no less than the U.S. International Trade Commission has recently reported, when global apparel quotas are removed in January, 2005, the Central Americans will face even more competitive pressure from China and its virtually endless supply of cheap labor.
The Bush administration could help workers in the United States and at least some third world regions if it would limit overall imports by setting some trade liberalization priorities. That way, the main trade liberalization benefits for third worlders could be channeled to countries of special interest – like our hemispheric neighbors in Central America or Mexico or the Caribbean.
But the White House has so far refused, and once the quotas come off, its message to Central America will undoubtedly be the same as its recent message to African exporters worried about Chinese competition: That´s your problem.
To revive its manufacturing sector and all the economic and national security benefits it generates, the United States urgently needs a new set of trade policies. Defeating the misguided Central American Free Trade Agreement is the place to start.
Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).
That is interesting --- back when tv's were more expensive you could watch it for free and have some entertaining decent shows to watch. Tv's aren't really free when people have to buy VCRs and DVD's and $50 a month cable to have something interesting to watch.
I hadn't thought about that --- I had a couple great grandparents who lived on their own into their 90's but no one from the grandparent generation made it into their 90's and we'll see about the parent generation --- I don't think we can say that we're going to live longer than our great-grandparents or even grandparents. The lifespan has probably been maxed out for some time now.
Yeah, and they sold it back for 1/2 of what they paid.
I don't think you want to start talking about how Japan is going to take all our jobs after they just came out of 15 years of on and off recession.
With your negative attitude, I'm surprised you've lasted this long.
You mean we'd be paying $500? LOL!
Get it thru your thick head, dollars are IOU's. If the damn foreigners redeem them for our goods, that's good for our economy, right? I think even you can understand that.
If the foreigners keep our IOU's, we'll keep their goods and we win again!! Get it? Duh!!!
All those industries and jobs that went overseas - all those used to pay US taxes, now they don't.
Yeah, those government revenues have shrunk so much. Oh, you mean they keep rising? Must be overspending not undertaxing that's the problem then.
Do these numbers include the 8-10 million illegals?
If we ever get them to leave that will raise median incomes, don't you think?
You are correct. I have no fear of Japan.
Their recession/no growth problem has everything to do with demographics and nothing whatever to do with assets owned.
And in 50 years, Japan will not exist as a nation because they are seriously under the necessary reproduction rate, have been for 20 years, and are Xenophobic about furriners gaining citizenship.
But look carefully at Japan's assets. They are (barely) the largest holder of T-Bonds and T-Bills in the world, next is PRChina. They STILL hold more US real estate than any other foreign entity.
But they ARE history.
Your thick head is even worse.
They use the dollars to buy US companies and land/buildings. Even AlQuaeda is investing in real estate ventures.
Yeah--it's good that Japan, England, and PRChina own all those US companies and land. Yup.
Yeah--it's good that Japan, England, and PRChina own all those US companies and land. Yup.
So they're gonna take the land and companies back to China? What about those foreign car companies that own plants in the U.S. is that bad for us too?
Illegals' incomes are not reported.
Do you live in an alternate universe?
You'll notice that there is a question mark after my question. Don't know anything about your source or it's methodology.
Tell me this: if you don't think GWB is doing the right thing about illegals (and I agree he's not...) WHY THE HELL do you think his head is screwed on straight about the demise of manufacturing in the USA?
Yeah, manufacturing hasn't been declining in terms of employment in the US for the last 50 years, just the last 3, right?
Their recession has everything to do with bad government policy. If we don't eliminate stupid regulations,cut taxes, cut govt spending and reform the legal system, the same thing will happen to us.
cut taxesBush: 1 for 2 (no corporate tax cuts)
cut govt spending : Bush spends more than Clinton, year-over-year % gains and absolute dollars, on NON-DEFENSE items.
reform the legal system,: Bush: zero
Your hero's not doing well, my friend.
No matter the Government policy--in 50 years, the country will be vacant. Their Gummint policy worked from 1980-1995, BTW.
Didn't say he was doing well. Better than the alternative but LOTS of room for improvement.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.