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).
Do you have a link to the Insight report?
Or ownership of American assets, ownership of American government and private bonds (which is not good for several reasons), purchase of American politicians, courts, legislation, etc., and on and on. It means that, since we don't really have anything to export to them that they aren't already making cheaper themselves (thanks to out outsourcing, manufacturing transfers, etc.) that they will buy controlling interests in America. It also gives them substantial amounts of the "reserve currency" of the world (dollars) which they use to pay for things like oil from Saudi Arabia and goods and commodities from other unfriendly countries (enemies of the US, even if we like to kiss their butts a lot) which further strengthens our enemies. If all they could buy was American goods, there would be little problem from my standpoint.
True
Their Gummint policy worked from 1980-1995, BTW.
Their recession started in 1989.
So, they take more dollars (pieces of paper) back to their home country? So, Americans are working for foreign companies? They're outsourcing work to America? Hmmmmmm. Interesting.
So, what's most important, the profits or the salary paid to American workers?
And you have no clue, no brain, yada yada yada.
Are you a grumpy union worker missing past days of glory?
Here's the first couple of graphs:
It is no secret that tens of thousands of jobs in the software sector are being shipped to India, nor are many unaware that millions of manufacturing jobs, once filled by America's blue-collar middle class, have been moved to Communist China where desperate people are willing to work for substandard wages. What may not be understood is that 2.5 million Americans have lost their jobs since 2001, and nearly 400,000 ran out of their federal unemployment benefits in January of this year alone. Indeed the U.S. Bureau of Labor Statistics reports that the average salary for U.S. workers has fallen from $44,570 to $35,410 since 2001, with nearly 5 million Americans working at part-time employment to make ends meet.
This bleak picture is wholly out of line with the reported "recovery" touted by Alan Greenspan, the top money man at the Federal Reserve. Despite what has been described as a jobless recovery, President George W. Bush last month proposed a more lenient immigration policy in an effort to "create a system that is fairer, more consistent and more compassionate."
The president appears to be responding to upbeat data provided by his top economic advisor, N. Gregory Mankiw, who recently announced that outsourcing American jobs overseas is actually good for the nation's economy. Mankiw assured, "I know there will be jobs in the future," and in fact has predicted 2.6 million new payroll jobs by the end of 2004. Not everyone agrees with that upbeat assessment of the nation's job market.
And the new immigration reform, say critics on both the left and right, invites mass immigration to the United States to "match willing foreign workers with willing U.S. employers when no Americans can be found to fill the jobs."
According to the fact sheet provided by the White House, "the Federal Government [will] offer temporary-worker status to undocumented men and women now employed in the United States and those in foreign countries who have been offered employment here." While the president's proposal has been short on specifics, the idea is that U.S. employers first must consider Americans for these jobs, the program will prevent exploitation of undocumented workers, and the process will become an incentive for temporary workers to return to their countries of origin when their temporary status expires.
In other words, the estimated 8 million to 12 million undocumented aliens now illegally residing in the United States, and the untold millions of other "willing employees" who may be granted temporary status in the United States, will, after making a living wage, return voluntarily to the countries from which they fled because they could not make ends meet there. Critics of the proposal quote the president's father, who was fond of saying in other contexts, "It doesn't seem prudent."
This doesn't pass the smell test. 2.5 million lost jobs have caused average wages to drop 20%? That would be kinda like a depression. Isn't the employment number around 130 million? That would make 2.5 million 2% of the total. Those 2% would have to be very highly paid for the drop in their salary to drop the average 20%. I just don't buy it.
Yeah looked at your little notes. Didn't see the cause of your bitterness there.
The only way this stat makes any sense is maybe average salary of new hires has dropped.
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