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).
Yes.
So, Americans lost their jobs because cheaper goods were bought from Mexican companies? And Mexicans (farmers?) lost jobs because cheaper American agricultural products were available?
And the money saved wasn't beneficial to both countries?
Millions of American farmers lost their jobs after mechanical reapers were invented. Do you miss the more expensive food too?
As far as the flood of Mexican immigration, build a wall. Make Mexico take care of their own.
Yeah, didn't the CIA think the USSR was going to surpass the U.S. economy?
So, second largest economy, I guess were still the largest?
All that with only 4 times our population.
Can you name some of those countries doing better than the U.S.?
So, China is doing better than the US?
In terms of growth, emphatically YES.
Any other questions?
What about in terms of per capita GDP?
So, all this debt is due to free trade? Can you cite your source for that? Millions of jobs lost? What was US employment before all this "idiotic free trade" and what is US employment now?
Also, in case you hadn't checked we're running trade deficits every year in the area of several hundred billion so obviously foreigners don't have as much appetite for our goods as you've been lead to believe
I never said anything one way or the other about foreigners appetite for our goods.And what good are the dollars these evil foreigners are getting?
As for the FTAA, if it goes through there will be demands for a new constitution to govern the new superstate, as in the case of the EU.
I don't believe this at all.
Per capita GDP is higher.
Before you concern yourself with my ignorance you might want to get some facts yourself.
Yup. So now we can lose MORE money every year in trade deficits, and have a LARGER national debt when it's all over.
Thus, since WTO, we can lose money on every sale, but make it up in volume.
now THERE'S a plan!
Why do you harp on the trade deficit?
We get cars and stereos and stuff from WalMart. Those evil foreigners get green paper. If they buy stuff from us, that's good, right? If they buy nothing from us, we can print more paper.
Why can't you get that thru your thick skull?
As far as the LARGER national debt, I already told you how I felt about govt spending.
So, the population went from 240 million to 300 million but GDP went from $5.4 trillion to $10.4 trillion.
http://www.bea.gov/bea/dn/gdplev.xls
As far as the unemployment data...that's a joke
I said employment was higher. I didn't say anything about unemployment.
How many trillions has the govt spent on these programs (AID, OPIC, ect)? Source please.
I agree we need to reduce/eliminate illegal immigration.
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.