When Free Trade isn't fair

July 27, 2005, midnight | By Ethan Kuhnhenn | 18 years, 8 months ago

The U.S. should reject CAFTA

Lindon Tobias Maldonado and his family scratch out a living by farming beans and corn in the high altitudes of El Salvador's Cuscatalan Department. Maldonado is a self-sustenance farmer — the crops he grows turn into the food that he and his family eat every night. The crops that are left over are sold in larger towns for a small, yet significant amount of money — money that will be used to pay for medical treatment, new tools and maybe even a plane ticket that could send his nephew to study in America.

Under the proposed Central American Free Trade Agreement (CAFTA), there would be no market for Maldonado's surplus crop. The crucial money would be put into the pocket of an American distributor who can offer a lower price for the same corn and beans that Maldonado sells.

When CAFTA legislation enters the House for debate, Congress should reject the free trade agreement on the basis that it would undermine poverty-stricken farmers in the five Latin American countries affected by the deal. Additionally, CAFTA would endanger workers' rights and would not provide the economic boost to these countries that the Bush administration has promised.

CAFTA is the second installment in a proposed series of free trade agreements aimed at strengthening North, Central and South America's trade partnerships through tariff liberalization. The North American Free Trade Agreement (NAFTA) took more than seven years to negotiate and was finally implemented in 1995 as the first step towards establishing a Free Trade Area of the Americas. CAFTA is similar to NAFTA and has been championed by the Bush administration as the best way to open up business opportunities in Latin American countries and increase foreign markets for American goods.

CAFTA would open up business opportunities, but at the expense of workers' rights. Eliminating taxes on imports and foreign corporations (namely American-owned enterprises) will encourage American businesses to open factories in tiny nations like El Salvador where workers' union rights are not protected and minimum wage is 15 times less than what it is in the U.S. CAFTA does not impose a standard of labor right for workers and allows nations to use their own laws to dictate workers' wages, hours, etc. In most Central American nations, the legal framework is not secure enough to guarantee that workers' rights will be protected.

CAFTA would probably increase foreign markets for American goods, but at the expense of impoverished Latin American farmers. The agribusiness industry would jump at the opportunity to sell its cheap crops to tiny nations like Guatemala, undermining nearly six million farmers who already live in poverty. By eliminating agricultural tariffs in these Central American countries, the United States would enable its agricultural industry to export goods below the price of production and further impoverish these Central American farmers.

Trade liberalization has already occurred in Central America, but development has not followed. Throughout the 1990s, for example, Nicaraguan tariffs decreased from 45 percent to five percent, and while exports did double, import rates increased at a much faster rate.

The lack of a balanced import and export rate has led to a $10 billion trade deficit in Central America. Additionally, the Washington Office in Latin America asserts that during this period of trade liberalization, Central American economies have remained stagnant. Finally, the productivity levels that supporters touted would increase by reducing tariffs have actually decreased in Central American countries. This has led to increased poverty, especially in agricultural areas.

If the United States wants to build lasting bonds with its Central American neighbors, it needs to do so by supporting the citizens of these countries, not by monopolizing their markets and taking advantage of their workers.

Ethan Kuhnhenn. Ethan Kuhnhenn is a junior in the Communication Arts program and is entering his first year as a SCO staff member. When he's not fishing in his new bass boat, you can probably find him at Taco Bell chilling with his best friend, the cheesy … More »

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