Central American Sequel to NAFTA a Hit
with Execs, a Bomb to Working Americans
April 28, 2005
By Roger Bybee
However improbable, the atmosphere in Washington, DC is actually
even more rarified and unreal than in Hollywood, as shown by the
fact that Congress would even consider the Central America Free
Trade Agreement now before it.
When a super-expensive, star-studded, ultra-hyped project in Hollywood
can't be sold to the public (think Gigli, Waterworld,
or Ishtar), the heads of top studio executives will roll.
Serious accountability is demanded. The media have a field day highlighting
every flaw. Needless to say, no one mentions the idea of a sequel,
except in bitter jest.
But in Washington, even the super-colossal failure of the North
American Free Trade Agreement in the public's eyes fails to produce
even a ripple of acknowledgement among either elite policymakers
or the media. Public sentiment against NAFTA was overwhelmingly
opposed beforehand, and is more strongly against it now (opposition
to NAFTA-style deals is opposed by 55% even among those earning
more than $100,000).
No wonder. In terms of every promise made by its proponents, NAFTA
has failed: an estimated 879,000 jobs lost in the US; manufacturing
wages have fallen on both sides of the border; nearly 2 million
Mexican farmers have been displaced by US-subsidized food imports;
already-abysmal environmental conditions have worsened along the
border, and a modest US trade surplus with Mexico has turned into
a $45 billion deficit. NAFTA-style "free trade" has amounted
to merely exporting US factories and jobs to low-wage Mexico and
importing finished products, with most Mexicans getting poorer and
seeing US-made consumer goods further out of reach.
But none of this matters to the elite corporate and political
officials who shape economic policy for America. In fact, they are
planning a sequel to NAFTA: the Central American Free Trade Agreement
with five nations just south of Mexico and the Dominican Republic.
And why not? While NAFTA may have been a flop for mere citizens,
it was fabulous for the Fortune 500.
Offering a very timely, penetrating and concise preview of the
sequel is documentary filmmaker (of the powerful and passionate
American Jobs) Greg Spotts with his new book, CAFTA and
Free Trade: What Every American Should Know. Although compact,
CAFTA and Free Trade manages to skillfully puncture the over-arching
myth of free trade so beloved by major media pundits, examine the
increasingly massive role of China as a low-wage producer surpassing
even Mexico, and to discuss what passage of CAFTA – and its bigger
brother, the continent-wide Free Trade Agreement of the Americas
- would mean for working Americans.
"Free Trade agreements have been described as tools to open up
new markets for American-made goods," Spotts notes, a proposition
readily swallowed by free-market fundamentalists in both parties
and the media corps. This notion is highly dubious, given that Central
America's combined population of 37 million has far less buying
power than the three million people of Kansas. Spotts deftly skewers
the absurdity of the "market-opening" premise: "Who in their right
mind would invest in manufacturing a product using well-paid American
workers and then try to sell that expensive product to price-sensitive,
low-wage Chinese or Mexican consumers?"
As Spotts points out, "Building a viable consumer class in
an impoverished nation is very hard work that can take decades."
But US decision-makers show no interest in the successful European
Union model of investing in the public infrastructure (roads, health,
education, etc.) and assisting with building real democracy in poorer
nations like Spain, Greece, and Portugal.
Instead, the "free trade" model is based on short-term
plunder, untroubled by concerns like developing local purchasing
power. It entails simply providing elaborate investor protections
for corporations temporarily setting up shop in low-wage nations
to maximize their profits. So don't bother with paying for clean
water, sewers, or safe streets for your workers in places like Juarez,
Mexico, which boasts the biggest concentration of US-owned maquiladora
plants, typically paying 60 cents to $1 an hour.
And when an even lower-wage opportunity crops up in, for example,
China, where pay may run as low as 20 to 30 cents an hour, just
relocate your operation there. While Mexico gained 900,000 low-paying
manufacturing jobs between 1993 and 2000, it has since lost about
250,000 of these jobs. US-based and other transnational corporations
are now bypassing Mexico in favor of China, which offers a regimented,
well-trained workforce at rock-bottom wages.
The Central America Free Trade Agreement is aimed at intensifying
the race to the bottom, as it will make the six low-wage nations
more accessible to US corporations by providing a robust set of
protections for investors on intellectual property rights and a
host of other concerns to corporate executives. For example, CAFTA
imposes a new 5 to 10 year waiting period before nations like Guatemala
can manufacture the generic version of badly-needed pharmaceuticals
like anti-AIDS drugs, thereby extending the monopoly of US drug
CAFTA generally represents a step backward when it comes to labor
and environmental standards. Where the Generalized System of Preferences
guiding trade deals requires nations "to afford internationally
recognized worker rights," CAFTA would only demand that each
nation enforce its own labor laws. In this context, it would pit
the Central American nations – with weak labor protections and sordid
histories - against each other to ignore enforcement in the hopes
of attracting multinational firms.
CAFTA would also uniquely undermine the ability of US states to
enforce laws aimed at blocking the outsourcing of jobs, promoting
the use of energy-efficient policies, or demanding the boycott of
governments practicing human rights abuses, as with Burma.
Potentially, as Spotts stresses in his urgent new book, the US
has the influence to nurture a version of globalization very different
from CAFTA. As he puts it, "If we dare to dream, the powerful economic
forces that are sweeping the world could be harnessed to build up
our neighbors instead of strip-mining their labor."
and Free Trade: What Every American Should Know by Greg
Spotts (New York: Disinformation Co Ltd., 2005), 93 pages, $7.95.
Roger Bybee is a Milwaukee-based writer and activist. He can
be reached at firstname.lastname@example.org.