Washington Notebook

June 30, 2005
Vol. 2, No. 24

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Joe Feuerherd, NCR Washington correspondent


Trade agreement opponents as American as apple pie

By Joe Feuerherd

Disputes over trade are as American as the Fourth of July.

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The Sons of Liberty tossed tea in Boston Harbor to protest Britain's subsidy of its European-based industry at the expense of American tea merchants. Fourteen years later, the U.S. Constitution emerged from just such disputes, a fruit of the frustration of merchants and farmers whose goods, under the loose restrictions of the Articles of Confederation, could be taxed as they left Pennsylvania for Maryland, or South Carolina for New England; not to mention the disparate tariff treatment goods from the West Indies or London received as they entered one of the former colonies.

Trade was serious business in the new country. Tariffs on imports were a significant source of revenue for the newly formed federal government (the income tax was unconstitutional). "What will be the consequence, if we are not able to avail ourselves of the resource in question in its full extent?" asked Alexander Hamilton. "A nation cannot long exist without revenues."

And by making foreign goods prohibitively expensive, those "excises" protected the burgeoning manufacturing and farming economies of the young country from the sophisticated mercantilism of Britain and other European powers. In other words, whole sectors of the underdeveloped U.S. economy depended on the government to protect them from the economic reach and might of the world's superpowers.

Sound familiar? Globalism wasn't invented in the 21st century, let alone the 20th.

Today, in the eyes of many opponents of the Central American Free Trade Agreement (CAFTA), the United States. is the colonial economic power, while the poverty-stricken countries of Central America are the developing economies in need of nurturing and, yes, protection.

President Bush says CAFTA, an agreement among Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic that will be before Congress this summer, "is a good deal for American workers and farmers and small businesses" because 80 percent of the products produced in Central America enter the United States duty-free, while U.S. exports face high tariffs. CAFTA would eliminate these tariffs.

Further, says the administration, CAFTA will spur economic development in the South.

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But at what cost?

That's a question CAFTA opponents -- a coalition that includes advocates for the poor, U.S. farm interests, environmentalists, labor unions and, not least, religious groups -- keep asking. The U.S. bishops and Catholic Relief Services (who are skeptics but not outright opponents of the trade agreement) recently summarized the concerns. They outlined five key areas:

  • Livelihoods of farmers and food security. Poor farmers in Central America may not be able to compete with much more efficient, highly subsidized U.S. agriculture. At the same time U.S. subsidies are not focused on the needs of small and medium-sized farms in the United States. Meanwhile, tariff reductions and elimination of supports under CAFTA could subject staple foods like corn, beans, and rice to serious price fluctuations. How will CAFTA address the needs of small and medium-sized farms in the U.S. and Central America?
  • Worker rights and environmental protection. While certain labor and environmental provisions are included in the agreement, it is not clear that they will lead to stronger protection of fundamental worker rights and the environment. How will CAFTA protect the rights of workers and the environment?
  • Transparency and democratic participation. During the negotiations and since the agreement was signed there has been an absence of broad consultation with key sectors who will be affected, and little information has been available in publicly accessible forms. How will people have a say in how CAFTA affects their lives?
  • Intellectual property. CAFTA's extension of protections for intellectual property rights may impair the right of Central American countries to exercise proper stewardship over their natural resources and may limit access of poor people to affordable generic medicines. How will CAFTA's intellectual property provisions affect the poor?
  • Poverty reduction and sustainable development. CAFTA's ability to increase opportunities for the poor and to enhance prospects that they will genuinely benefit from increased trade remains unclear. Trade policies must be framed within an integrated development agenda that incorporates measures to improve education, health care, and democratic participation. How will CAFTA promote integral human development, especially of the poor?

Stealing a page from the Republican Party playbook, representatives of Pax Christi and Catholics for Faithful Citizenship argued in a June 22 teleconference call that CAFTA is a "culture of life" issue.

"The economic model articulated throughout Catholic social teaching stands in stark contrast to the economic model that lies at the heart of CAFTA, where millions struggle to meet even the most basic human necessities like food, clean water and health care -- including medicine to treat the more than 275,000 people infected by HIV in the region," said Pax Christi communications director Michael Jones.

Rep. Bart Stupak (D-MI) told the press that the trade agreement is a boon to the pharmaceutical industry, which will be able to charge 20 times the generic drug cost for anti-AIDS medicines under the patent extensions included in the agreement. In Honduras, said Stupak, because of the patent protection granted to U.S. manufacturers under the agreement, the cost of anti-AIDS drugs will be nearly double the annual income of the average Honduran.

CAFTA will be considered by Congress under "fast-track authority." This means that debate will be limited and no amendments will be allowed. No trade agreement considered under these restrictive rules has ever been defeated.

But CAFTA may be different. Democrats are united, if not quite unanimous, in their opposition. And Republicans are splintered -- with representatives from trade-sensitive states like Ohio (the Social Action office of the Cleveland diocese is urging a no vote on the agreement) concerned that a yes vote will haunt them politically.

Meanwhile, the president's popularity has dropped, making appeals to party unity less appealing. House Democratic Leader Nancy Pelosi has made opposition to the agreement a test of party loyalty.

If the vote were held this week, said Stupak, CAFTA would lose. But the vote won't be held this week. And in the meantime, the administration will be pulling out the stops -- promising federally-funded "bridges in districts without rivers," said Stupak -- to get the votes.

No one doubts the stakes. Revolutions have started over smaller things.

The e-mail address for Joe Feuerherd is jfeuerherd@natcath.org

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