Thursday, July 28, 2005

CAFTA as Trojan Horse

The best coverage today comes from the Wall Street Journal, which details some of the last-minute vote-buying/bargaining from the Administration:
Republican leaders secured at least five votes for Cafta by agreeing to bring separate legislation to the floor that would allow the U.S. to impose duties on exports from China and others designated as nonmarket economies by the Commerce Department. The measure, approved yesterday in the House by a 255-168 vote, was castigated as "a sham" by Senate Democratic leader Harry Reid of Nevada and faces uncertain prospects in the Senate.

Another five votes, and perhaps more, came after the administration cut deals to assuage textile-industry concerns, such as fears that the pact would create incentives for Central American producers to use inexpensive Asian-made yarn and fabric instead of U.S.-made materials. Even with the changes, opposition remained among lawmakers from textile-producing states.
Even their accompanying graphic was snyde, or at least used it to illustrate how all of this is much ado about very little. It's worth going back about 10 days to another WSJ analysis piece, entitled "CAFTA No Cure-All for Central America," to grasp why this CAFTA may not do much for the region. That article ends with the following prognosis, and makes the radical suggestion that perhaps free movement of labor (which is what we have already in a rather de facto way, and which is what is really helping Central American economies) is what might work best:
But Cafta's immediate economic benefits are so "nebulous" says the economist Carl Ross, a Bear Stearns analyst, that he says he can't incorporate them into his forecasts for the region.

When it comes to promoting regional security through economic growth, the Europeans, looking for deeper economic integration, have adopted another model. The European Union offers its poorest entrants free trade coupled with development assistance, free movement of labor and other measures designed to lift nations out of poverty.

When such poor nations as Ireland and Spain were admitted to the EU, they received funding aimed at boosting competitiveness and their workers were able to work elsewhere in wealthy Europe. Today, Ireland has one of the world's fastest growing economies and is competing on solid footing in high technology. The disposable income of Spanish families has risen by nearly 40% since 1998, estimates by Spain's La Caixa bank show.

Cafta's limited trade openings are unlikely to produce such dramatic gains.
Finally, today's WSJ piece provides more explicit details about Administration lobbying:
In a day of high-level lobbying, Secretary of State Condoleezza Rice made the rounds to argue that Cafta would help heal old divisions in the region and foster stability. Late last night, Mr. Cheney camped out in an office just off the House floor, and Commerce Secretary Carlos Gutierrez worked the halls.
Wait a minute -- CAFTA will "help heal old divisions" in the region?

NOT. CAFTA has already provided a useful political foil for the left, and now that the region's elites have it, they'll have to accept the political consequences should that reported 300,000 job gain in the region prove elusive. That can only help the left and other opposition forces. Which I doubt the Bush administration will be too happy about.

1 comment:

Tim said...

Nice to see you blogging again.

It's hard to see how CAFTA produces those job gains in Central America. Much easier to see how the gap between rich and poor will continue to widen. Trickle down economics doesn't tend to work in that part of the world.