CAFTA - The Central American Free Trade Agreement

The Central American Free Trade Agreement, CAFTA, is a proposed trade agreement between the U.S. government and five Central American countries: Costa Rica, Guatemala, El Salvador, Honduras, and Nicaragua. CAFTA has been met by mass protests in Central America, and the Bush administration is having trouble garnering even Republican votes in the US Congress. Ratifying CAFTA promises to be a highly symbolic legislative struggle, with the potential to significantly stall the free trade agenda. Citizen pressure is working and needs to continue! Tell your Representative to publicly oppose CAFTA: see the action steps below.

The CAFTA agreement is based on the North American Free Trade Agreement, NAFTA, which is almost ten years old. Like NAFTA, CAFTA’s agreement on investment gives corporations the right to sue governments if their right to profit is restricted in any way. [1] CAFTA fundamentally undermines democracy by allowing corporations to sue state and local governments for implementing the public health, labor, and environmental protections mandated by voters.

Farmers in Central America are vehemently opposed to CAFTA. They recognize that they stand little chance of being able to compete against the massively subsidized US agribusiness machine. The 2002 US Farm Bill apportioned $180bn in new subsidies for the industry over ten years. By comparison, the total GDP for all five countries last year was a little under $140bn. In Mexico, similar policies under NAFTA have contributed to wide-spread rural poverty by driving down the prices that Mexican farmers earn from growing corn, their ancestral food. Farmers in United States ranging from advocates of sustainable agriculture to conventional sugar beet growers have joined their colleagues to the south in voicing concerns over CAFTA as well.

We can look to the history of NAFTA to assess the likely impacts of CAFTA. Over the past ten years, this deal between the U.S., Canada, and Mexico has had the following effects:

• From 1994 to 2000, the United States experienced a net loss of 3.2 million jobs due to trade.[2]
• Even accounting for increased employment in maquiladoras, more than 1 million jobs were lost in Mexico.[3]
• Agricultural poverty in Mexico has increased from 54% before NAFTA to 68% after NAFTA.[4] Farmers have been pushed to the wall, and the biggest Mexican peasant protest since 1930 was organized in January 2003, involving 200,000 campesinos, under the slogan "El campo no aguanta mas" (The countryside can't take it any more).[5]
• U.S. genetically modified crops imported without restriction into the Mexican market have contaminated local crops and reduced yields.[6]
• As a result of the catastrophic consequences of NAFTA on Mexican agriculture,[10] Mexico is becoming increasingly dependent on imports from the U.S.[7]

CAFTA will hit the poor even harder than NAFTA

• In Mexico, the hardest hit are the poor, predominantly in agriculture. The winners from NAFTA have mainly been skilled urban workers and large corporations. But Central American has no firms on the scale of Pemex or Grumsa SA, the food giant behind Mission Foods. Central American countries are far less industrialized than Mexico, skills levels are significantly lower, and even the World Bank has admitted that adding a trade agreement to this socio-economic situation is a recipe for disaster.[8]
• Three-quarters of central Americans live on less than $2 per day.[9]
• Almost half of all Central Americans depend on agriculture that is local and household based.[10] Under CAFTA, the U.S. wants access for U.S. beef, corn, and beans to Central American markets without import tariffs. This exposes Central American farmers to dumping, increasing rural poverty.[11]

Workers rights are under attack

• Central American countries have a history of labor abuses sponsored by U.S. corporations. In El Salvador, Human Rights Watch found systematic corporate abuses of workers' rights, with tacit government sponsorship.[12]
• Meanwhile, in the U.S. between 1998-1999, 71-100% of U.S. industrial employers in the manufacturing industry threatened to relocate their factories if workers formed a union, leading to reduced success in union organizing drives.[13]

1 http://www.publiccitizen.org/documents/CH%2011%20Spanish.pdf

2 Bronfenbrenner, Kate. "Uneasy Terrain: The Impact of Capital Mobility on Workers, Wages, and Union Organizing." Report submitted to the U.S. Trade Deficit Review Commission, 2001: 6.
www.ustdrc.gov/research/research.html, See also http://www.foodfirst.org/progs/anhr/workers.pdf

3 http://www.foodfirst.org/media/press/2003/ftaamobilization.html

4 http://www.foodfirst.org/media/press/2003/policybriefsftaa.html

5 http://www.foodfirst.org/media/interviews/2003/rossetmexicoprotests.html

6 http://www.foodfirst.org/pubs/backgrdrs/2002/sp02v8n2.html

7 http://www.foodfirst.org/pubs/backgrdrs/2003/f03v9n4.html

8 http://lnweb18.worldbank.org/

9 http://www.libertadpura.com/infopublica/archives/000004.html

10 Carnegie Endowment for International Peace

11 Carnegie Endowment for International Peace

12 "The right way to Trade" Pier, http://www.washingtonpost.com

13 Bronfenbrenner, Kate. "Uneasy Terrain: The Impact of Capital
Mobility on Workers, Wages, and Union Organizing." Report
submitted to the U.S. Trade Deficit Review Commission, 2001.
www.ustdrc.gov/research/research.html