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Jewish World Review
May 18, 2005
/ 9 Iyar, 5765
Free trade slip-sliding away?
By
Tony Blankley
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http://www.JewishWorldReview.com |
The Central American Free Trade Agreement (CAFTA), President
Bush's modest little trade bill that would benefit the U.S. economy at least
as much as Central America's, is edging toward defeat in Congress. It is a
sign of the precarious political position of the entire post-WWII free-trade
regime that such a bill might be unpassable in the capital of the world is
pre-eminent free trading nation.
If the American political system is driving even free-trade
believing congressmen to vote "nyet" on CAFTA, it is "adios" to globalized
trade and "welkommen" to protectionist principles of international
economics. (I thought I would start using up my foreign vocabulary, as there
may soon be a glut in the market for foreign words of salutation.)
The bill itself is a model of practical utility. It eliminates
almost all the trade barriers between the United States and Central America
(Costa Rica, El Salvador, Honduras, the Dominican Republic, Guatemala and
Nicaragua), America's second-largest Latin trading block after Mexico.
Because of NAFTA and the Caribbean Basin Initiative, our economy
is already open (barrier-free) to most of Central America's likely imports
to us. On the other hand, their economies will now provide export
opportunities for American business and agriculture, which is why CAFTA is
endorsed by most manufacturing and service sector producers as well as
dozens of American farm organizations, such as fruit, pork, chicken and
dairy producers.
Passage of the treaty by Congress would have the added political
advantage of bringing some economic growth and stability (and competitive
trade parity with Mexico, which, under NAFTA, already has more open trade
relations with the U.S.) for a region that has been ripped by violent
communist revolution and violent right wing counter revolution for two
decades. It is just now settling down to something resembling normal life
for the long-suffering citizens of Central America.
The treaty is vigorously opposed by the American sugar
producers, the textile industry and the normal assortment of anti-globalists
of the left and right. The treaty would allow an extra 109,000 metric tons
of imported sugar, which would bring sugar costs down slightly but would not
undermine the massive American sugar industry.
The textile industry is concerned that the new "rules of origin"
would establish a bad precedent as well as allow more foreign fabrics to be
imported into the U.S. from Central America (although most economists point
out that Central America is likely to continue importing our textiles for
finishing work and re-importation into the United States for sale.)
Of course, many on the left make the cruel argument that they
oppose the trade treaty because of lower labor and environmental standards
in Central America (thereby driving the locals from low wages to
destitution, and further impoverishing the local country, thus assuring
higher levels of environmental degradation. Only richer countries can afford
high environmental standards.)
These arguments are not new, but their political effects are.
For about 10-15 years now, the conventional protectionist and anti-globalist
arguments have held sway over a substantial minority of Congress, but have
consistently failed to convince a majority to reject a reasonably balanced
trade bill. That may be changing.
Ever since the NAFTA vote in 1993, free-trade bills have relied
on overwhelming Republican support along with a substantial minority of
free-trade Democrats. President Clinton had to lobby Democratic congressmen
hard to get half of them to support his NAFTA treaty.
But now, despite a strong and growing economy, under the
pressure of huge trade imbalances with China, and fears of outsourcing
(perhaps in response to the growing general frightfulness of the world),
traditionally pro-free-trade congressmen from both parties are beginning to
waver.
Rep. Ellen Tauscher, D.-Calif., the head of the 41 member
centrist, pro-free-trade New Democratic Coalition has come out against
CAFTA, citing the old anti-globalist arguments that had never before moved
her support of free trade. Other members of that coalition have followed her
into the protectionist camp.
In the Republican Party, Sen. Saxby Chambliss, R.-Ga., another
traditional supporter of free trade, told the New York Times recently that
he "could no longer support bilateral trade agreements without being assured
that American industries and workers are truly benefiting from these
agreements." Once again, the language of the protectionists is being
embraced by a now former free trader.
According to the Financial Times, the generally free trade
enjoyed by the United States since 1945 has accounted for about 10 percent
of our economic activity. That is to say, America would be about a trillion
dollars a year poorer without the benefits of free trade. Of course, world
trade will not decline overnight. But it is an ominous political fact that
there may be an emerging majority in Congress prepared to sacrifice the
golden goose on the altar of their deepest economic fears.
Every weekday JewishWorldReview.com publishes what many in in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.
Tony Blankley is editorial page editor of The Washington Times. Comment by clicking here.
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