May 18, 2005

CAFTA Or Atomic Wedgie?

The Carnegie Foundation has a new analysis of CAFTA that I meant to blog about earlier today, but stuck it over on the mini-blog. Anyway, unlike praktike, I do think the labor standard provisions of CAFTA are wholly atrocious—my baseline for this sort of thing is at least to give workers the right to organize and speak out in the workplace, and I've seen little evidence that this would unduly harm developing nations, though I'll admit enforcement is a much, much trickier matter (how, for example, do you allow factories to break up genuinely corrupt unions?)—but setting that aside, I think we can all agree that much of this stuff is pretty horrendous:
The optimal combination of trade terms for regional rural development would be to phase out the tariffs on staple crops very slowly and gradually, so that subsistence farmers have time to adapt to competition from subsidized U.S. production, while increasing access to the U.S. market for traditional cash crops such as sugar and other agricultural products that exploit the comparative advantages of the region.

As negotiated, the CAFTA-DR gets less than half of this equation right. The Administration did recognize the need for the countries in the region to slowly open their markets for a few staple products, but does not provide adequate transition periods for all such products. This half-measure will mean little for poor farmers in the region, who typically produce more than one staple product, be it rice, beans, corn, chickens, onions or potatoes. For poor farmers, lower prices for any of the products will put already precarious household incomes at risk. Malnutrition in the region is rising due to low coffee prices. The shock of CAFTA would likely mean more hunger in Central America.

Moreover, and even more significantly, the CAFTA-DR does not provide new opportunities for rural populations to utilize and benefit from. For example, production of sugar could absorb some of the labor displaced from staple crops. Yet, sugar from Central America and the Dominican Republic is denied meaningful access to the U.S. market.
Look, I understand comparative advantage just fine, thanks, and under some conditions lower tariffs sound truly swell, yes. But this is just a boot to the teeth. The transition period will be poorly managed, there's little assistance for farmers harmed by the upheaval, and Central American farmers get screwed by our high barriers on sugar imports. "Free trade" or trans-hemispheric donkey-punch? You decide. Meanwhile, for Republicans who love open markets but hate open borders, guess where all those displaced workers are going to do? Uh-huh. Hope you've stocked up on MinuteMen.
-- Brad Plumer 3:19 AM || ||