Earlier this month, the Stop CAFTA Coalition released a report on the effects of the Central American Free Trade Agreement (CAFTA) and called for the trade agreement to be suspended by president elect Barack Obama.
The report argues that CAFTA has failed on several fronts and that its failure should be seen as a reason to reject the pending Colombia Free Trade Agreement and focus instead on agreements that focus on human rights, and economic, social, and environmental sustainability.
The report argues that the problems that come with CAFTA–often dismissed by critics as “growing pains” that will even out over time–are problems inherent to the flawed economic theories that shaped the agreement. As with many neoliberal trade agreements, jobs gained have largely been low paying–and often dangerous–jobs at factories owned by multi-national corporations. Similarly, a rise in exports reported by some CAFTA countries has largely benefited multinationals. Intellectual property rights included within CAFTA have stopped local corporations from being able to sell generic medicine to impoverished citizens who cannot afford brand-name drugs. The agreement has also paved the way for destructive environmental projects including open-pit mines and hydroelectric dams. Moreover, CAFTA’s rules make it harder for citizens to challenge these projects.
The report also briefly looks at how the United States has been impacted by CAFTA. The agreement’s passage was hotly debated in the legislature and many unions and NGOs opposed CAFTA. Some of them opposed the agreement on the grounds that it would negatively affect the agricultural and industrial sectors of the US economy. The report concludes that there has been relatively little effect on those sectors. However, it cautions that any gains for the US under CAFTA favor large corporations over small ones, and agri-business over small farms.
Overall, the report concludes that:
“The promises of DR-CAFTA have not been realized in the first three years of its implementation. If DR-CAFTA is not seriously renegotiated, it will continue to harm local economies and people, promote migration, and greatly increase the economic inequalities that persist throughout the region. Without changes to the current economic model and vast improvements to local infrastructure, employment opportunities will continue to be scarce, and the poor will continue to become poorer as the rich continue to become richer.”
The report offers several ideas for alternatives to the neoliberal CAFTA, including ALBA, a cooperative trade agreement focusing on development and mutually beneficial policies, and the Association Agreement with the European Union. In addition, it contains a “Pledge for Trade Justice” that offers elements that must be present to have an agreement based on justice and equality. These include increased transparency, stronger core environmental and labor standards in the body of trade agreements, provisions allowing for locally focused sustainable development, and more.
CAFTA was supported by West Michigan Representative Vern Ehlers who has a history of supporting neoliberal trade agreements including the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO). Michigan Senators Carl Levin and Debbie Stabenow both voted against CAFTA.