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Free Trade: At what cost?
Maria Hornung
Issue date: 10/31/07 Section: News
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By: Maria Hornung
Just a few weeks ago, on Sunday October 7, Costa Rica became the last Central American country to join the Central American Free-Trade Agreement (CAFTA) with the United States.
The pact has already taken effect in the Dominican Republic, Guatemala, Honduras, Nicaragua and El Salvador. Costa Rica was the only one of these to have a referendum. The free trade agreement barely passed with 51.5% voting in favor of it. The Bush Administration put pressure on Costa Rica to accept the pact saying that they would not renegotiate if voters rejected it. Since The United States accounts for almost half of Costa Rica's exports, imports, and tourism, and more than two-thirds of its foreign investment, many fear the possible negative impact on their economy if they declined the pact.
In July 2005, CAFTA was barely passed by Congress with a 217-215 vote. This agreement eliminates customs barriers and ensures protection for capital investments. Some Americans are wary of free trade agreements because they fear losing US jobs to foreign competition, but there are many more concerns from the other countries, such as unfair labor practices and wages. According to an essay by Eric Jacobstein, the principle argument against CAFTA made by lead Democrats is that the agreement's labor regulations were unnecessarily weak. While the agreement calls on countries to be held to the standards of the International Labor Organization (ILO), there is no serious enforcement mechanism. The treaty also limits the government's power to protect the environment, contract local businesses, and protect basic services, including health care and communications. While an elite sector of the population will benefit, the unconstrained competition will further marginalize the poor majority.
CAFTA is based on the same model as the North American Free Trade Agreement (NAFTA). Some recent research has shown that NAFTA did not improve the lives of millions of poor Mexicans and has cost the jobs of workers in Canada and the United States. The Carnegie Endowment for International Peace, a Washington-based think-tank, said foreign direct investment in Mexico led to the creation of 500,000 manufacturing jobs from 1994 to 2002. However, the country lost at least 1.3 million jobs in the agricultural sector alone, quadrupling the number of unemployed workers in the rural sector and lowering the price of corn paid to farmers by 45%.
Just a few weeks ago, on Sunday October 7, Costa Rica became the last Central American country to join the Central American Free-Trade Agreement (CAFTA) with the United States.
The pact has already taken effect in the Dominican Republic, Guatemala, Honduras, Nicaragua and El Salvador. Costa Rica was the only one of these to have a referendum. The free trade agreement barely passed with 51.5% voting in favor of it. The Bush Administration put pressure on Costa Rica to accept the pact saying that they would not renegotiate if voters rejected it. Since The United States accounts for almost half of Costa Rica's exports, imports, and tourism, and more than two-thirds of its foreign investment, many fear the possible negative impact on their economy if they declined the pact.
In July 2005, CAFTA was barely passed by Congress with a 217-215 vote. This agreement eliminates customs barriers and ensures protection for capital investments. Some Americans are wary of free trade agreements because they fear losing US jobs to foreign competition, but there are many more concerns from the other countries, such as unfair labor practices and wages. According to an essay by Eric Jacobstein, the principle argument against CAFTA made by lead Democrats is that the agreement's labor regulations were unnecessarily weak. While the agreement calls on countries to be held to the standards of the International Labor Organization (ILO), there is no serious enforcement mechanism. The treaty also limits the government's power to protect the environment, contract local businesses, and protect basic services, including health care and communications. While an elite sector of the population will benefit, the unconstrained competition will further marginalize the poor majority.
CAFTA is based on the same model as the North American Free Trade Agreement (NAFTA). Some recent research has shown that NAFTA did not improve the lives of millions of poor Mexicans and has cost the jobs of workers in Canada and the United States. The Carnegie Endowment for International Peace, a Washington-based think-tank, said foreign direct investment in Mexico led to the creation of 500,000 manufacturing jobs from 1994 to 2002. However, the country lost at least 1.3 million jobs in the agricultural sector alone, quadrupling the number of unemployed workers in the rural sector and lowering the price of corn paid to farmers by 45%.
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