The U.S. House of Representatives soon will vote on the Central American Free Trade Agreement. If approved, CAFTA would boost prosperity in the Western Hemisphere by forging stronger commercial ties between the United States and its neighbors — Costa Rica, El Salvador, Guatemala, Honduras, and the Dominican Republic. Collectively, these 5 nations constitute America’s 13th-largest trading partner.
But what if the House ignores the Senate’s lead and defeats CAFTA? Foreign-policy specialists warn that doing so could undermine American diplomatic and security interests.
“I consider CAFTA to be as much a security issue as it is an economic issue — for them and for us,” Defense Secretary Donald Rumsfeld wrote in a June 11 Knight-Ridder newspaper column. “By approving CAFTA, the United States will bolster the advocates of freedom and openness in Latin America. Rejection of the agreement, conversely, could seriously undermine the forces of freedom and lead to an era of increased transnational security challenges.”
“The signal that CAFTA’s defeat would send is that the United States is not a reliable partner,” Otto Reich, President Bush’s former special envoy to Latin America, says by phone. “That is a very unfair signal, but that is what our enemies would say. Hugo Chavez and Fidel Castro probably have their talking points ready to say: ‘See? That’s what you get for believing in the U.S. You come to us, and we will give you money.’”
Chavez — Venezuela’s increasingly authoritarian leader — plays Mini-Me to Castro, the Cuban dictator, one-time lawyer, and long-time Dr. Evil of Latin America. Together, they stir trouble around the hemisphere in every conceivable manner, from collaborating with left-wing politicians in South America to using petroleum as a socialist lubricant.
Chavez, for instance, plans to buy $500 million in Ecuador’s debt and refine its oil at preferential prices, saving Quito an additional $500 million annually. “$1 billion to Ecuador is all the money in the world,” says one Latin American specialist. Not surprisingly, these strongmen oppose CAFTA, with Chavez reportedly lobbying Central American parliamentarians to sink the pact.
“Castro, Chavez, [former Nicaraguan comandante] Daniel Ortega, and the Latin American left have demonized and fought CAFTA tooth and nail. Why would the U.S. House join them?” asks Alexandra Beech, an analyst with Veninvestor.
“If CAFTA is rejected, people throughout Latin America will view it as a kick in the teeth,” worries U.S. Chamber of Commerce Latin American expert John Murphy. “Latin American politicians and journalists from left and right will point to the triumph of special interest politics over the U.S. national interest.”
Perhaps the most powerful special interest working to detonate CAFTA is the American sugar lobby. Despite a tangle of federal programs that keep this industry far more profitable than it would be in a free market, America’s well-subsidized sugar barons cannot stomach the idea of allowing new sugar imports equal to 1 percent of current U.S. supply. If their tantrum prevails and American prestige and influence suffer, who cares, so long as the pampered sugar millionaires maintain their glazed, artificial profits?
Ultimately, the implications of CAFTA are global in scope. Its defeat would mean even tougher sledding for the rest of the U.S. free-trade agenda beyond Latin America.
“If Washington cannot get something as simple as CAFTA passed, then its credibility on the big issues — like agricultural subsidies at the World Trade Organization — will suffer,” says Ian Vasquez, Director of the Cato Institute Project on Global Economic Liberty.
“If CAFTA is rejected,” John Murphy predicts, “governments from Beijing to Brussels will see that the United States is embracing protectionist rhetoric over its own economic well-being.”
Economists at the National Association of Manufacturers believe that if CAFTA implodes, it could take most of Central America’s apparel sector with it. Absent CAFTA’s incentives to manufacture textiles adjacent to the U.S. market, international producers likely would shift their manufacturing to low-cost, better-developed China. Thus, NAM forecasts that killing CAFTA could spawn a regional recession, triggering a 7 percent slide in the area’s GDP, and creating as many as 411,000 unemployed workers within Central America’s rag trade. Where might these folks turn for employment? Hint: Meet your new neighbors.
The House’s choice is simple: Open U.S. and Central American doors to each other’s goods and services for our mutual benefit, or slam them shut and watch the nightmares multiply.
–New York commentator Deroy Murdock is a syndicated columnist with the Scripps Howard News Service and a senior fellow with the Atlas Economic Research Foundation in Arlington, Virginia.