Dominican Republic-Central America-United States Free Trade Agreement Implementation Act
DOMINICAN REPUBLIC-CENTRAL AMERICA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT --
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Mr. HARKIN. Mr. President, as the Senate debates the Central American Free Trade Agreement implementing legislation today, we know that it has been more than 13 months since the United States and its six partner countries in Central American and the Dominican Republic formally signed the agreement. So what has taken so long? The reason I think for the long delay, obviously, is that supporters have had a hard time selling this agreement to the American people. The supposed benefits are murky, in the distance, while the flaws are all too obvious. This is a shame because we could have a much better agreement that would have won broad bipartisan support.
I have evaluated CAFTA with a genuinely open mind, having supported most major trade agreements during my three decades in Congress. I have no philosophical or ideological bias for or against trade. Far from it. I take a strictly pragmatic approach, and generally I am in favor of trade. But that same pragmatism tells me that it is folly to load all of our economic and diplomatic hopes on the slender back of inadequate trade agreements.
As has been my practice with past trade agreements, I have carefully weighed the prospective advantages and disadvantages of CAFTA. Under the fast-track procedure, our only option is to vote up or down. And late last evening, after thoroughly looking at this, I finally had to come to the conclusion that the problems with CAFTA, as we have it before us, clearly outweigh the very small benefits. On balance, the facts and reasons against CAFTA are significantly stronger than the arguments for it. Therefore, I must vote no on this implementing legislation today.
As one would expect, proponents of CAFTA have presented a glowing picture of the agreement's benefits, but there has been an awful lot of overselling, in some cases outright exaggeration about how important this agreement really is. Let's take agriculture, for example. On paper, CAFTA appears to offer opportunities for some U.S. farmers and negatives for others, and the magnitude of these pluses and minuses is part of the debate. But while in theory agriculture should benefit overall, the projected benefits are strikingly modest, and they come many years in the future.
Economists at the American Farm Bureau Federation estimate that U.S. agricultural exports would increase by about $1.5 billion a year when the agreement is fully effective. That is 15 to 18 years from now. So if we assume an average annual inflation rate of about 2.3 percent, that $1.5 billion increase by 2024 would be only about $930 million in today's dollars. That is about 1.5 percent of our total agricultural exports. So the benefits 15 to 18 years from now, calculated in today's dollars, are relatively small.
There is one other aspect to this. The International Trade Commission of the U.S. Government also had a study. It showed that they predicted a $100 million decline in net annual exports from the United States to the six partner countries as a result of CAFTA. So we get a small 1.5-percent increase in agriculture in 2024. But the International Trade Commission says we are going to have a $100 million decline in net annual exports from the United States.
Whether CAFTA's modest predicted benefits actually materialize is in dispute. Average per capita income in CAFTA countries is about $1,800 a year. Are they going to become good customers? About a third of the population there lives on $2 a day or less. How are they going to buy a New York strip steak or one of our delicious Iowa pork chops that some are so optimistic that we are going to export to those countries?
Potential for big gains is further limited by the fact that we already dominate trade in those countries. In 2003, we accounted for about 45 percent of all merchandise exports to the region. The benefits that CAFTA backers optimistically predict are based on the assumption that CAFTA will spur economic growth in these generally poor and small countries. Right now, under existing trade preference programs, these six countries already face zero tariffs on 80 percent of the goods they ship to the United States, meaning that additional tariff reductions will not spur significant economic growth in those countries. Many are skeptical of these claims about CAFTA and the economic growth in Central American countries.
One of the reasons that has moved me to the ``no'' column on this is, I recently had a meeting in my office with a Catholic bishop, Bishop Alvaro Ramazzini, a senior Catholic prelate in Guatemala, who came to my office to lobby against CAFTA. I spent time with him. I quizzed him about it. I wanted to know why he felt so strongly that CAFTA would not be in the best interest of his parishioners. He said that he and other advocates for the poor in Central America opposed CAFTA because its benefits would go mostly to the economic elites and it would deepen the disparity between rich and poor. So if, as the bishop says, CAFTA would not raise incomes broadly for Central America's people, it won't help them and it won't help us.
The previous speaker mentioned something about Daniel Ortega. Talk about a ghost out of the past. I am talking about the Catholic bishop of Guatemala who came to this country a few months ago to tell us that this would not be in the best interest of his small farmers, his campesinos, and their families. He said it would drive them off their farms and push them more into cities where there is no work for them.
CAFTA will make it harder for U.S. workers, farmers, and businesses to succeed in the increasingly competitive global economy. We can compete on a truly level playing field. It is not fair competition if other countries allow their manufacturers or farms to disregard internationally recognized labor rights and child labor protections or if those countries have lax or nonexistent environmental rules. This CAFTA does virtually nothing to deal effectively with the competitive issues relating to labor and environmental standards. For labor, the internationally recognized rights are pretty basic, such as the right of association and bargaining, prohibition of forced or prison labor, and protection of children from working at young ages or in hazardous or exploitative jobs. I have worked for many years in the effort to eliminate abusive child labor around the world. It is morally wrong, and it leads to all kinds of other injustices and inequalities.
Reports from our own Department of State and the International Labor Organization have documented labor rights and child labor problems throughout the six countries of CAFTA. Just yesterday morning, we learned that our U.S. Department of Labor had been hiding from us a report it commissioned that found serious labor violations in the countries that signed CAFTA. Right now--this is what is important--under current U.S. law, if one of those CAFTA countries condones abusive child labor or other violations of internationally recognized labor rights, we can keep that country from shipping goods to us at low tariff rates. In other words, our U.S. trade law right now allows us to enforce international labor rights. This came about because in 2000, I worked with then-Senator Jesse Helms to modify our Generalized System of Preferences Program, the GSP Program, so that countries that allow abusive child labor are ineligible to ship products to the United States at low GSP tariffs.
The other provision is in the Caribbean Basin Initiative. It allows our Government to deny the benefit of lower CBI tariffs to enforce the broader set of internationally recognized labor rights; that is, if a country is tolerating violations of international labor rights, we can take action so that goods from that country coming into the United States are subject to a higher tariff than is applicable to goods from other CBI countries. In fact, we have taken action under that CBI provision against violations of international labor rights.
So right now, as pertains to these CAFTA countries, we have strong provisions in law to protect against child labor and internationally recognized labor rights. Guess what. CAFTA would supersede and abolish both of these labor rights enforcement features of our current U.S. law with respect to the six other CAFTA countries. Talk about a giant step backward. Five years ago, this Congress added--and the President signed it into law--provisions that protect children, protect people who want to organize and bargain collectively, protect against forced or prison labor in these countries. Guess what. CAFTA does away with it.
What is happening? I thought we were supposed to be progressing in the world, in terms of recognizing basic, fundamental human rights. What could be more fundamental than the human right of children not to be exploited and find themselves in abusive types of labor situations and forced to work? Yet, CAFTA removes these countries from being covered by those laws. It says: Fine, if one of these countries were to use kids working in places where it would be in violation of internationally recognized human rights labor standards, we cannot do a thing about it--nothing. Today we could. When CAFTA passes and goes into effect, we won't. Not too many people know that. I guess that is the major reason why I am opposing this CAFTA--the giant step it takes backward in protecting against abusive child labor.
Under this bill, we have no ability to hold a CAFTA country to internationally recognized labor rights and child labor protections if its own laws are weaker than the international standard. So we are faced with a contradiction. One of the big reasons that I keep hearing to support CAFTA is to boost economic and social progress in these countries. Yet, we are taking a giant step backward in our ability to press our CAFTA trading partners to combat abusive child labor practices and other violations of internationally recognized labor rights.
Elsewhere, this administration insists on social and political reform as a condition for allocating aid to developing countries. For example, eligibility standards for the Millennium Challenge Accounts require progress on social and political fronts. Why should we jettison such requirements under CAFTA? Should free trade come at the cost of progress in combating abusive child labor practices? Of course not. It is not acceptable for me, and it should not be for any of us. That is the problem with the bill before us.
Again, if the President would have worked with us and consulted with us in good faith and said we are going to keep these provisions that we put into law in 2000 and the provisions we put in the Caribbean Basin Initiative to protect child labor, well, you've got my vote. But they didn't do that. In discussions with U.S. negotiators before the text was completed on CAFTA, Members and staff made clear our concerns about all these issues. Unfortunately, little or no effort was made to address those concerns until after the agreement was completed and the White House recognized it might fall short of the necessary votes. At that point, it was too late; the final agreement had been negotiated.
Mr. President, from a broader view, the modest benefits that we are theoretically promised 15 years from now under CAFTA simply do not offset the harm it will do to kids and poor people and small farmers in those countries. The modest benefits do not compensate for what is going to happen if our small manufacturers in this country rush down there for cheaper labor, lower environmental standards, make products down there, pay people low wages, don't give them decent benefits, don't recognize appropriate labor standards, use children as workers, dump the refuse out in the environment, and then ship the products back to the United States. That is what we are voting on here.
Mr. President, I don't consider this agreement worthy of passage. Modest benefits, 15 years from now, may or may not be realized. But we are taking a giant step backward in terms of protecting labor rights and child labor and the environment. For that reason, I believe this CAFTA bill, as it is written, is a big mistake. I do not oppose all free-trade agreements with Central America. But for these reasons, I oppose this one. We can, and we should, do better for our people, our farmers, our small manufacturers but also for the poor people of Central America and the campesinos there who need to have their standard of living raised, not have their children working and not going to school, not have refuse dumped into the environment which threatens their health in the future. That is why this is unfair. That is why it ought to be defeated. We ought to have a better trade agreement than this one.
With that, I yield the floor.
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