CAFTA: A Bad Deal Passes

August 5, 2005

CAFTA: A Bad Deal Passes

By Congressman Charlie Norwood

The Central American Free Trade Agreement, commonly called CAFTA, passed the U.S. House of Representatives on July 28 by the narrowest of margins, 217-215. I voted against it.

I believe CAFTA falls short on several vital issues, including the undermining of U.S. sovereignty and laws; weak tariff reduction schedules for key U.S. goods; loopholes that cause problems for local industry; state and local healthcare regulations are ignored; "buy American" provisions are effectively repealed; potential immigration problems are created; and U.S. companies receive second-class legal status behind their foreign competitors here at home. I will take each of these in turn.

Sovereignty and our entire Constitutional legal system will be compromised under CAFTA. All CAFTA disputes will be settled by a new, three-judge international tribunal system stacked with two Central American representatives and just one from the U.S. - all appointed, not elected. While I have been outraged in the past at the trend of Supreme Court justices using international law in their decisions, this new CAFTA legal language leaves us wide-open to being absolutely run over by foreign laws. For any dispute under CAFTA, our Constitution and Bill of Rights will cease to be the final say in how our companies do business, how our citizens are governed, and the manner in which we live. So any section of the agreement that is even remotely questionable in meaning will be decided by these "kangaroo courts" - with two judges against our one, and no right of appeal. Keep this fact in mind on every other area of concern about CAFTA.

Tariff reductions are not nearly aggressive enough on key products like poultry. Currently Central American countries send their poultry into the U.S. duty-free, but U.S. poultry products sent to Central America face stiff tariffs, some as high as 164%. A true free trade agreement would simply eliminate everybody's tariffs immediately, or at least within months. However the tariff on our poultry products like chicken leg quarters takes over 18 years to finally fade away under CAFTA, while CAFTA countries continue shipping their leg quarters to us duty-free the entire time. Eighteen years of unfair competition could seriously hurt our poultry industry.

Loopholes in CAFTA allow continued unfair foreign competition to put American workers into the unemployment line, especially in the textile and apparel industries. Provisions of CAFTA would expand failed NAFTA language that allows duty-free treatment of foreign goods. Also, CAFTA contains no guarantee or certainty that U.S. products such as yarn and fabric will be used by Central American factories to assemble finished products.

Also, contrary to the claims of CAFTA supporters, CAFTA will not alleviate Chinese textile and apparel products from continuing to crush the U.S. textile industry. CAFTA allows even greater Chinese access to our markets, both through legally increased import levels and also illegally through continued allowance of their widespread smuggling and transshipment policies through these very Central American countries. The U.S. must deal with China's unfair trade policies head-on, not via other arrangements or trade deals.

As a dentist and member of the healthcare community for over 30 years, I have serious concerns about the conflicting language in CAFTA on the licensing and certification of health care professionals and facilities. Language in the agreement seeks to pull our healthcare standards down to those of Central America.

"Buy American" laws and similar state and federal legislation would be gutted by CAFTA rules that prohibit all laws that give a preference to domestic or local businesses. Article 9 overturns state and federal law requiring government agencies to buy American products.

CAFTA also prohibits and trumps current laws that restrict or ban outsourcing to Central American nations and also to firms registered in those nations. Under CAFTA, a Central American firm with a satellite office in America could contract with an Indian telemarketing company to provide a low bid for federal or state government phone banks, such as IRS hotlines or state employment office services. All state and federal laws to the contrary would be void, and the Central American firm could file a dispute in a CAFTA tribunal if they failed to win the contract after submitting the low bid.

The CAFTA language could dramatically worsen our current crisis-level immigration problems. The agreement states that our laws cannot unfairly prevent CAFTA firms from using imported personnel to compete for U.S. business. Simply put, this language could be interpreted to force standardization of our immigration laws with those of Central America, in essence overturning the immigration policy laws passed by Congress.

CAFTA extends bad provisions of NAFTA that provide greater rights to foreign companies operating on U.S. soil than U.S. companies. For instance, when U.S. companies obtain mining, logging or other contracts on federal lands, their rights under U.S. law are determined in our courts. But under CAFTA, foreign investors with identical contracts take the same disputes to a CAFTA tribunal, based on international law. Under NAFTA, the investor-state dispute resolution process (which is closed-door, mind you, unlike our court system) has allowed foreign corporation investors to challenge a variety of state or local public interest policies, including our environmental and public health policies. As the signatory to the agreement, the federal government, rather than state and local governments, would defend these state and local policies when they are challenged. This ends the finality of state court judgments, which is troubling. CAFTA tramples on states' rights and tramples on the rights of domestic companies. Based on our experiences with the NAFTA model for 11 years, we know CAFTA insults federalism and states' rights.

Simply put, CAFTA wasn't negotiated effectively, wasn't done in the best interests of American workers or laws, and wasn't agreed upon with our sovereignty in mind. Free trade must be fair trade - this is neither.

I want to support increased trade, and feel that properly structured trade agreements benefit the people of both nations. Agreements before the Congress that met this test have received my vote, such as the Australia Free Trade Act I supported during the last session of Congress.

We could have fixed this agreement if the House were allowed to debate it and offer amendments. But unfortunately, since it was presented under the Fast Track Trade Authority rules, we either had to pass it or reject it with no changes. Another reason I voted against Fast Track.

My friend and former House colleague Ambassador Rob Portman did not negotiate this treaty. I have faith future agreements under his leadership will be free and fairer than CAFTA. We should be negotiating reciprocal agreements that are fair to my constituents, all Americans, and not so tilted toward those we trade with.

Under NAFTA, some Americans increased their exports. However, Mexico and Canada increased theirs much, much more, costing American jobs. In the nearly 12 years since NAFTA, our trade surplus has gone from $98 billion to 700 billion. We've lost over 3 million good-paying manufacturing jobs in just the last 5 years, including 86,000 here in Georgia alone. You tell me who's making good deals?

Even though I remain disappointed we passed what I believe is a faulty trade bill, I am encouraged by the fact that a single vote difference would have allowed its defeat, and the opportunity to re-write it into a positive agreement for America. That is much closer to restoring free and fair trade agreements than we have come in the past, so I remain hopeful that we are making steady progress in turning Congress around on this issue of trade.

I will stay in this fight and continue to play a role in future trade agreements brought before the House.

http://www.house.gov/apps/list/speech/ga09_norwood/CAFTApasses.html