Rep. McCarthy on Passage of CAFTA

Statement

Rep. McCarthy on Passage of CAFTA

Free and fair trade has helped drive the United States' foreign policy since the end of World War II. This is especially the case for trade with developing countries. In the past 20 years, liberalized trade policies have helped result in nearly halving the world's percentage of people living in extreme poverty, from 40 to 21 percent.

In addition to providing access to those most in need, trade has been a tool for political stability around the world. Our post Cold War trade policy helped reform former Soviet satellite nations in Eastern Europe into new democracies. While much work still needs to be done, our relationships with China, India, and Russia have improved because of trade.

Like the nations of Eastern Europe, Central America repelled the threat of communism in the 1980s and is on its way to a new era of political stability. Central America represents an exciting new market for American companies.

A responsible trade agreement with Central American nations is the logical next step in American foreign policy. Unfortunately, the trade agreement that passed House of Representatives this evening, the U.S. - Dominican Republic - Central American Free Trade Agreement (CAFTA) falls short of what is needed to build a new era of economic cooperation between the U.S. and our Central American neighbors. CAFTA represents a missed opportunity to spread the benefits of free and fair trade to working people in both Central America and the U.S.

As a member of the New Democratic Coalition, I have supported trade agreements with Australia, Singapore, and Morocco in recent years. But, I opposed CAFTA because we need an agreement that ensures labor conditions in Central America meet internationally recognized standards.

Fair labor practices are essential to achieving political stability in developing countries. In recent years, the U.S. has pursued a policy of working with the governments of developing nations to improve their labor practices and human rights protections. CAFTA is a departure from this policy and risks sacrificing long-term political stability in the western hemisphere for short-term boost on the balance sheets of multi-national corporations.

Competition is necessary for fair trade to succeed, and simply moving American jobs to nations with substandard working conditions is counterproductive. CAFTA will not improve Central American working conditions and will not even allow workers to organize. CAFTA will not give Central American workers real purchasing power that will improve their lives and give American companies new customers.

CAFTA imposes fines of up to $15 million if a country "fails to effectively enforce" its own labor laws in the production of goods for trade. This enforcement clause is a farce. Many CAFTA nations have substandard labor laws already, and in some cases, a $15 million fine will be less expensive then improving working conditions. For many, it will be more profitable to just pay the fine and continue business as usual.

In addition, fair trade cannot come at the cost to American workers. CAFTA's negative effect on American workers is compounded by recent Bush Administration budgets that cut more than $1 billion from Workforce Reinvestment Act and Trade Adjustment Assistance programs that help retrain displaced workers.

It is vital that we invest to prepare our workforce for the realities of the 21st Century economy. This can be done by providing displaced workers with easy access to job training and new technologies, making the minimum wage a living wage, and taking steps to reduce the cost of health insurance. The return on this investment will be higher wages and a better trained and educated American workforce with more disposable income.

We are on the verge of a critical new period of economic cooperation with our Central American neighbors. By allowing this short-sighted and incomplete agreement to move forward, we set a dangerous precedent for future trade agreements with developing nations. We must send a message to the workers in developing economies that the United States is acting in their best interests, not on behalf of corporations looking to exploit cheap labor.

We need an agreement that puts the interests of Central American and our own workers first and will promote the continuance of political stability in a region so vital to our interests. Unfortunately, the agreement passed by the House tonight falls well short of these objectives.

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